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Ted Baxter runs a small, very stable newspaper company in southern Oregon. The paper has been in business for 25 years. The total value of the firms capital stock is $1 million, which Ted owns outright. This year, the firm earned a total of $250,000 after out of pocket expenses. Without taking the opportunity cost of of capital into account, this means that Ted is earning a 25% return on his capital. Suppose that risk free bonds are currently paying a rate of 10% to those who buy them. a. What is meant by the "opportunity cost of capital"? b. Explain why opportunity costs are real costs even though they do not necessarily involve out of pocket expenses. c. What is the opportunity cost of Ted's capital? d. How much excess profit is Ted earning?
How would international expansion affect your business? What are the risks, advantages, and disadvantages to your business of international expansion?
Economists usually do not favor subsidies on specific products or in-kind payments to help low income people.
The economy of the United States is described by the following aggregate production function: Yt = minimum (Kt, Lt). Saving occurs at a constant rate s. Each period, capital depreciates at a constant rate δ. The population is constant. What is the e..
What are efficiency, producer surplus, worker surplus, and total gains from trade? Why would we expect regional wage levels to converge? What happens to total gains from trade as regional wages converge? How do payroll taxes affect labor markets (i.e..
What kept China from breaking up into separate nations?
On Friday, August 5, 2011, the rating agency Standard and Poor's downgraded the U.S, from AAA to AA+. However, the other major rating agencies -- Moody's and Fitch -- retained the AAA status for the U.S.
Why is Medicare insulated from recessions?
The university is seeking a grants to cover capital cost. How big of a grant would make this project worthwhile (to the university)?
Can you tell me illustrate what does the quote print allows you to hold another's mind in your hands by James burke
What would this event cause the demand for the dollar to increase or decrease relative to the demand for the pound.
Can a for-profit business engaged in maximizing profits also be an ethical business? If so, why or why not? Include discussion of at least 1 ethical theory, refer to a least 2 materials assigned in Theme 2, and give at least 1 specific example to cla..
propose to model his tastes in the following way: For any 2 bundles A and B of "grams of cocaine" and "dollars of other consumption.
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