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3. Xander Harris is considering whether to buy a corn and soybean farm in Iowa. The farm will cost $800,000, and Xander will be able to pay this from profits his recently deceased mother made on the stock market and willed to him. He estimates that if he does not run the farm, and keeps his current job as an economic forecaster, he will be able to earn $40,000 a year. The prevailing interest rate is 9 percent. Xander's only motive is to maximize his income. a) Should he buy the farm, and become a farmer from an accounting viewpoint if his accountant tells him the annual profit from the farm is likely to be: i) $160,000? ii) $100,000? iii) $50,000? b) Since he is currently an economist, Xander decides to recalculate the profit figures in a) according to the logic used by economists rather than accountants. What profit figures does he come up with? Do these new figures cause him to change his mind about becoming a farmer?
The question is that if two firms in the Cornout market merge into one firm, what would the merger result in? how much of marginal cost would prevail in the market, etc are answered in a detailed in manner in the solution.
ABC Company would like to purchase a particular item from a potential supplier. ABC does not know the supplier's specific cost structure for producing this item, but hope to estimate the cost using some information gathered from the supplier. ..
Suppose that you are the only seller of paper in the market, and you know that John already has a printer, how much will you charge him for the (100 units of) paper?
Examine the extent of internal rivalry, entry, substitutes, buyer power, and supplier power within your industry, indicating whether each of these forces represents a high, medium, or low threat to profits.
Five annual deposits in the amounts of ($1,200, $1,000, $800, $600, and $400) are made into a fund that pays interest at a rate of 9% compounded annually.
Which is the considered a cause of inflation. Producers raise prices to meet higher costs,There is not enough money in the economy or else.
Describe the concept of the law of "diminishing returns" and why does it take place only in short run? Differentiate between "the long run return to scale" and "economies of scale."
Briefly explain whether each of the following is primarily a microeconomic issue or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold
Identify the firm"s supply curve on your graph. d. At what price would the firm supply exactly 6 units of output
What is the optimal distribution of income if the social welfare function is additive?
Residents of a town take turns driving a water truck to a fire hydrant in a nearby town. They fill the truck with water and then haul it to a storage tank. Last year truck fuel and maintenance cost $3180.
Some firms will lobby their legislative bodies to impose barriers to entry. Can anyone think of groups or firms that do this?
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