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You inherit a phosphate mining company and are now in charge of production decisions. You only have two years to extract all of the phosphate because in three years from now, an environmental regulation will go into effect banning mining in that area. There are 300 tons of phosphate to mine. The marginal benefit (marginal revenue) from selling phosphate (which is used in fertilizers) is: MB = 200 - Q and is the same for both periods. The Marginal Extraction Cost is zero and you face a discount rate of 10%. a. Consider year one. When your marginal benefit = 0, how much are your sales of phosphate (Q)? if you do not sell any phosphate, how much is your marginal benefit? if you sell all 300 tons of phosphate, how much is your marginal benefit? [NOTE: there is no “economics” here – this is just plugging in numbers to help you make a graph in the next question] b. The answers to part (a), combined with the fact that MEC = 0, should enable you to graph out the Net Marginal Benefit curve for year one (NMB1). c. Knowing that the NMB is the same for year two (NMB2), graph NMB2 on the same graph as NMB1. d. Discount your curve for NMB2, to get PV(NMB2), and plot that line on the graph as well. e. What is the optimal amount of phosphate to sell in the first year and the second year? Recall that the total amount of phosphate available is 300 tons. Show all of your work and label these amounts on your graph. f. If the discount rate rises, what do you think will happen to your answers in part (c)? (you do not need to use actual numbers, but talk about what happens when discount rates rise)
Think about the demand for the three popular game consoles: XBox, PS3, and Wii. In each of the scenarios below, briefly describe the effect on (a) the demand for XBox games and (b) the quantity of XBox games demanded
Question 1 Why would perfectly competitive industries advertise even though individual firms do not? Question 2 We could state correctly that the minimum characteristic necessary to distinguish among pricemaking firms is:
Many national brands are supplying products to be sold by retailers under the retailer’s own private label. For example, Purina, Borden, Heinz – have all admitted to supplying products (sometimes lower in quality) – to be sold under the retailers’ ow..
Write a response paper about the following discussion. I would have to say consumption. According to the BEA, there was a 2.4% increase in real GDP from 2014 to 2015.
Economists argue that the move from barter to money increased trade and production. How is this possible.
How much money would be accumulated in 10 years for a deposit of $10,000 made at the end-of-year zero if the account earned interest at 6% per year for the first three years, 9% per year for the next four years, and 7% per year for the last three yea..
Negotiable instruments are transferred every business day of the year. Make a checklist for the potential buyer or holder of a negotiable instrument. Remember they are going to give something of value in return for this document and they don't want t..
Suppose now the price of a cell phone minute falls to $.50 per minute. Show how this will change the budget line.
Suppose in the United States, one worker can produce 10 tons of steel per day or 20 tons of chemicals per day. In the United Kingdom, one worker can produce 5 tons of steel per day or 15 tons of chemicals per day. Find the opportunity cost of both go..
Sometimes, a bidder on a work contract may bid lower than what would maximize his/her profit from the contract and the reason for that is to create goodwill. How would you value the goodwill that is obtained in this way?
Describe the common allegation that when all firms in an industry are charging the same price, this indicates the absence of competition and the presence of someform of price-setting agreement
When the accounting profit equals the implicit costs, the firm earns
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