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Question 1:
Define the concept of opportunity cost in your own words. Given an example from your own life of the opportunity cost of a decision (do NOT use classroom examples). Explain why opportunity costs rather than "out of pocket" costs are the appropriate cost measure for social benefit cost analysis.
Question 2:
A foreign company plans to clear several dozen acres of ecologically valuable mangrove swamp in Vietnam for the creation of a shrimp aquaculture facility. This decision will create economic profits of $5000/year to the company (which hires substantial numbers of local villagers) after one year of construction but will cost $10,000 (paid upfront) to build. In addition, the loss of the mangrove habitat will reduce spawning and nursery habitat for valuable fish species - thus reducing the catch of fish by artisanal fishermen from 1000 tons to 750 tons per year (which has a market value, after costs, of $10/ton). Assume that these losses are experienced from the very first (construction) year onward and are permanent.
a. Assume that the discount rate is 5% (r=.05) and the evaluation horizon is 10 years from the present. Please neatly fill the blanks in the table below.
b. What is the net present value of this proposed project? If efficiency was the only objective for making the decision and we have fully accounted for all costs and benefits would you recommend the project go ahead or not?
c. Would the demonstration of a $.50 per family average willingness to pay for the preservation of the mangrove habitat on the part of middle to upper-class families in developed countries change your perception of the efficiency of this project?
Suppose that the government chooses conscription. That is, the government forces the representative consumer to supply a units of time to the government as military service C with a lump-sum tax. Use a diagram to show the effects of conscription o..
What is the opportunity cost of working at the internship and it is unreasonable that companies must pay an average of $15,000 per year to provide health insurance for an employee and their family.
Consider an electricity market with a daytime (peak-period) inverse demand of P=160-Q, and a nighttime (off-peak) inverse demand P=80-Q, where P is the price of electricity and Q is units of electricity.
Question 2: Why is it that a profit-maximizing businessman would always raise prices when facing an inelastic demand curve, but might or might not raise prices when facing an elastic demand curve? Explain and justify your answers in detail.
Suppose that you have to charge a uniform price. That is you post a price and one canbuy as many units as one wishes at that price. What would be your price?
one of the offenders cited in the article is the royal economic societys economic journal which charges about 50 more
What is the approximate p-value of this hypothesis and find the confidence interval for the population mean
A huge number of successful businesses' such as Apple, The Cheesecake Factory, and E-Bay, were built around the personal passions of their founders. Consider your own personal passions. What do you love to do What are you great at doing
curlys life insurance co. is trying to sell you an investment policy that will pay you and your heirs 33000 per year
Suppose that firms in the short-run are earning above-normal profits. Describe what will take place to these profits in long-run for the following markets:
With a high and growing US trade deficit, many hope that a depreciation of the dollar would help close the deficit. Explain the logic behind this prediction.
Assuming an economy is initially at potential output, an expansionary monetary policy will: A) not affect output in the long run. B) not affect output in either the short run or the long run. C) affect output, but only in the long run. D) affect o..
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