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What will the consumer do to arrive at a new equilibrium

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Reference no: EM13122005

1. All-you-can-eat restaurants allow customers to eat as much as they want for a fixed price. These types of restaurants must make money or they would not remain in business. How can they earn profits when people can always eat more which would increase the restaurant's costs as they eat more? What principle are the restaurants relying on? How does this work?

2. For which types of business organization is unlimited liability going to apply to - a sole proprietorship, a partnership or a corporation? Now explain out of those business organizations, for which one will unlimited liability be the greatest problem for? Why?

3. Suppose a consumer is at an optimum, consuming 6 hamburgers a week at a price of $1.50 each and 10 donuts a week at 50 cents a donut. If the price of a hamburger increases to $2.00, what will the consumer do to arrive at a new equilibrium? Why?

4. You expect to receive a payment of $200 one year from now.Your discount rate is 5%. What is the present value of the payment to be received ?Suppose that your discount rate rises to 6%. What is the presentvalue of the payment to be received?

Reference no: EM13122005

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