4. Suppose that there is a tax 7 on the sales of the firm, so that the firm only gets (1-7) times the quantity produced. The benefit of operating the capital stock for one period is now (1-7)-MPK. Use a variational argument as discussed in class to "derive" the new optimality condition of the firm which determines the target capital stock. Show graphically how an increase in the tax on capital will affect the optimal capital stock and hence investment.

4. Suppose that there is a tax 7 on the sales of the firm, so that the firm only gets (1-7) times the quantity produced. The benefit of operating the capital stock for one period is now (1-7)-MPK. Use a variational argument as discussed in class to "derive" the new optimality condition of the firm which determines the target capital stock. Show graphically how an increase in the tax on capital will affect the optimal capital stock and hence investment.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 10CQ

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u.om/mod/quiz/attempt.php?attempt3D1579003&cmid%=812962&page%3D19 System (Academit oles of Microeconomics Spring20 fall20 Price MC ATC of P2 P3 stion Q, Q2 Q3 Quantity/time MR Refer to the above figure. Economic profits for this firm are Select one: O a. undetermined without more information. O b. zero. C. positive. O d. negative. pe here to search hp
Refer question 1 and answer both the questios Question 1 Afrm raises capital to invest in a business project. The marginal revenue fromthe first 5 units of capital is: 1st unit has MR $1.64, 2nd unit has MR 1.41, 3rdunit has MR 1.30, 4th unit has MR 1.23, and 5th unit has MR 1.18. If the interestrate is 26%, what is the optimal amount of capital for this firm to borrow?O. 2O. 3O. 4O .5 Question 2 Consider the MR figures in Problem 1. If this firm borrows exactly 5 units ofcapital, what is the firm's total revenue?O. 6.05O. 6.76O. 6.89O. 7.14
Kindly assist on question 1 and 2 1The difference between zero accounting profit and zero economic profit is that. a) an economic profit of zero indicates a fair return because it includes the opportunity cost of a firms capital. b) an economic profit zero indicates unacceptable rate of return because it does not include the opportunity cost of a firms capital. c) an economic profit of zero indicates more than a fair return because it includes opportunity cost and explicit cost. d) an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firms capital. 2.If a corporation is sued and losses the lawsuit, it's liability to pay. a) is imposed on all stockholders, personally b) is imposed only on the corporate CEO and the board of directors. C) its limited to the assets held in the corporations name. d) is imposed on the bondholders of the corporation
As an international manager of a US business that has just developed, I would export the computer from the US because I will have full control of how the computer will be manufactured and distributed to Europe. Another pro that I would consider to export from the US is that the patent would be able to protect the design of the computer, which will reduce the result of the property being an infringement. A con from exporting from the United States that it would cost more money from the taxes, duties, and the trade barriers that are from Western Europe. Another con would be that it would take much longer to exist something from over seas. First, I will start with the cons of the process where you might not have full control over the manufacturing process, which can really impact the product of the computer. This can significantly be a bad idea. A pro of having to license a European firm to manufacture and market the computer in Europe would be how they know all of the distribution…
32.23 Millie Bush has written a best-seller. Revenues net of production costs are $3007¹/34¹/3 where T is the number of publicity trips Millie takes and A is the number of ads for the book that appear. Millie has to pay for all of her own publicity trips, which cost $100 each. Her publisher pays for the advertising, which costs $100 per ad. Revenues from the book are split equally between Millie and her publisher. Let T1 be the number of trips that Millie would choose to make in a Nash equilibrium where she chooses the number of trips and the publisher chooses the amount of advertising. Let T2 be the number of trips that Millie should make if trips and advertising are determined so as to maximize total profits net of trip and ad costs. (a) T1 = 1 and 72 = 1. (b) T1 = 1 and 72 = 2. (c) T1 = 2 amd T2 = 1. (d) T1 = 1 and T2 = 1/8. (e) T1 1/8 and T2 = 1.
O e none of the mentioned CLEAR MY CHOICE ion Economic profits differ from accounting profits because O a all of the mentioned O b. the former is calculated by economists and the latter by accountants out of Oc most firms report economic profits once a year and accounting profits every pay period O d. none of the mentioned Oe many firms own their own capital so accounting profits do not factor this cost P Type here to search %23 1 2 4 & 7 Q E T A S. C V } BY Alt (5 מ א LL 11
Rashid is studying Masters Degree in Sultan Qaboos University, Muscat. His research topic is "The effect of capital structure on the profitability of the selected manufacturing companies in the Sultanate of Oman". From the following research methods, suggest a suitable method to Rashid for conducting his research? O a. Experimental method O b. Survey method O c Case study method O d. Archival method
1. Imagine yourself to be the owner of a large tract of agricultural land. You want the land to beproductive but then you have no idea how to farm. A landless farmer approached you, anddiscussed with you the possibilities of him tilling your farm. What kind of economic/financialarrangement do you think would be appropriate so that both of you benefits from the relations?Possible arrangements include:A. Employment of the farmer to be paid a fixed monthly wageB. Proportionate sharing of costs and profitC.Landowner bears all costs of farming implements and gets a bigger share of the profitsD. Other options.Please elaborate your answer
1. Suppose Firm A has a budget of P1.5 million pesos in outsourcinginputs, labor and machines, that would lend support in its 1 yearoperation. Suppose further that the cost of labor for 1 year is P150,000and for a machine is P200,000. If it decides to hire 6 laborers, howmany machines would it accept?
. Assume the coal resource is in fixed supply and its stock is 15 units of coal. Assume 2 periods of extraction: present and future and a discount rate of r = 10%. The demand function is given by MB = 10 - 0.5q and the supply function is given by a fixed MC cost of extraction MC = $5/unit of coal. a) What is the optimal extraction rate in a static setup of the problem? Show numerically. Why cannot it be applied to this resource? b) What is the optimal extraction rate each period in a dynamic setup of the problem? Show numerically. c) What are the prices and MUC-marginal user costs each period? Show numerically. d) What are the total net benefits obtained if the extraction rate equals the dynamic efficient rate? Show numerically.
1. Assume you must choose between two mutually exclusive alternatives: A or B. The explicit benefit you receive from alternative A, bª, is equal to $100. And, the explicit cost of choosing alternative A, c*, is $80. Also, the explicit benefit to choosing alternative B, b", is $120. What is the accounting return for choosing alternative A, r^? Given r and b", what is the explicit cost that you are willingness to pay (WTP) for alternative B, WTP"? Please include the formulas from class in your answer. How would WTPB change ifr^ increased by $5? Explain. your Using the original set of values for explicit costs and benefits, what would be your economic return to choosing alternative How does this relate to the concept of consumer surplus? if the price that you were charged was $95? Please interpret.
Exercise Assume the yield of maize and wheat are given below with its selling price of birr 7 and 10 per quintal respectively. If only 10 units of inputs with a Price of 40 Birr per unit were used. Then: 1. A. What is the profit maximizing combination of output ? В. what is the maximum profit? of Yield wheat (Y2) of Return from Return from TR Yield TC Profit Maize (Y1) maize wheat 78 780 780 400 380 10 76 70 760 830 400 430 20 72 140 720 860 400 460 30 67 210 670 880 400 480 40 60 280 600 880 400 480 50 48 350 480 830 400 430 60 28 420 280 700 400 300 70 490 490 400 90