Economics of Enterprise Answers

Near new car is expected to earn an economic profit of $20,000 each year for the next years. the discount rate is 10 percent. Assume profits are received at the end of the year.
1. what is the present value of the firm?
2. how is that present value affected if a 15 percent discount rate is used?

A report on demographic structure of neighborhood.

Mr mohamed's budget line relating to goods X and goods Y has intercepts of 50 units of goods X and 20 units of goods Y. If goods X is dollar 12

a. what is mohamed level of income
b.the price of goods Y
c. the slope of the budget line

Demand for a softback managerial economics texr is given by Q=20,000-300R
The book is initially priced at $30
a. Compute the point price elasticity at demand at P=$30
b. If the objective is to increase total revenue should the price be increased or decreased? Explain
c. Compute the are price elasticity for a price decrease from $30 to $20
d. Compute the are price elasticity for a price decrease from $20 to $15

For each of the following equations, determine whether demand is elastic, inelastic, or unitary at given price
a. Q=100 - 4P and O=$20
b. Q=1500 - 20P and P=$5
c. P=50 - 0.1Q and P=$20

A manager believes that the demand for her product is given by the equation P=50-Q/100.
a. What is the are elasticity of demand as price decreases from $12 to $10?
b. What is the are elasticity of demand as price increases from $10 to $12?

The demand for shirts produced by a canadian manufacturer has been estimated to be P=30-Q/200
a. Compute the point elasticity at P=$10; at P=$15
b. How does the point elasticity vary with the price?

Economists assume that the goal of a firm is to maximize profits. How the firm achieves this goal?

It is estimated that the annual after-tax profits of the Microwave Corporatior will be $500,000 per year for each of the next 30 years. Given a discount rate of 14 percent, what is the value of this firm?

A couple borrows $10,000 to buy a car. The loan agreement specifies that monthly payments are to be made for four years. The annul interest rate is 12 percent. Determine the monthly payment.