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Eva is risk averse. Currently she has $50,000 to invest. She faces the following
choice: she can invest in the stock of a dotcom company, or she can invest in IBM stock. If she
invests in the dot com company, then with probability 0.5 she will lose $30,000, but with
probability 0.5 she will gain $50,000. If she invests in IBM stock, then with probability 0.5 she
will lose only $10,000, but with probability 0.5 she will gain only $30,000. Can you tell w hich
investment she will prefer to make?
You are the manager of a Fortune 500 hotel chain and must decide where to locate a new hotel. Based on tax considerations, your accounting department suggests that Atlantic City is the best choice, followed closely by Las Vegas. In particular, your current-year tax savings from locating in Atlantic City are $4 million but only $3 million in Las Vegas. Your marketing department, on the other hand, has provided you with sales estimates that suggest that the present value of the gross (of taxes) operating profits from locating in Atlantic City are only $10 million but are $14 million for Las Vegas. It will cost $14 million to build the hotel in either location. Ignoring all other considerations, where should you build the hotel? What are your firm's economic profits if you locate the hotel in Atlantic City?
What happens to the equilibrium price and quantity, when demand and supply both changes in equal proportion? (Increase, decrease or constant/uncertain)
When Beza's income is Birr 2000; she purchases 100Kg of a good. When her income increases to Birr 2400, she purchases 120Kg of a good. A) What is her income elasticity? B) What type of good is?
he coefficient of elasticity of supply of a commodity is 4. A seller supplies 40 units of this commodity at a price of birr 20 per unit. What quantity of this commodity will the seller supply when price rises by birr 24 per unit
Differentiate SHAREHOLDER WEALTH MAXIMIZATION from PROFIT MAXIMIZATION and describe why the former is the ultimate goal of financial management.
Cite your sources properly:
An individual firm supply curve for the quantity of Beer supplied in litter per- hour is given by Qs = 60P - 48. There are 5 firms in the Beers industry and the price of Beer is 40 Birr per-litter. Find; A) the quantity of Beer supplied by an individual firm per- hour. B) The quantity of Beer supplied by the industry per- hour
Most countries, including the United States, import substantial amounts of goods and services from other countries. Yet the chapter says that a nation can enjoy a high standard of living only if it can produce a large quantity of goods and services itself. Can you reconcile these two facts?
True/False/Uncertain. Why? (Justify your answer with a short argument.)
Evidence suggests that happiness in rich countries increases with output per person
Evidence suggests that happiness in rich countries increases with output per person
