Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 15, Problem 4P
(a)
To determine
(b)
To determine
Highest interest rate at which an individual will be willing to purchase the machine.
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Jane quit her job at IBM where she earned $50,000 a year. She cashed in $50,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Lincoln and Omaha. There are 1000 people who will pay $400 a year each for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation, etc. What are Jane's total revenue? A. $600,000 B. $250,000 C. $400,000 D. $480
Eduardo has $7,000 in savings. His bank pays 6% interest per year on savings. He withdraws all of his savings to purchase a machine for his business. At the end of the
year, he can resell the machine for $1,000. Based on this information, what are Eduardo's economic costs for the year, in dollars? Enter a number only, no $ sign.
The Rosebud Motel is a must-stay for any road-tripper or weary traveler. The motel fils each of its 24 rooms for 200 nights each during the year. Annual fixed costs total $160,000. The variable cost
of one night's stay is $100. The motel owners expect a 50% return on the company's $500,000 of assets each year.
The Rosebud Motel is currently the only place to stay for 50 miles.
What should Rosebud's cost-plus price be if sales volume and costs are expected to stay consistent?
OA. $133.33
OB. $185.42
OC. $2,150.00
OD. $152.08
OE. The Rosebud Motel would not set its price as it is a price-taker in this market.
Chapter 15 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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