In a competitive market, the market demand is Qd = 60 – 6P and the market supply is Qs = 4P. The full economic price under a price ceiling of $3 is
  • 8
In a competitive market, the market demand is Qd = 60 – 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a
  • shortage of 30 units.
Maximizing the lifetime value of the firm is equivalent to maximizing the firm’s current profits if the
  • Interest rate is larger than the growth rate in profits and both are constant
Property owners move scarce resources towards the production of goods most valued by society because
  • Consumers demand inexpensive goods and services
If the interest rate is 5% and cash flows are $3,000 at the end of year one and $5,000 at the end of year two, then the present value of these cash flows is
  • $7,392.29
“Our marginal revenue is greater than our marginal cost at the current production level.” This statement indicates that the firm
  • Should increase the quantity produced to increase profits
Generally when calculating profits as total revenue minus total costs, accounting profits are larger than economic profits because economists take into account
  • Both explicit and implicit costs
Marginal benefit refers to:
  • The additional benefits that arise by using an additional unit of the managerial control variables
Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:
  • Less than the interest rate
Suppose the growth rate of the firm’s profit is 5%, the interest rate is 6%, and the current profits of the firm are 100 million dollars. What is the value of the firm?
  • $10,600 million