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Question
Scenario 5.3:Wanting to invest in the computer games industry, you select Whizbo, Yowzo and Zowiebo as the three best firms. Over the past 10 years, the three firms have had good years and bad years. The following table shows their performance:
| Company | Good Year Revenue | Bad Year Revenue | Number of Good Years |
| Whizbo | $8 million | $6 million | 8 |
| Yowzo | $10 million | $4 million | 4 |
| Zowiebo | $30 million | $1 million | 1 |
Refer to Scenario 5.3. The expected revenue from all three companies combined is
A) $11 million
B) $17.9 million.
C) $25.5 million.
D) $29.5 million.
E) $48 million.
Answer
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Related questions
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Q:
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For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:
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Q:
If the inflation rate falls and nominal interest rates are unchanged,
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If an individual has $10,000 in a savings account paying 3% and the inflation rate is 2%, the nominal interest rate is
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Q:
The real interest rate is
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Q:
The first term in an NPV calculation is usually
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C) zero, because interest charges do not accrue until the second period.
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Q:
The "NPV Criterion" is that a firm should invest in a new capital project if
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Q:
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Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers, and both groups of workers initially earn the perfectly competitive wage. What happens to the equilibrium employment level and wage for non-union workers if the union exercises its bargaining power?
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Suppose a labor market has perfectly inelastic supply that is composed of union and non-union workers, and both groups of workers initially earn the perfectly competitive wage. What happens to the equilibrium employment level and wage for union workers if the union exercises its bargaining power?
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D) Both decline.
Q:
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B) the United Auto Workers union in the market for auto worker services.
C) OPEC in the market for crude oil.
D) all of the above
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Who does NOT earn economic rent in a competitive factor market?
A) No one
B) Everyone
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E) Only owners of physical properties earn economic rents
Q:
Scenario 14.4:
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TP = 100L - 0.125L2 MP = 100 - 0.25L
where L is the amount of labor employed. The supply curve for labor and the marginal expenditure curve for labor are given as follows:
L = PL -5 MEL = 2L + 5
Refer to Scenario 14.4. Suppose that a tax is imposed on each unit of the product that John produces. Which curve will shift?
A) Marginal product of labor
B) Marginal revenue product of labor
C) The supply of labor
D) All of the above will shift due to the tax on output.
Q:
In a competitive labor market, the supply of labor curve is expressed as:AE = $5 + 0.0025L,where AE represents the average expenditure ($/unit) and L represents units of labor hired per unit of time. The demand for labor is based on the following expression:MP = 5 - 0.001L,where MP represents marginal product of labor. Revenue from the final good is $5 per unit sold in a competitive market.a. Determine the equilibrium wage rate and labor employment rate.b. Compute the economic rent earned by labor.
Q:
Suppose the supply and demand of land for natural gas extraction are imperfectly elastic. Given that coal is a potential substitute for natural gas in energy applications, a change in the price of coal may shift the demand curve for natural gas. What happens to the economic rents assigned to land on which natural gas is extracted if the price of coal declines?
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B) Rents are positive and remain unchanged
C) Rents decrease
D) Rents are zero before and after the change
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Under an upward sloping supply curve for land, the economic rents to land ________ as the demand for land shifts rightward.
A) decrease
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D) We do not have enough information to answer this question.
Q:
Which of the following is NOT true about the supply of labor to the firm in a competitive labor market?
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Use the following statements to answer this question:
I. Under profit maximization, the quantity of labor used in production is optimal if MR = w/MPL.
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A) I and II are true.
B) I is true and II is false.
C) II is true and I is false.
D) I and II are false.
Q:
Scenario 14.3:Suppose that a firm's demand curve for its product is as follows: Output Price of the Good 25 9 40 8 54 7 67 6 79 5 90 4Also suppose that labor is the only variable input of production, and that the total product of labor is: Amount of Total Output Labor 2 25 3 40 4 54 5 67 6 79 7 90Refer to Scenario 14.3. What is the marginal profit from hiring the third unit of labor?A) 30B) 65C) 85D) 225E) none of the above
Q:
Scenario 14.3:Suppose that a firm's demand curve for its product is as follows: Output Price of the Good 25 9 40 8 54 7 67 6 79 5 90 4Also suppose that labor is the only variable input of production, and that the total product of labor is: Amount of Total Output Labor 2 25 3 40 4 54 5 67 6 79 7 90Given the data in Scenario 14.3, how much labor should the firm employ if labor costs $30 a unit?A) 3 units of laborB) 4 units of laborC) 5 units of laborD) 6 units of laborE) 7 units of labor
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An increase in technology that enhances labor productivity will likely result in:
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B) an increase in labor employment and an increase in the wage rate.
C) a decrease in labor employment and a decrease in the wage rate.
D) an increase in labor employment and a decrease in the wage rate.
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Q:
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If leisure is a normal good, then the income effect of a decrease in wage will
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C) decrease the number of leisure hours.
D) increase the sum of leisure plus hours worked.
Q:
The marginal revenue product can be expressed as the
A) additional revenue received from selling one more unit of product.
B) increment to revenue received from one additional unit of input hired.
C) marginal physical product of an input times the average revenue received from the sale of the product.
D) average physical product of the input times the marginal revenue received from the sale of the final product.