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Eco 2023: Micro Homework #13 Paige     1

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Eco 2023: Micro

Homework #13

Paige

 

 

1.   Using the table, how many units of land, labor, and capital would you hire?             
    

 

 

2.  The marginal revenue product curve is equivalent to the _______ curve for the input.                

 

 

 

 

3.  To a firm that is a small player in its factor market the supply of the factor is:             

 

 

4.   Firm A has a 60% chance of success with a $70,000 average profit.  Firm B has a 50% chance of success with an $80,000 average profit.  Find the expected value for each.   

 

 

5.   A farmer uses a piece of land with the following accounting costs to grow a crop worth $1800.  If a normal rate of return is $100 on such an investment, what will the value of the land be for use during this time period?                                                                                              

 

$150 for seed               $100 for fertilizer                     $80 for herbicides

$20 for water               $150 for labor                         $600 for equipment

$100 for fuel                 $200 for taxes

 

 

 

6.  Suppose that you have a chance to buy some new computer equipment and software that will add to your future profits.  It will take a year to have the package designed to your needs, installed, tested and your personnel trained to use it.  After that, it will add to your profits for the following 5 years until you expect to change your hardware over again.  The project is expected to make you:

 

Year	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6
Increase in Profits	0.00	1,000,000	2,000,000	2,000,000	1,000,000	1,000,000
Present Value

 

 

Notice that the project will increase your profits a total of $7 million dollars, BUT that benefit is spread over a 6 year period while the cost is paid now.  Find the present value for each year if the interest rate is 6% and then add them together for the total present value of future revenue. 

 

 

If the price of the software is $5 million is it profitable to buy the software?                    

 

 

 

 

 

7.  What is the future value in 10 years of $1 million if the interest rate is 4%?