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Homework answers / question archive / 1)Using the table, how many units of land, labor, and capital would you hire? 2

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 |

7. 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.

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

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

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