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:

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%?