The private marginal cost of throwing a party in the San Francisco is $500.
The demand for parties in SF is characterized by P = 2500 – 50*Q, where Q is the number of parties held per semester.
Each party produces 150 decibels of noise, and each decibel generates $10 worth of pain and suffering among village residents.
A) What is the efficient number of parties provided?
B) The village taxes party hosts $10 for each decibel generated. Hosts respond by adding soundproofing equipment to their facilities so that each party produces only 50 decibels of noise. What is the new equilibrium number of parties provided?
C) The equilibrium quantity found in Part B is (Click to select) impossible to calculate inefficiently, high inefficiently, low efficient .
D) A pigouvian tax on parties would have led to an equilibrium quantity (Click to select) greater than, the same as, that is impossible to compare to, smaller than, the quantity resulting from the tax described in Part B
In: Economics
It is not uncommon to hear people say that because debt has a lower cost of capital than equity, a firm can reduce its overall WACC by increasing the amount of debt financing. If this strategy works, shouldn’t a firm take on as much debt as possible, at least as long as the debt is not risky? Explain your answer using M&M Proposition II
In: Finance
The total fixed cost is $60 per month. (a) If the price per visit is $60, at what level of visits will the maximum profit position be? (b) What are the profits at this level?(c) What is the quantity supplied? (d) If the total fixed cost increases to $80 and the price per visit is $60, what is the quantity supplied (assuming maximizing profits)?
quantity per visits supplied:1,2,3,4,5,6,
total variable cost: 20,50,90,140,210,290
In: Economics
| Cori's Meats is looking at a new sausage system with an installed cost of $520,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $78,000. The sausage system will save the firm $200,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $37,000. If the tax rate is 23 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
In: Finance
The marginal benefit of an additional beach towel is $10. The marginal cost of producing an additional beach towel is $10. If producers are not minimizing the average costs of production, then we can conclude:
beach towel production is neither allocatively nor productively efficient.
beach towel production is allocatively efficient but not productively efficient.
beach towel production is not allocatively efficient but is productively efficient.
beach towel production is both allocatively and productively efficient.
In: Economics
What effect does the increase of the price of gasoline have on the cost curves of package delivery firms such as Federal Express or United Parcel Service? Which cost curves will this price change impact and in what direction will they shift? For an extra point draw the original curves and indicate the shift.
In: Economics
Which of the following statements is correct for a given company?
a.The cost of equity is greater than the cost of debt.
b.The WACC is greater than the cost of equity.
c.The cost of retained earnings exceeds the cost of new common
stock.
d.The WACC is not affected by taxes.
In: Economics
Use the values in the table below to answer the following questions.
Q | TC | ATC | MC |
2 | |||
5 | -( A)- | ||
6 | -( B)- | -( C)- | |
19 | |||
20 | -( E)- | -( D)- |
Cell (A) stands for the total cost of 5 units. Its value should be
____.
| A. | ||
| B. | ||
| C. | ||
| D. |
In: Economics
In this module we learned that, despite increases in the cost, the value of higher education has increased over time. How can college be made more affordable? Revenues earned by colleges and universities come from three main sources: Tuition and fees paid by students, which have increased faster than the cost of living. Support from governments at the federal, state and local levels. This support is paid for through tax revenues. Even private colleges and universities obtain funding from the government, but government support has declined at all levels in recent years. Alumni contributions. What has caused the cost of college to increase so much? (Not every college has a fancy gym or an Olympic sized pool with a lazy river.) What features of your college education would you be willing to do without to make college more affordable? What do you propose should be done to make higher education more affordable? What reasons can you provide to support your argument? (200 words minimum)
In: Economics
Explain the concept of opportunity cost and the Law of Diminishing Returns. How are they related? Why economists use the concept of opportunity cost when they want to determine cost rather than the traditional view of cost, i.e., cost out of pocket? Illustrate with an original and relevant example these concepts and how they are related.
In: Economics