Q: Your insurance firm processes claims through its newer, larger high-
Your insurance firm processes claims through its newer, larger high-tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims, incurs $100,000 in...
See AnswerQ: George’s T-Shirt Shop produces 5,000 custom printed T
George’s T-Shirt Shop produces 5,000 custom printed T-shirts per month. George’s fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is his break-even price? What w...
See AnswerQ: Suppose an initial investment of $100 will return $50/
Suppose an initial investment of $100 will return $50/year for three years (assume the $50 is received each year at the end of the year). Is this a profitable investment if the discount rate is 20%?
See AnswerQ: A firm sells 1,000 units per week. It charges
A firm sells 1,000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65. a. What should the firm do in the short run? Why? b. What should the fir...
See AnswerQ: A good incentive-compensation scheme a. maximizes the agent's
A good incentive-compensation scheme a. maximizes the agent's utility. b. anticipates how an agent will game the scheme. c. does not subject a risk-averse agent to risk. d. accompanies centralized dec...
See AnswerQ: Probably the most important source of capital is human capital. For
Probably the most important source of capital is human capital. For example, most medical doctors spend years learning to practice medicine. Doctors are willing to make large investments in their huma...
See AnswerQ: A university spent $1.8 million to install solar panels
A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. a....
See AnswerQ: Last year, a toy manufacturer introduced a new toy truck that
Last year, a toy manufacturer introduced a new toy truck that was a huge success. The company invested $2.5 million for a plastic injection molding machine (which can be sold for $2.0 million) and $10...
See AnswerQ: In early 2008, you purchased and remodeled a 120-room
In early 2008, you purchased and remodeled a 120-room hotel to handle the increased number of conventions coming to town. By mid-2008, it became apparent that the recession would kill the demand for c...
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