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$100,000
probs
Risky project
0.5
safe project
0.9
CHINA
PLANES
COMPUTERS
100
2000
USA
PLANES
COMPUTERS
120
5000
FOR CHINA
20
FOR USA
41.6666666667
40
20 computers
800
5840
USA
PLANES
48
42*48
2016
7064
China
opp cost on specialisation
original
20*100
total
2000
2000
4000
USA
opp cost on specialisation
original
TOTAL
42*120
5040
5000
10040
omputers
Slaughtering the cows will result in an increase in the supply of beef to the market,
which will in turn lead to a decrease in the equilibrium price of beef and an increase in the equilibrium
2
. Chicken and beef are substitute goods
As the price of beef decreases, consumers will buy more beef and less chicken. The demand for chick
3
As it happens, the slaughter of beef cattle has coincided with a decrease in consumers' income.
Assuming that steak is a normal good while hamburgers are an inferior good, use a supply-and-deman
diagram for either market to illustrate the combined effect of the two aforementioned events on the e
soln
Hamburgers: S increases,
n. The demand for chicken will decrease, causing a decrease in the equilibrium price and quantity of chicken
onsumers' income.
use a supply-and-demand
entioned events on the equilibrium price and quantity of hamburgers and steak.
nd quantity of chicken
initial
$100,000
payback
$200,000
interest
10%
Present value
$100,000*(1/1.1^-3)
$75,131.48
$82,644.63
$75,131.48
Q^d= 1000- 2p
800
Qs=0.5p-10000
Qd=90000-1.5p
Equlibrium price and quantity will be;
0.5p-10000 = 90000-1.5p
2.0p=100000
p=50000
Computing consumer surplus
Qs= 0.5(50000)-10000
15000
15000
-6750
Qd=90000-1.5(6500)
80250
3000
-3750
(6000+)90000-1.5P
108000000
dreadweight loss
90000-1.5(56000)
-75000
Budget line
10 B
0.5
$2A+$1B = $20
A=10-B/2
A
10
20
Opportunity cost of banana and apples
Banana
20/10
apples
(10/20)
2
0.2
10
(10/10)
apples
(10/10)