What is the maximum amount you would pay for an asset that generates an income of $250,000 at the end of each of five years if the opportunity cost of using funds is 8%?
ECO500
Using the graph below, develop a three- to four-page response in APA format using the following three-question prompt: (also include 6 APA formatted references)
Question 1 What is the maximum amount you would pay for an asset that generates an income of $250,000 at the end of each of five years if the opportunity cost of using funds is 8%?
Question 2 Suppose the supply function for product X is given by Qxs = ??30 + 2Px ?? 4Pz.
How much of product X is produced when Px = $600 and Pz = $60?
How much of product X is produced when Px = $80 and Pz = $60? Suppose Pz = $60.
Determine the supply function and inverse supply function for good X. Graph the inverse supply function.
Question 3 Suppose the own price elasticity of demand for a good X is ??5, its income elasticity is ??1, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3. Determine how much the consumption of this good will change if:
The price of good X decreases by 6%.
The price of good Y increases by 7%.
Advertising decreases by 2%.
Income increases by 3%.
Question 4 A consumer is in equilibrium at point A in the accompanying figure. The price of good X is $5.
What is the price of good Y?
What is the consumers income?
At point A, how many units of good X does the consumer purchase?
Suppose the budget line changes so that the consumer achieves a new equilibrium at point
B. What change in the economic environment led to this new equilibrium? Is the consumer positively or negatively affected by the price change?
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