1. A firm will have constant profits of $10,000 per year at the end of each year
ID: 1197115 • Letter: 1
Question
1. A firm will have constant profits of $10,000 per year at the end of each year for the next two years and zero profits thereafter. If the interest rate is 6%, what is the value of the firm?
ANSWER: $18,333
2. "Colombia, Brazil Advance Proposal to Withhold 10 Percent of Export Output" (Wall Street Journal, September 23, 1991, p. B6). A Colombian delegate to the International Coffee Organization said that if all its members withheld 10 percent of export output, the international price would rise 20 percent. This statement implies the own price elasticity of demand for coffee is approximately
ANSWER: 0.50
3. If output is produced according to Q = 4l + 6k, (l is the quantity of L and k is the quantity of K) the price of K is $12, and the price of L is $6, then the cost minimizing combination of K and L capable of producing 60 units of output is
ANSWER: l=15 and k=0
I already know the answers to these questions but can someone please explain to me how to get the answer? step by step please!
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1. A firm will have constant profits of $10,000 per year at the end of each year
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