Question

As the manager of We Do It Right Construction, you need to make a decision on...

As the manager of We Do It Right Construction, you need to make a decision on how many homes to build in a new residential area. There is a 20 percent chance of a recession, a 60 percent chance the economy will remain as it is, and a 20 percent chance there will be an economic upturn. If a recession hits, your inverse demand curve for new homes will be P = 100,000 – 4Q. If things remain as they are, your inverse demand curve will be P = 115,000 – 3Q. If economic growth occurs, your inverse demand curve will be P = 130,000 – 2Q. Your cost function in all three scenarios is C(Q) = 70,000 + 2Q + 0.5Q2. If you are risk neutral, how many homes will you start?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
As the manager of We Do It Right Construction, you need to make a decision on...
As the manager of We Do It Right Construction, you need to make a decision on how many homes to build in a new residential area. There is a 20 percent chance of a recession, a 60 percent chance the economy will remain as it is, and a 20 percent chance there will be an economic upturn. If a recession hits, your inverse demand curve for new homes will be P = 100,000 – 4Q. If things remain as they...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer....
Total utility can be objectively measured in numbers that indicate usefulness or benefit to the consumer. ____ 2. Consumers should purchase quantities of a good to the point where MU > P. ____ 3. Voluntary exchange requires that there must be mutual gain. ____ 4. Points along a budget line represent the maximum combinations of two commodities that a consumer can afford. ____ 5. The budget line represents a consumer's preferences for a commodity. ____ 6. A change in consumer...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT