Question

Question 1)

A company is considering expanding their production capabilities with a new machine that costs $47,000 and has a projected lifespan of 10 years. They estimate the increased production will provide a constant $5,000 per year of additional income. Money can earn 0.6% per year, compounded continuously. Should the company buy the machine?

Question 2)

Find the accumulated present value of an investment over a 6 year period if there is a continuous money flow of $5,000 per year and the interest rate is 0.7% compounded continuously.

Question 3)

Given: (x is number of items)
Demand function: d(x)=420.5−0.3x2d(x)=420.5-0.3x2
Supply function: s(x)=0.2x2s(x)=0.2x2

Find the equilibrium quantity:    

Find the producers surplus at the equilibrium quantity

Question 4)

Given: (x is number of items)
Demand function: d(x)=583.2−0.5x2d(x)=583.2-0.5x2
Supply function: s(x)=0.3x2s(x)=0.3x2

Find the equilibrium quantity:    

Find the consumers surplus at the equilibrium quantity:

Question 5)

Given: (x is number of items)
Demand function: d(x)=300−0.6xd(x)=300-0.6x
Supply function: s(x)=0.2xs(x)=0.2x

Find the equilibrium quantity:    

Find the producers surplus at the equilibrium quantity:

Answer 1