Question
a.Compare the following methods to evaluate a project: present value criterion, internal rate of return, and benefit-cost ratio. Which is preferred? Why? b.Suppose the demand
a.Compare the following methods to evaluate a project: present value criterion, internal rate of return, and benefit-cost ratio. Which is preferred? Why?
b.Suppose the demand in a certain city for low-cost housing can be characterized by the equationP= 500 2Q, whereQis housing measured in square feet. Further, suppose that supply is characterized by the equationP= 25 + 3Q.
i.How much consumer surplus is there?
ii.Suppose that a grant is given so that the supply of housing is increased. This increase changes the supply curve toP= 3Q. How much does consumer surplus change because of the grant?
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