economics for managers

1. Kirsten has spent $1500 purchasing and repairing an old boat which she expects to sell for $1800 once the repairs are complete. Kirsten discovers that, in addition to the $1500 he has already spent, she needs to make an additional repair, which will cost another $600, in order to make the boat worth $1800 to potential buyers. However, she can sell the boat as it is now to a second buyer for $1300. What should she do? 2. Suppose you are scheduled to work at your job for 4 hours Friday night, where you make $20.00 per hour. However, once Friday arrives you decide to "call in sick" so you can go to the movies with your friends for those 4 hours. At the movies, you spend $15 on a ticket and $25 on refreshments. How much did the night at the movies cost you? 3. Kevin's favorite uncle left him a baseball card collection in his will. Not being a fan, Kevin auctions them off to some buyer on an Internet website. Since nothing was "created," how could this transaction have created value/wealth? 4. The Indian government constructs houses for the homeless in order to move them out of the slums. As soon as these houses are constructed, the homeless turn around and rent them out, and immediately move to another slum -- an unintended consequence. Given what you know about incentives and opportunity costs, how could the policy have gone wrong? 5. What is an opportunity cost? Give me an example from your own life or experience 6. Jacob manages a cloth manufacturing firm. He is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firm's current fixed costs are $19,000 and current marginal costs are $15, The firm currently charges $18 per unit. If the interest rate is 8% then what is the net present value of the associated cash flows? Show your calculation clearly. 7. Jobu is thinking about borrowing $10,000 from Mike. He promises Mike cash flows (a stream of payments) of $5000 for the next three years. If Jobu's cost of capital is 15%, what is the Net Present Value of the investment for Mike? Show your calculation clearly. 8. One common economic measure that captures "value-created" is gross domestic product (GDP -- also called output) and another is price level, For this problem, you will create plots of GDP and prices over time and explore changes using a simple growth rate formula. a) Navigate to the FRED St. Louis site: https:/fred stlouisfed. org/. Search for Real Gross Domestic Product. Click the first option: Billions of Chained 2012 Dollars, Quarterly, Seasonally Adjusted Annual Rate Q1 1947 to Q3 2020 (Dec 22). Explore the controls of the plot. Take a screenshot of the plot and paste it into your solutions. These interactive plots are a terrific resource for your group projects. b) A simple growth rate captures the rate of change in perc