Why are competitive advantages never permanent?

A manufacturer grows oranges which are used to produce orange juice and orange marmalade. One orange gives 1 unit of orange juice AND 2 units of marmalade. Assume that the cost function of growing oranges is given by C(q)=0.05 q2 (and assume that there are no further costs of production). Demand for orange juice is given by qJ = 25 – 50 pJ and demand for marmalade is given by qM = 100 – 50 pM where pJ and pM denote the prices for orange juice and marmalade respectively. How many oranges should the manufacturer grow and what prices should she set for marmalade and juice? Assume that disposal is free.

Why might a family choose not to send their child to school?

Consider the country of Freedonia. Let i = 0.05. Groucho, a man living in Freedonia, is trying to figure out if he should take a year of extra education. If he does, Groucho can earn $40 that year(t = 1). The year after that, he can earn $220.

A) What is Groucho’s present value of future payments if he educates himself?

B) Groucho could earn $100 this year if he does not enroll in the education program. If he does enroll, he must do not have to pay any tuition immediately, but for the next year, Groucho must pay $50 per year to the program. What is the present cost of enrolling in the year-long education program?

C) Find the internal rate of return for this extra year of schooling.

D) Will Groucho end up enrolling? Why or why not?