ECON 20A Exam Solutions Fall 2018: Savings Account, Forego, Potential Output
Document Summary
These problems are useful for preparing for the exam. One problem from here will be chosen, at random, to be turned in during your discussion section. You will have 20 minutes to work on the problem, with help from others and the ta (if you choose): while walking along the ring road you nd a bill lying on the ground. You have must make the following choice: spend the money now, or put the money away for a year into your bank savings account and earn a 2% annual interest rate. What is the opportunity cost of spending the money now: the company that you manage has invested million in developing a new product, but the development is not quite nished. At a recent meeting, your sales people report that the introduction of competing products has reduced the expected sales of your new product to million.
