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ECON 3411 (4)
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Chapter 1

Chapter 1 Solution.pdf

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ECON 3411
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Chapter 01The Fundamentals of Managerial EconomicsChapter 1 Answers to Questions and Problems 1 Producerproducer rivalry best illustrates this situationHere Southwest is a producer attempting to steal customers away from other producers in the form of lower prices2 The maximum you would be willing to pay for this asset is the present value which is 32a Net benefits are NQ2024Q4Q b Net benefits when Q1 are N12024440 and when Q5 they are2N5202454540c Marginal net benefits are MNBQ248Q 1Q5Qd Marginal net benefits whenare MNB1248116 and whenthey are MNB5248516 e Setting MNBQ248Q0 and solving for Q we see that net benefits are maximized when Q3 f When net benefits are maximized at Q3 marginal net benefits are zero That is MNB3248304a The value of the firm before it pays out current dividends isb The value of the firm immediately after paying the dividend is 5 The present value of the perpetual stream of cash flows This is given by112014 by McGrawHill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied scanned duplicated forwarded distributed or posted on a website in whole or part
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