Questions PA1-3.docx - Using the graph below develop a 2-...

Using the graph below, develop a 2- to 4-page response in APA format using the following
three-question prompt:
Question 1
What is the maximum amount you would pay for an asset that generates an income of
$250,000 at the end of each of five years if the opportunity cost of using funds is 8 percent?
Question 2
Suppose the supply function for product X is given by Qxs = −30 + 2Px − 4Pz. (LO1)
 How much of product X is produced when Px = $600 and Pz = $60?
 How much of product X is produced when Px = $80 and Pz = $60?
 Suppose Pz = $60. Determine the supply function and inverse supply function for
good X. Graph the inverse supply function.
Question 3
Suppose the own price elasticity of demand for good X is −5, its income elasticity is −1, its
advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is 3.
Determine how much the consumption of this good will change if:
 The price of good X decreases by 6 percent.
