Question

﻿ECON 103F Principles of Microeconomics Fall 2020

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1:24 PM Tue Nov '17 E aclmsbucket.53.ca-ceoval-1.amazonaws.com A business idea requires to spend \$25,000 on training the staff this year and will save \$2,000 a every year aﬁerwards (because the staff is more productive), forever. a. Will the ﬁrm implement the idea if the interest rate is 5%? Explain. (1) b. Will the ﬁrm implement the idea if the interest rate is 10%? Explain. (1) c. At what interest rate is the ﬁrm indifferent between implementing the idea and abandoning it? Explain. (2) A government bond with face value \$10,000 matures next year. This means that next year the government will send the bond holder a \$10,000 cheque (the bond is not worth anything afterwards). If the interest rate is 2.6%, what is the bond's market price today? Explain. (2) Here's how much a ﬁrm produces for every level of employment, from 1 worker to 10: Employment (number of workers) Output, loaves of bread per hour 1 50 65 79 92 104 1 15 125 134 142 149 —\DOO'-IO\UI-bbél\3 Bread is sold for \$2 per loaf, and the wage the ﬁrm must pay its workers is \$17 per hour. How many workers will the ﬁrm employ? Give the number and explain. (1) Canada admits 300,000 to 400,000 new immigrants every year. What is the effect of immigration on the wages in Canada? Show the changes in the Canadian labour market graphically and explain in words. (3) [email protected]%-