Paid for Grades Children in poor neighborhoods sometimes have bleak outlooks on life and do not see much gain to studying. A recent experiment is paying children in poor neighborhoods $100 for each "A" they earn in a six-week grade reporting cycle. How does this affect behavior? 2. Processing Insurance Claims Your insurance firm processes claims through its newer, larger high-tech facility and its older, smaller low-tech facility. Each month, the high-tech facility handles 10,000 claims, incurs $100,000 in fixed costs and $100,000 in variable costs. Each month, the low-tech facility handles 2,000 claims, incurs $16,000 in fixed costs and $24,000 in variable costs. If you anticipate a decrease in the number of claims, where will you lay off workers?

3. Copier Company A copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 100,000 page per day. One month ago, they added five workers, and productivity also increased by 50,000 page per day. Copiers cost about twice as much as workers. Would you recommend they hire another employee or buy another copier? Explain. 4. Net Present Value Suppose an initial investment of $100 will return $50/year for three years (assume the $50 is received each year at the end of the year). Is this a profitable investment if the discount rate is 20%?