Question: 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,

  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?

  1. Suppose the own price elasticity of demand for goodXis -4, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and goodYis 4. Determine how much the consumption of this good will change if:

Instructions: Enter your responses as percentages. Include a minus (-) sign for all negative answers.

a. The price of goodXdecreases by 4 percent.

percent

b. The price of goodYincreases by 9 percent.

percent

c. Advertising decreases by 2 percent.

percent

d. Income increases by 3 percent.

percent

  1. Suppose the cross-price elasticity of demand between goodsXandYis -4. How much would the price of goodYhave to change in order to change the consumption of goodXby 10 percent?

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