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1. I know I ask so much but honestly I have no idea with these homeworks. They require an understanding microeconomic problems thoroughly but I lack off these knowledge though I try my best to read all the book ---hopeless. Plzz help me

1/The photocopy machine in the library cost \$295 per month to rent. The rental fee covers repair service, toner, developer, and 20,000 copies per month. The library also pays 1 cent for every copy beyond 20,000, plus one-half cent for every sheet of paper used. Harriet Martineau has to read a 20-page journal article for tomorrow's class. She is willing to pay 50 cents for a photocopy of the article; but she will read it in the library if she has to pay more than that.

(a) What is the highest price per page Harriet will be willing to pay to use the copier?

(b) What is the lowest price per page the library should be willing to accept? What additional information must you have in order to answer?

(c) Harriet just found out she is supposed to read a second article for tomorrow's class, an article full of complex graphs. Harriet badly wants her own copy of this article and will pay whatever she has to pay to get one. What is now the highest price Harriet will be willing to pay to use the library copier? (You must supply some information from your own experience to answer.)

2.Chuck Waggin owns and operates a small tax-accounting firm, which he runs out of the basement of his home.

(a) The basement was just wasted space until Chuck turned it into an office for his business. He says his firm is more profitable than most tax-accounting businesses because he doesn't have to pay any rent. Do you agree that rent is not a cost of production for Chuck?

(b) Chuck recently turned down an offer to go to work for a larger firm at a salary of \$75,000 a year. Chuck's net income from his business runs about \$60,000 a year. Would you say that Chuck's firm is profitable?

(c) Chuck says he likes being his own boss, and that he would be willing to sacrifice at least \$25,000 a year in income to avoid working for someone else. Does that information change you answer to part (b)?
.

(d) Chuck recently invested \$10,000 of his savings in an office computer. How would you include the effects of this investment in his costs?

(e) Chuck could have earned 12 percent per year on his savings had he not used them to buy the personal computer. If he had not had these savings, he still would have bought the computer, using a loan from the bank at 18 percent annual interest to finance the purchase. Is the opportunity cost of owning the computer really less for Chuck because he had savings of his own from which to buy it? If Chuck had been required to pay 18 percent interest to the bank rather than giving up 12 percent interest, for what would the additional 6 percent have been a payment? Does Chuck reduce his costs by financing the computer purchase himself?

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Updated: December 9, 2010
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