A new major league baseball expansion team is moving to your town. It will inject consumer spending worth $40 million into your local economy initially. The Chamber of Commerce predicts that this will generate a total of $500 million in additional spending for your town. The team owners think that this is an underestimate. What do you need to know to figure out who is right? Explain
You need to know the size of the spending multiplier. If it is equal to 12.5, then the Chamber of Commerce is right ($40 × 12.5 = $500). If it is greater than 12.5, then the team owners are right.
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The risk adjusted discount rate
A) is the sum of the risk-free rate and the risk premium. B) includes risk in the denominator of the present value calculation. C) includes risk in the numerator of the present value calculation. D) All of the above
Ceteris paribus, a change in the quantity supplied along the supply curve of Braun coffee makers is:
a. directly related to the price of a Morphy Richards coffee maker. b. directly related to the price of milk and cream. c. directly related to the prices of inputs used in the production of Braun coffee makers. d. directly related to changes in the technology used in producing coffee makers. e. directly related to the price of a Braun coffee maker.
Marissa owns a small cottage by the lake. Big Boy’s Sawmill is next door, and it dumps sawdust into a sinkhole it owns. Unfortunately for Marissa, the sinkhole opens into a brook on her land, which gets clogged by the sawdust. It costs Marissa $3,000 per year to clean up the sawdust. Big Boy’s can dispose of the sawdust by having it hauled away for $2,000 per year. Marissa offers to pay Big Boy’s $2,500 per year to have the sawdust hauled away. In this example of the Coase theorem, what is the annual pecuniary cost to society of negative externality before any transaction occurs between Marissa and Big Boy’s?
a. $2,000 b. $2,500 c. $3,000 d. $5,000
An increase in the economic output of a society is known as ______.
a. efficiency b. scarcity c. consumerism d. growth