Suppose That the Cost of Personal Computers Falls by 20

question 44

Essay

Suppose that the cost of personal computers falls by 20% per year.To make this problem relatively easy, we will assume that their quality does not change and that computers never wear out.You plan to get one sometime.What is the rational way to decide when to buy one?

Recognize the reasons why liquidity is important according to J. M. Keynes.

Explain the operation and benefits of a lockbox system for a firm.

Provide a clear definition for float and its significance in financial management.

Understand various financial instruments and strategies, including smart cards, dividend capture, lockboxes, and the consideration of corporate bonds for investing excess idle cash.

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Definitions:

Rational Decision Makers

Individuals or organizations that make choices that maximize their utility, based on systematic analysis of options and outcomes.

Expected Marginal Benefit

The additional benefit perceived by a consumer or producer from consuming or producing one more unit of a good or service.

Expected Marginal Cost

Refers to the anticipated increase in cost for producing one additional unit of a good or service.

Macroeconomics

The study of the economic behavior of entire economies, as measured, for example, by total production and employment.