-The figure above shows the demand curve for pizza.
a.What is the marginal benefit of the 20th pizza?
b.What is the maximum price the consumer is willing to pay for the 20th pizza?
c.If the price of a pizza is $6,what is the consumer surplus of the 20th pizza?
d. If the price of a pizza is $10,what is the consumer surplus on all the pizzas consumed?
e.If the price of a pizza is $6,what is the consumer surplus on all the pizzas consumed?
Definitions:
Real Options
The value of additional decision-making opportunities available to a business when investing, likened to financial options.
Cash Flow
The amount of cash and cash equivalents being transferred into and out of a business, indicating its liquidity position.
Net Present Value
Net present value (NPV) is the calculation used to find today’s value of a future stream of payments and earnings, accounting for the time value of money.
Cost of Capital
The return rate that a company must achieve in order to compensate its investors for the risk of the investment, including the cost of equity and debt.
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