Deck 02 Flashcards
What is the formula of present value of net benefits assuming that the benefits are realized at the end of each?
NPV = costs + (benefit_1)/(1+rate^t )+(benefit_2)/(1+rate^t )…
What is the formula of present value of net benefits assuming that the benefits are realized at the beginning of each of the three years?
NPV=cost+benefit+ (benefit_1)/(1+rate^t )…
What is the formula/definition of Consumer Surplus generalized in a demand curve?
CS=\integral(+∞, p) D(t)dt
What is the demand curve?
A graphic representation of the relationship between product price and the quantity of the product demanded
What is the formula for social welfare (SW)?
SW=Consumer surplus+Consumer profit
Formula for internal rate of return (IRR)
0 = ∆SW · ( (1+r) / r) − C
How can the individual I’s welfare be represented as a utility function when valuing time?
u_i=u_i (l_i,c_i),
Where l_i=leisure time and c_i=i^′ s consumtion
What is the langragian formula?
L=f(x,y)−λ∗g(x,y)
What are the 3 formulas of shadow price given valuating of time?
w · λ = w / (wt−e)
−λ = −1 / (wt−e)
λ (t−l) = (αt + (l−α) · e/w) / (wt−e)
What is the cobb-douglas’ utility function given valuating time?
u(l,c)=c^α·l^(1−α)
What does shadow prices tell us?
How valuable resources are in terms of objective function
What is shadow price
An estimated pricefor something that is not normally priced in the market or sold in the market. It is often used in cost-benefit accounting to value intangible assets. It is based on the willingness to pay.
