Analyzing Golf Course Economics: A Profit Maximization Assignment

This assignment analyzes the economics of a golf course, focusing on profit maximization through golf cart purchases. It begins by calculating the user cost of capital and determining the optimal number of golf carts to purchase. The assignment then explores the impact of a "luxury tax" and an investment tax credit on the golf course's investment decisions, using user cost/marginal product of capital graphs and desired investment diagrams to illustrate the effects. Furthermore, it examines how changes in the real interest rate would affect the investment decisions. The assignment then shifts to a closed economy model, solving for the desired savings function, the goods market clearing interest rate, and the levels of consumption, investment, and government spending. Finally, it analyzes the effects of expansionary fiscal policy, specifically an increase in government spending, on the market clearing interest rate, savings, and investment, supported by graphical representations and explanations of the underlying economic principles, including the substitution effect.