QUESTION 1 [30 marks] a. Tebogo enjoys her coffee with a few cookies. Assume the price...

QUESTION 1 [30 marks]

a. Tebogo enjoys her coffee with a few cookies. Assume the price of cookies decreased, how would this affect Tebogo’s demand for coffee? Use a relevant diagram to support your answer.

b. With the use of a diagram, distinguish between change in demand and change in quantity demanded. c. Trade unions always try and get a much higher wage rate than what the market is willing to pay. Using and appropriate explain what will likely happen in the labour market if the wage rate demanded by a trade union is above the market equilibrium wage.

d. Calculate the following different elasticities:

i. A price increase from P2 to P10 causes quantity demanded to change from 80 units to 30 units. Calculate and interpret price elasticity of demand.

ii. Income increase by 10% results in quantity demanded increases by 5%. Calculate and interpret income elasticity of demand.

iii. Quantity of good B increases by 50% because of an increase in price of good A by 40%. Calculate and interpret cross elasticity of demand.

iv. How would a firm manipulate the prices of goods in di-iii in order to maximize revenue and profits?

Expert Solution

Answer,

Rahul Sunny answered 3 months ago

SECTION A (30 marks) This section consists of ONE (1) compulsory question QUESTION 1 (30 marks)...

SECTION A This section consists of ONE (1) compulsory question QUESTION 1 ABC Ltd is a wholesaler of furniture which has been in operation for ten years. It buys furniture from five major manufacturers and sells them to a range of customers. The company currently has a customer base of over 500 customers most of which are credit customers. The receivables balance comprises customers owing up to $2,000,000 to smaller balances of about $10,000, all with many different due dates...

QUESTION 1: INTRODUCTION TO FINANCIAL MANAGEMENT [30 MARKS] Assume that you recently graduated and have just...

QUESTION 1: INTRODUCTION TO FINANCIAL MANAGEMENT [30 MARKS] Assume that you recently graduated and have just reported to work as an investment advisor at the Bill Morrisons Wealth Management Sdn. Bhd. One of the firm’s clients is Dato’ Lee Chong Wei, a Malaysian male professional badminton player who was ranked first worldwide for 349 weeks from 21 August 2008 to 14 June 2012. After retiring, he would like to set up a badminton academy in Malaysia to develop and nurture...

Question 2: (30 marks) Assume that the following statements of financial position are stated and a...

Question 2: Assume that the following statements of financial position are stated and a book value. Alpha Corporation Current Assets $15,000 Current Liabilities $5,400 Net Fixed Assets 39,000 Long-Term Debt 10,100 Equity 38,500 $54,000 $54,000 Beta Corporation Current Assets $3,600 Current Liabilities $1,400 Net Fixed Assets 6,700 Long-Term Debt 2,100 Equity 6,800 $10,300 $10,300 Suppose the fair market value of Beta’s fixed assets is $9,500 rather than the $6,700 book value shown. Alpha pays $17,300 for Beta and raises the...

Question 1 (30 marks) : The focus of this question is to analyse the external operating...

Question 1 : The focus of this question is to analyse the external operating environment of a Higher Education (HE) Sector and discuss potential impacts on the HRM functions of a HE provider such as a University. Use Jackson and Schuler (1995) HRM model to analyse the external environment of the HE Sector that you are familiar with. Identify and discuss the factors of the environment and their potential impact on the HRM functions of an HE provider of your...

QUESTION 1 (30 marks) Jo-Anne just bought 200 bonds at a purchase price of R1 043.70...

QUESTION 1 Jo-Anne just bought 200 bonds at a purchase price of R1 043.70 each. The bonds will mature in 7 years’ time and have a face value of R1 000.00. The coupon rate is 11% and is paid semi-annually. Answer the questions that follow: 1.1 Calculate the prevailing interest rate. (5) 1.2 If the prevailing interest rate is 12%, what would happen to the price of the bond? (5) 1.3 If Lee-Anne bought the bonds at R1 043.70 and...

Bowl 1 contains 30 vanilla cookies and 10 chocolate cookies. What is the likelihood of the...

Bowl 1 contains 30 vanilla cookies and 10 chocolate cookies. What is the likelihood of the following: you, without looking, select a vanilla cookie and eat it (i.e. you are selecting without replacement), then select a chocolate cookie, and eat it, and then select a vanilla cookie. Now, what is the likelihood if instead you had a Bowl 2 which contains 20 of each.

Bowl 1 contains 30 vanilla cookies and 10 chocolate cookies. What is the likelihood of choosing...

Bowl 1 contains 30 vanilla cookies and 10 chocolate cookies. What is the likelihood of choosing 15 vanilla and 10 chocolate cookies (without replacement). Now, instead, what is the likelihood of choosing 15 vanilla and 10 chocolate cookies (without replacement) if you had Bowl 2 which contains 20 of each.

Assume that Monica is spending all her income on purchasing a combination of two products: cookies...

Assume that Monica is spending all her income on purchasing a combination of two products: cookies (C) and tea (T). The marginal utility of cookies (MUC) is 12 and the price of a cookie (PC) is $3. The marginal utility of tea (MUT) is 10 and the price of tea (PT) is $5. Is Monica maximizing utility? If not, what should she do to maximize utility? Explain

Assume the following (1) selling price per unit = $30.

Assume the following (1) selling price per unit = $30. (2) variable expense per unit = $18, and (3) total fixed expenses = $33,900. Given these three assumptions, the unit sales needed to break-even is: Multiple Choice 36,400 units. 5,325 units 35,325 units. 2,825 units Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $300,000 120,000 180,000 111,000 $ 69,000 Per Unit $ 40 16 $24 If the variable expenses increase by $1 per unit, the advertising expenditures...

Question 1 (20 marks) Consider a 1-year forward contract on a stock with a price of...

Question 1 Consider a 1-year forward contract on a stock with a price of $51. The current price of the stock is $50. A cash dividend payment of $2 per share is anticipated in 9 months. The interest rate is 3% per annum with continuously compounding. Assume that there are no transaction costs. (a) Determine the fair price and the initial value of the forward contract today. (b) Is there any arbitrage opportunity? Verify your trading positions taken at each...

Question