Suppose that there are two goods, X and Y. The utility function is ?(?, ?) = 5?² ?. The price of Y is $2 per unit, and the price of X is P. Income is $2,400.

A.) Derive the demand curve and state the law of demand in relation to your product or service.

B.) ? = 800 − 10?^0.5 . Calculate elasticity of demand when Q=100, Is the good elastic?

C.) ? = 800 − 10?^0.5 − 0.5?. Calculate elasticity of income when Q=4 and I=100. Is the good normal or inferior?

D.) ?_A = 80 − 10?^0.5 − ?B Calculate cross price elasticity when Q= 16 and ?B =10. Are the goods complementary or are they substitutes?

Use Excel to calculate the point price elasticity of demand, ε, for price, p = 1, 2, 3,…, 19.

Suppose that there are two goods, X and Y. The utility function is ?(?, ?) = 5?² ?. The price of Y is $2 per unit, and the price of X is P. Income is $2,400.

A.) Derive the demand curve and state the law of demand in relation to your product or service.

B.) ? = 800 − 10?^0.5 . Calculate elasticity of demand when Q=100, Is the good elastic?

C.) ? = 800 − 10?^0.5 − 0.5?. Calculate elasticity of income when Q=4 and I=100. Is the good normal or inferior?

D.) ?_A = 80 − 10?^0.5 − ?B Calculate cross price elasticity when Q= 16 and ?B =10. Are the goods complementary or are they substitutes?

abc company's stock is currently selling at $100 per share. you have 12000 in your pocket but want to buy 200 shares. you can borrow the remainder of the purchase price from your broker at an annual rate of 5% the margin loan.

a. What happens to your net worth(i.e.return) in your brokerage account if the price of abc company increases to $100 after one year?

b.If the maintenance margin is 30%, how low can abc's price drop in one year before you get a margin call?

c.Explain why you may want to buy on margin.Is there any disadvantage of this strategy?

1. L&G's Lawn & Garden faces a demand curve of P=100-2Q and a marginal revenue for her product of 100-4Q.

a. what do you know about the elasticity of demand for this firm's output?

b. describe the industry structure and the nature of the firm's situation. Does it face competition? If so, what is the nature of that competition? Explain.

c. what is the profit maximization price and output for the firm which experiences constant marginal cost of $16? Why?

d. is there another market structure which would increase output and lower price? If so, what is the equilibrium price and quantity in the new market structure? Explain.

9. If the Price of a related good A changes, then for good B stay on the same demand curve, and move along it, as opposed to shifting to a new demand curve.

True or False

10.If the Income Elasticity of deamnd for a good is negative, we can say that the good is normal good.

True or False

11. Own price elasticity of demand is always negative, because of the law of demand.

True or False

12. A firm in a perfectly competitive market, finds that it's MR = MC occurs at Q = 100, at which point the market Price is $8. What is the firm's TR at this point?

a.100

b.8

c.800

d.10.50

1. There are two firms, A and B producing differentiated products. Their demand curves are:

_{qA=100-2PA+3PB}

_{qB=120-2PB+2PA}

and both have MC=5. Note that demand curves are not symmetric. Assuming that firms are engaged in Bertrand price competition:

(a)Write down the profit function of firm A and find its price response function

Hint:
_{πA=(PA-5)(100-2PA+3PB)}

(b) Write down the profit function of firm B and find its price response function

(c) Find equilibrium prices P_A and P_B; equilibrium quantities q_A and q_B; and profits for firms A and B.

3) Janice Kerrman is considering two 10-year AAA corporate bonds:

Sentinel bond is a noncallable 4% coupon bond priced at $100

Colina bond is a 4.5% coupon bond priced at $100 callable at a price of $102.   Both bonds pay coupons semiannually.

a) Suppose market rates decline by 1%. Contrast the effect of this decline   on the price of each bond. (15 Pts)

b) Which bond should Kerrman prefer if rates are expected to rise or fall? (10 Pts)

Use the following market demand and supply equations to answer questions a and b:

1.Qd=200-4P and Qs=P+100

2.TC=0.05*(Q-100)^2

a.)Assume this market is a competitive market calculate the market's profit maximizing price, quantity, and profit. What will happen to profit in the long-run?

b.)Assume this market is a monopolistically competitive market calculate the market's profit maximizing price, quantity, and profit. What will happen to profit in the long-run?