Suppose that the spot price of gold is $600. The total cost of insurance and storage for gold is $30 per year, payable in advance. The rate of interest for borrowing or lending is 20%. If the forward price is $700, and you are interested in arbitrage, you would: (Hint: Check answer with an arbitrage table)

Suppose that the spot price of gold is $500.  The total cost of insurance and storage for gold is $30 per year, payable in advance.  The rate of interest for borrowing or lending is 20%. If the forward price is $650, how much money could you make from arbitrage at expiration of the forward?  Hint: Use an arbitrage table after you figure out the appropriate arbitrage portfolio.

) Suppose that the firm’s total cost function is of the form C(y) = 100 + 10y + y^2 . Where does the average cost function reach a minimum? Consider the following demand curves:

i. D(P) = 130 − 4P

ii. D(P) = 120 − 2P

iii. D(P) = 120 − 4P

For which of these examples is the firm a natural monopoly? [There may be multiple tests to answer this question. Clearly state which one you are using. That is give a specific mathematical criterion for this and the intuition for using that choice.

Can you please explain thoroughly, thank you.

Question 1 A contractor is interested in the total cost of a project for which he intends to bid. He estimates that materials will cost P25000 and that his labour will cost P900 per day. The contractor then formulates the probability distribution for completion time (X), in days, as given in the following table. Completion time in days (X) 10 11 12 13 14 P(X=x) 0.1 0.3 0.3 0.2 0.1 a) Determine the total cost function C for the project. b) Find the mean and variance for completion time X. c) Find the mean, variance and standard deviation for the total cost C.

Q1

In the aerospace industry, the material cost is small in relation to the total fabricated cost of the material. If we assume approximately 10% of the total value of a pound saved on a sattelite may be spent on raw material, how much can we spend (in dollars per pound) on raw material?

Q2

Using the result of the previous question, which of the following materials can be justified for use in fabrication of a sattelite if a large majority of the sattelite will comprise the material selected?

nickel-based superalloys

silver

palladium

gold

high-strength composites

Q3

Based on the analysis of this section, at most approximately $.20/lb can go toward raw material cost in the fabrication of rail and ship transit carriers. What is the most expensive material that is feasible in the fabrication of the structural components in this sector?

wood

concrete

carbon steel

plastic

PLEASE I NEED CORRECT  ANSWER

You are evaluating the purchase of equipment for a house painting business. The total cost of the equipment is $27,000. You paid a consultant $1,000 to estimate the revenues expected from the equipment. The firm selling the equipment charges $600 for shipping.

The project's incremental operating cash flows before taxes will be $12,000 per year for four years. At the end of four years the equipment will have no value and will be scraped. The equipment has a three-year useful life and will be depreciated using the three-year MACRS depreciation schedule (assume these depreciation percentages: Yr 1: 33.3%, Yr 2: 44.5%, Yr 3: 14.8%, and Yr 4: 7.4%). The tax rate is 34% and the firm's required rate of return is 17%.

Calculate the cash flows from Years 0 through 4.

Should you purchase the equipment?

A firm in a competitive industry has the following total and marginal cost functions: ? = ?? + ?? + ?? ?? = ? + ?? Suppose that the current market price is $20 and the firm is producing 8 units of output.

a. Is the firm maximizing profit? If not, at what quantity should the firm produce in order to maximize profits?

b. Write down the following cost functions for this firm: i. Variable Cost ii. Fixed Cost iii. Average Cost iv. Average Variable Cost v. Average Fixed Cost

c. Graph AC, MC and AVC on a single graph for values of ? between ? ?? ??. You can use Excel.

d. At what output level is AC minimized (this can be a non-integer)?

e. At what range of prices will the profit-maximizing firm produce a positive level of output ? > ??

f. At what range of prices will the profit-maximizing firm earn positive profits?

g. At what range of prices will the profit-maximizing firm earn negative profits?

Assume that the cost data in the following table are for a purely competitive producer:

Instructions: If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce.

a. At a product price of $68.00

     (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? units per firm =

     (iii) What economic profit or loss will the firm realize per unit of output? Loss/Profit per unit = $

b. At a product price of $43.00

     (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? =  units per firm

     (iii) What economic profit or loss will the firm realize per unit of output? Loss/Profit  per unit = $

c. At a product price of $34.00

     (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? units per firm =

     (iii) What economic profit or loss will the firm realize per unit of output? profit/loss per unit = $

Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers.

d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3).

e. Now assume that there are 1,500 identical firms in this competitive industry. That is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4 in the table above).

f. Suppose the market demand data for the product are as follows:

What is the equilibrium price? $

     Instructions: Enter your answers rounded to two decimal places. Enter positive values for profit or loss.

     What will profit or loss be per unit? (Profit or Loss) per unit =

     Per firm? $

     Will this industry expand or contract in the long run?  (Expand or Contract)