A). The government needs revenue. It decides to tax lemon pie sales by 20%. Jimmy is a fan of lemon pies. He has an income of 100 pence. The price of lemon pies is 5 pence, the price of mascarpone pies is 4 pennies. Jimmy's utility is U=(lp)^2/3(mp)^1/3. How much revenue will the tax generate?

B). The tax on lemon pies is a burden on Jimmy. How big of a burden is it? Calculate the income increase that would be required to compensate Jimmy for the imposition of the tax. How does this compare to the revenue raised from the tax?

Question 1

The table below shows the cost and revenue information of a firm.

(a) Complete the table above.

(b) Determine the price and output at equilibrium.

[6 marks]

(c) Calculate the profit or loss at equilibrium.

[4 marks]

(d) Is this firm in the short-run or long-run? Explain your answer.

[5 marks]

(e) To what type of market structure does this firm belong? Why do you say so?

[6 marks]

Question 2

The table below shows the cost and revenue information of a firm.

(a) Complete the table above.

(b) Determine the price and output at equilibrium.

[6 marks]

(c) Calculate the profit or loss at equilibrium.

[4 marks]

(d) Is this firm in the short-run or long-run? Explain your answer.

[5 marks]

(e) To what type of market structure does this firm belong? Why do you say so?

[6 marks]

Question 3

(a) Explain the marginal cost and average cost. Elaborate on the relationship between the two.

[8 marks]

(b) Elaborate on the main differences between short run and long run.

[4 marks]

(c) Differentiate between economies of scale and economies of scope.

[8 marks]

Question 4

(a) Explain THREE (3) main characteristics of a perfectly competitive firm.

[6 marks]

(b) Using an appropriate diagram, demonstrate how a perfectly competitive firm achieves equilibrium in the short-run.

[7 marks]

(c) Why is the demand curve of a perfectly competitive firm horizontal? Explain your answer.

[7 marks]

For each of the following, identify whether total revenue rises, falls, or remains constant:

Discuss the probable non-revenue justifications for each of the following aspects of the tax law. a. A tax credit is allowed for amounts spent to furnish care for minor children while the parent works.

b. Deductions for interest on home mortgage and property taxes on one’s personal residence.

c. The income-splitting benefits of filing a joint return.

d. Fines and penalties are not deductible.

e. Net operating losses of a current year can be carried back to profitable years.

f. A taxpayer who sells property on an installment basis can recognize gain on the sale over the period the payments are received.

g. The exclusion from Federal tax of certain interest income from state and local bonds.

h. Prepaid income is taxed to the recipient in the year it is received and not in the year it is earned.

Which is the term for revenue collected and recorded in advance?

As we know that generally economic exposure can be managed by balancing sensitivity of revenue and expenses to exchange rate fluctuations. To accomplish this, however, the firm must first recognize how its revenue and expenses are affected by exchange rate fluctuations which in turn will affect the firm’s future cash flow. For some firms, revenue is more susceptible. These firms are most concerned that their home currency will appreciate against foreign currencies since the unfavourable effects on revenue will more than offset the favourable effects on expenses. Conversely, firms whose expenses are more sensitive to exchange rates than their revenue are most concerned that their home currency will depreciate against foreign currencies. When firms reduce their economic exposure, they reduce not only these unfavourable effects but also the favourable effects if the home currency value moves in the opposite direction. After comprehending the economic exposure assessment from the various perspectives, you are required to answer all the questions.

Smith Co. operates business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information.

      i.    Smith’s U.S. sales are slightly influenced by the New Zealand dollar (NZ$) value, due to confronts rivalry from New Zealand exporters. It estimates the U.S. sales based on the following three exchange rate scenarios:

                                                                               Revenue from U.S. Business

                        Exchange Rate of NZ$                             (in millions)

                                   NZ$ = $.48                                              $100

                                   NZ$ =   .50                                                105

                                   NZ$ =   .54                                                110

      ii.   Revenues for Smith Co. in New Zealand dollars are projected to be NZ$600 million.

      iii.   Cost of goods sold is projected at $60 million from the U.S. materials purchase and NZ$100 million from the New Zealand materials purchase.

      iv. Fixed operating expenses are valued at $30 million.

v.   Variable operating expenses are projected at 20 percent of total sales (after including New Zealand sales, translated to a dollar amount).

vi. Interest expense is projected at $20 million on prevailing U.S. loans, and the company has no existing New Zealand loans.

Questions:

1. Generate a forecasted income statement for Smith Co. under each of the three exchange rate scenarios.   

Also answer the following questions based on the rubric.

2. Discuss how Smith’s projected earnings before taxes are influenced by the vital of exchange rate forecasting. Justify your viewpoints.                                                          

C.Describe how Smith Co. can restruc­ture its operations to minimize the earnings sensitivity to the degree of exchange rate movements without reducing its business volume in New Zealand.      

why does yield tend to decrease with effective revenue management? For airline industry.

Using the Google Draw tool, create a marginal revenue and demand for a monopolist graph.

Then answer the following questions:

1. What is the relationship between Marginal Revenue (MR), and Demand (D) for a monopolist?
2. For a non-price discriminating monopolist (a monopolist who charges only one price), if the cost for producing one extra unit of a product where $0, what point on your curve should the monopolist produce? (Hint: think Marginal Benefit/Revenue = Marginal Cost or MB=MC)

Make sure to label each axis and line appropriately.

The following data show the annual revenue ($ millions) and the estimated team value ($ millions) for the 30 Major League Baseball teams (Forbes website, January 16, 2014). Team Revenue ($ millions) Value ($ millions) Arizona Diamondbacks 195 584 Atlanta Braves 225 629 Baltimore Orioles 206 618 Boston Red Sox 336 1312 Chicago Cubs 274 1000 Chicago White Sox 216 692 Cincinnati Reds 202 546 Cleveland Indians 186 559 Colorado Rockies 199 537 Detroit Tigers 238 643 Houston Astros 196 626 Kansas City Royals 169 457 Los Angeles Angels of Anaheim 239 718 Los Angeles Dodgers 245 1615 Miami Marlins 195 520 Milwaukee Brewers 201 562 Minnesota Twins 214 578 New York Mets 232 811 New York Yankees 471 2300 Oakland Athletics 173 468 Philadelphia Phillies 279 893 Pittsburgh Pirates 178 479 San Diego Padres 189 600 San Francisco Giants 262 786 Seattle Mariners 215 644 St. Louis Cardinals 239 716 Tampa Bay Rays 167 451 Texas Rangers 239 764 Toronto Blue Jays 203 568 Washington Nationals 225 631 1. Write the regression equation. 2. Interpret the regression constant and regression coefficient. 3. Forecast a value for the dependent variable, test the significance of the regression coefficient at an alpha level of .05. Test the overall significance of the regression model, and Interpret the coefficient of determination. 5. Are there any indications of violations of the general linear model? You must address each assumption separately and explain.