4.Your firm spent $100 million developing a new drug. It has now been approved for sale, and each pill costs $1 to manufacture. Your market research suggests that the price elasticity of demand in the general public is −1.1.

1. What price do you charge the public?
2. What would happen to profits if you charged twice as much?
3. What role does the $100 million in development costs play in your pricing decision? 

4. The Medicaid agency has made a take-it-or-leave-it offer of $2 per pill. Do you accept? Why or why not?

Suppose we are analyzing the market for oranges in 2017. Graphically illustrate the impact of each of the following events would have on supply and demand curves. Also show how equilibrium price and quantity would change in each scenario. Make sure you provide narrative discussions on each scenario to receive full credits A. In 2017, Wildfires destroyed a majority of orange farms, reducing orange production substantially (Graphical analysis + Written discussion=at least 100 words) B. The price of apple, orange substitute, decreased in 2017. (Graphical analysis + Written discussion=at least 100 words)

5. Consider a $100 par value 8% bond with semiannual coupons called at $106.50 on any coupon date starting 4 years after issue for the next 2 years, at $102 starting 6 years after issue for the next 2 years, and maturing at $100 at the end of 8 years. (a) Find the highest price which an investor can pay and still be certain of a yield of 6% convertible semiannually. (b) Assuming the price paid in part (a), compute the nominal yield convertible semiannually the purchaser would earn if the bond was not called.

Already worked but not correct in chegg.

Suppose the production function in medieval Europe is Y=K0.5L0.5, where K is the amount of land and L is the amount of labor. The economy begins with 100 units of land and 100 units of labor. Use a calculator and equations in the chapter to find a numerical answer to each of the following questions.

1. How much output does the economy produce?

2. What are the wage and the rental price of land?

3. What share of output does labor receive?

4. If a plague kills half the population, what is the new level of output?

5. What are the new wage and rental price of land?

6. What share of output does labor receive now?

he demand and cost function for a company are estimated to be as follows:

P=100−8QTC=50+80Q−10Q2+0.6Q3P=100-8QTC=50+80Q-10Q2+0.6Q3

1. What price should the company charge if it wants to maximize its profit in the short run?

2. What price should it charge if it wants to maximize its revenue in the short run?

3. Suppose the company lacks confidence in the accuracy of cost estimates expressed in a cubic equation and simply wants to use a linear approximation. Suggest a linear representation of this cubic equation. What difference would it make on the recommended profit-maximizing and revenue-maximizing prices?

Painted Box Corporation

Common shares 5,000, par $1, Capital $5,000, paid-in capital-excess of par $15,000

Convertible preferred shares 100, par $100, capital $10,000, rate 6%, convertible into # shares of common 300

Convertible bonds, par $10,000, interest rate 12%, convertible into # shares of common 800

Stock options for # shares of common 300, option price $5, market price $6

Earnings $12,500, tax rate 30%

( the basic Eps is 2.38 and Diluted Eps is 2.17. How did they get Diluted Eps 2.17?)

An economy has full-employment output of 1500. Suppose desired consumption and desired investment are
?? = 125 + 0.75(? − ?) − 400?
?? = 200 − 100?
G is the level of government purchases, and T=100

Money demand is
?? ?
= 0.8? − 2000(? + ??)
where the expected rate of inflation, ??, is 0.05. The nominal supply of money M = 2000.

2. Asset market equilibrium and the LM curve.

i) Derive the LM curve when the price level is equal to the solution in part (h) [Hint: Use the price level from the part (2-h) to get the real money supply]

Solution in part H is P = $2

Let a perfectly competitive industry have 100 identical firms with a marginal cost curve given by MC = Q/2.

a. Construct the short run industry supply curve with 100 firms.

b. Let the market demand curve be Q = 4000 – 200*P. Find the short run equilibrium price, industry quantity, and firm quantity.

c. This is a constant cost industry with a cost of $8. Will firms be making profits or losses in the short run equilibrium in b?

d. Find the long run equilibrium price, industry quantity, firm quantity, number of firms, and profit for each firm.

a. Josiah Bartlett collects 2 goods, carving knives (C) and antique books (B). His utility function is U(C, B) = 2C + B (they are perfect substitutes). Find Josiah’s demand curve for carving knives if he has $100 to spend and the price of antique books is $10.

b. Josiah's assistant Charlie collects the same two goods but has a different utility function: U(C, B) = min{2C, B} (they are perfect complements). Find Charlie’s demand curve for carving knives if he has $100 to spend and the price of antique books is $10.

1. Prices of several bonds are given below:

   *Half

   Bond Principal($)	Time to maturity(years)	Annual coupon*($)	Bond price($)
   100	0.5	0	98.9
   100	1	0	97.5
   100	1.5	4	101.6
   100	2	4	101.9

   the stated coupon is assumed to be paid semiannually.
   (a) Use the bootstrap method to find the 0.5-year, 1-year, 1.5-year and 2-year zero rates per annum with continuous compounding.
   (b) What is the continuously compounded forward rate for the period between the 1-year point and the 2-year point?