To use Excel INV functions, such as XXXX.INV(probability,....) to generate random variates, replace probability by:

Suppose that the demand for a monopolist's product is estimated to be Q^d = 100 − 2P and its total costs are C(Q) = 10Q. Under first-degree price discrimination, the optimal price(s), number of total units exchanged, profit, and consumer surplus are:

Multiple Choice

• 10 ≤ P ≤ 50; Q = 80, Π = $1,600; CS = $0.

• 10 ≤ P ≤ 100; Q = 80; Π = $1,600; CS = $1,600.

• P = $30; Q = 40, Π = $800; CS = $400.

• P = $30; Q = 40, Π = $600; CS = $0.

A 4% annual coupon bond has 5 years remaining until maturity and is priced to yield 6%.

(a) What is the price per 100 of par?

(b) For this bond, estimate the price value of a basis point by first considering an increase in yield and then a decrease in yield.  

(c) Now show that for very small price changes, the absolute value of a bond’s price change does not differ much conditional on whether the yield change is a rise or a fall in yield.

Thanks   

Consider a husband and wife with brown eyes who have 0.75 probability of having children with brown eyes, 0.125 probability of having children with blue eyes, and 0.125 probability of having children with green eyes.

(a) What is the probability that their first child will have green eyes and the second will not?

(b) What is the probability that exactly one of their two children will have green eyes?

(c) If they have 7 children, what is the probability that exactly 2 will have blue eyes?

(d) If they have 7 children, what is the probability that at least 2 will have green eyes?

(e) What is the probability that the first brown eyed child will be child number 3?

A sunglasses manufacturer wishes to determine the minimum price it should charge a customer for a special order of sunglasses. The customer has requested a quotation for 100 sunglasses (10 batches) but might subsequently place an order for an additional 100. Material costs are €25 per pair of sunglasses. It is estimated that the first batch of sunglasses will take 80 hours to be completed and a 70% learning curve would apply. Labour and variable overhead costs amount to €2. Setup costs are €800 regardless of the units produced

1. What is the minimum price the company should charge for the initial order if there is no guarantee of further orders
2. If the company was to receive a follow up order, what would the minimum price of this order be
3. What would be the minimum price if both orders were placed together

Q1/ a. For the following three cases, calculate

i. The marginal revenue curve

ii. The level of output where MR = MC (i.e., set the equation from item i equal to marginal cost and solve for Q)

iii. The profit-maximizing price (i.e., plug your answer from equation ii into the demand curve)

iv. Total revenue and total cost at this level of output (something you learned in Chapter 11)

v. What entrepreneurs really care about—total profit

Case A: Demand: P = 40 − Q Fixed cost = 100 Marginal cost = 10

Case B: Demand: P = 100 − 2Q Fixed cost = 100 Marginal cost = 10

Case C: Demand: P = 100 − 2Q Fixed cost = 100 Marginal cost = 20.

b. What is the markup in each case? Measure it two ways: first in dollars, as price minus marginal cost, and then as a percentage markup [100 × (P – MC)/MC, reported as a percent].

c. If you solved part b correctly, you found that when costs rose from Case B to Case C, the monopolist’s optimal price increased. Why didn’t the monopolist charge that same higher price when costs were lower? After all, they are a monopolist, so they can charge what price they want. Explain in language that your grandmother could understand.

Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two-for-one in the last period. P0 Q0 P1 Q1 P2 Q2 A 84 100 89 100 89 100 B 44 200 39 200 39 200 C 88 200 98 200 49 400 a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).

Consider the three stocks in the following table. P_t represents price at time t, and Q_t represents shares outstanding at time t. Stock C splits two-for-one in the last period.

a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).

Consider the three stocks in the following table. P_t represents price at time t, and Q_t represents shares outstanding at time t. Stock C splits two-for-one in the last period.

a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1). (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What will be the divisor for the price-weighted index in year 2? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Calculate the rate of return of the price-weighted index for the second period (t = 1 to t = 2).

Lisa, a critical care nurse is caring or Rochelle a 73-year-old woman suffering from diabetes, TBI and multiple internal injuries following a serious motor vehicle accident. Most likely Rochelle will need substantial skilled nursing care for an indefinite period of time, likely the rest of her life. Rochelle is on medicare and her husband informed you they have no supplemental insurance. Although Rochelle had expressed to her husband and several friends a desire to not live in a situation as she is currently, her husband was persuaded by the children to do everything possible to sustain her life. Rochelle’s husband has privately expressed to you his concern that her wishes are not being followed but feels he cannot disregard the wishes of their children.

*Apply the ethical principles: autonomy, beneficence, nonmaleficence, fidelity and justice to this case study. What would you do in this situation?