Questions
Demand curve is given as D = 100 – 2P. If a monopoly company, whose cost...
Demand curve is given as D = 100 – 2P. If a monopoly company, whose cost function is C = 2Q, can do 1st degree price discrimination, what will be the market quantity and profit of the firm?
In: Economics
Suppose the prices of one-year, two-year, and three-year zero coupon bonds each with a par value...
Suppose the prices of one-year, two-year, and three-year zero
coupon bonds each with a par value of $100 are $90,$80, and $70,
respectively. Determine the arbitrage-free price of the
annuity
In: Finance
a.) Two identical firms compete as a Cournot duopoly. The market demand is P=100-2Q, where Q...
a.) Two identical firms compete as a Cournot duopoly. The market demand is P=100-2Q, where Q stands for the combined output of the two firms, Q=q1 +q2. The marginal cost for each firm is 4. Derive the best-response functions for these firms expressing what q1 and q2 should be.
b.) Continuing from the previous question, identify the price and quantity that will prevail in the Cournot duopoly market
c.) Now suppose two identical firms compete as a Bertrand duopoly. The market demand is P=100-2Q, where Q stands for the combined output of the two firms, Q=q1+q2. The marginal cost for each firm is 4. Identify the price and quantity in this market.
In: Economics
1) (justify) The less progressive the tax system, the: - a) Weaker is the built-in stability...
1) (justify) The less progressive the tax system, the: -
a) Weaker is the built-in stability for the economy
b) Greater is the built-in stability for the economy
c) Less is the effect of crowding-out on the economy
d) Greater is the severity of business fluctuations on the economy
2) (show working) If the price level is constant and the slope of the aggregate expenditure curve is 0.65, a decrease in investment of RM 100 leads to a decrease in real GDP of about -
a) RM65
b) RM154
c) RM100
d) RM286
3) [SHOW WORKING] If the price level is constant and the slope of the aggregate expenditure curve is 0.65, a decrease in investment of RM 100 leads to a decrease in real GDP of about -
a) RM65
b) RM154
c) RM100
d) RM286
In: Economics
Beech Corporation has three finished products (related to three different product lines) in its ending inventory...
Beech Corporation has three finished products (related to three different product lines) in its ending inventory at December 31, Year 1. The following table provides additional information about each product:
| Product | Cost | Replacement Cost | Selling Price | Normal Profit Margin |
| 101 |
$130 |
$140 | $160 | 20% |
| 202 | $160 | $135 | $140 | 20% |
| 303 | $100 | $80 | $100 | 15% |
Breech Corporation expects to incur selling costs to 5% of the selling price on each of the products.
Required: Determine the amount of at which Breech should report its inventory on the December 31, Year 1, balance sheet under (1) IFRS and (2) U.S. GAAP
In: Accounting
1.should these monopolists increase or decrease output, increase or decrease price, and on what information is...
1.should these monopolists increase or decrease output, increase
or decrease price, and on what information is your answer based?
Can the monopolists maximize profits minimize a loss ,or should
they shutdown? Give a reasons for your answers based on the numbers
in the rows
| Price | MR | Q | TR | TC | P/L | TVC | ATC | AVC | MC |
| 10 | 5 | 10 | 100 | 50 | +50 | 30 | 5 | 3 | 7 |
| 50 | <50 | 50 | 2500 | 2600 | -100 | 1600 | 52 | 32 | 50 |
|
10 |
5 | 1000 | 10000 | 8000 | +2000 | 5000 | 8 | 5(min) | 5 |
| 90 | 70 | 25 | 2250 | 1500 | +750 | 750 | 60 | 50 | 50 |
In: Economics
A firm is contemplating investment to the tune of Rs.750 million on an expansion plan. The...
A firm is contemplating investment to the tune of Rs.750 million on an expansion plan. The firm’s current ROI is 20%, and the proposed investment will improve it to 25%. The current investment is Rs.1000 million. The firm’s current debt to equity ratio is 1:1. The existing cost of debt at 15%. The equity share capital is represented by 10 million shares, which are currently traded at Rs.300 per share. New debt can be raised at 18% and new equity shares cannot be issued at a price more than the current market price. Perform EPS-EBIT analysis for choosing between the options 100% debt and 100% equity for financing the proposed expansion. The applicable corporate tax rate is 30%.
In: Finance
Another supply and demand puzzle
The market price of calzones in a college town decreased recently, and the students in an economics class are debating the cause of the price decrease. Some students suggest that the price decreased because several new pizza parlors have recently opened in the area. Other students attribute the decrease in the price of calzones to a recent decrease in the price of cheeseburgers at local burger joints. Everyone agrees that the decrease in the price of cheeseburgers was caused by a recent decrease in the price of hamburger buns, which are not generally used in making calzones. Assume that pizza parlors and burger joints are entirely separate entities-that is, there aren't places that serve both calzones and cheeseburgers.
The first group of students thinks the decrease in the price of calzones is due to the fact that several new pizza parlors have recently opened in the area.
On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the decrease in the price of calzones.
The second group of students attributes the decrease in the price of calzones to the decrease in the price of cheeseburgers at local burger joints.
On the following graph, adjust the supply and demand curves to illustrate the second group's explanation for the decrease in the price of calzones.
Suppose that both of the events you have just analyzed are partly responsible for the decrease in the price of calzones. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the decrease in the price of calzones?
-
If the price decrease was small, then the supply shift in the market for calzones must have been larger than the demand shift.
-
If the equilibrium quantity of calzones increases, then the demand shift in the market for calzones must have been larger than the supply shift.
-
Whichever change occurred first must have been the primary cause of the change in the price of calzones.
-
If the equilibrium quantity of calzones increases, then the supply shift in the market for calzones must have been larger than the demand shift.
In: Economics
1.The data above represent the willingness to pay (WTP) and seller cost (SC) data for a flu shot market.
| Buyer | WTP | Seller | SC | |
| Abe | 20 | Vlad | 24 | |
| Boris | 40 | Wang | 18 | |
| Carla | 60 | Xilla | 12 | |
| Deirdre | 80 | Ying | 6 | |
| Ezra | 100 | Zenobia | 0 |
1.The data above represent the willingness to pay (WTP) and seller cost (SC) data for a flu shot market.
Each potential buyer is willing to purchase one flu shot if the price is below their WTP or no flu shot if the price is above their WTP.
Each potential seller is willing to sell one flu shot if the price is above their SC or no flu shot if the price is below their SC.
A price of $22 will produce an equilibrium of quantity demanded = 4 = quantity supplied.
What is consumer surplus in this equilibrium?
| Buyer | WTP | Seller | SC | |
| Abe | 20 | Vlad | 24 | |
| Boris | 40 | Wang | 18 | |
| Carla | 60 | Xilla | 12 | |
| Deirdre | 80 | Ying | 6 | |
| Ezra | 100 | Zenobia | 0 |
2.The data above represent the willingness to pay (WTP) and seller cost (SC) data for a flu shot market.
Each potential buyer is willing to purchase one flu shot if the price is below their WTP or no flu shot if the price is above their WTP.
Each potential seller is willing to sell one flu shot if the price is above their SC or no flu shot if the price is below their SC.
A price of $22 will produce an equilibrium of quantity demanded = 4 = quantity supplied.
What is producer surplus in this equilibrium?
| Buyer | WTP | Seller | SC | |
| Abe | 20 | Vlad | 24 | |
| Boris | 40 | Wang | 18 | |
| Carla | 60 | Xilla | 12 | |
| Deirdre | 80 | Ying | 6 | |
| Ezra | 100 | Zenobia | 0 |
3.The data above represent the willingness to pay (WTP) and seller cost (SC) data for a flu shot market.
Each potential buyer is willing to purchase one flu shot if the price is below their WTP or no flu shot if the price is above their WTP.
Each potential seller is willing to sell one flu shot if the price is above their SC or no flu shot if the price is below their SC.
A price ceiling of $19 will make flu shots affordable to Abe without discouraging any of the existing 4 willing sellers. That's pretty much the best case for a price ceiling.
On average, what will producer surplus be now?
4. All 1400 haircuts get paid the $5 subsidy. 1000 of the 1400
haircuts would have happened anyway. But 400 of them wouldn't.The
government decides that a pretty populace is a happy populace. It
therefore decides to establish a $5 subsidy for suppliers of
haircuts. The price of haircuts falls from $28 to $25. The quantity
transacted of haircuts rises from 1000 to 1400.How much did the
government spend per increased haircut?
5.
| Buyer | WTP | Seller | SC | |
| Abe | 20 | Vlad | 24 | |
| Boris | 40 | Wang | 18 | |
| Carla | 60 | Xilla | 12 | |
| Deirdre | 80 | Ying | 6 | |
| Ezra | 100 | Zenobia | 0 |
Part of the decline in deadweight loss comes from the decline in
producer surplus -- seller's economic welfare -- and we may not
care about the economic welfare of sellers.
But if we are instituting price ceilings, we probably do care about the economic welfare of buyers.
The price ceiling changed consumer surplus by ___________ dollars. (Enter a positive number if the price ceiling increased consumer surplus, a negative number if it decreased consumer surplus.)
In: Economics
Use the following information provided by Ashleigh Enterprises to prepare the:
Use the following information provided by Ashleigh Enterprises to prepare the:
4.1 Debtors Collection Schedule for March and April 2021.
4.2 Cash Budget for March and April 2021.
Note: * Where applicable, round off amounts to the nearest Rand. * Use separate monetary columns for each month.
INFORMATION 1. The following are estimates for the first four months of 2021: January (R) February (R) March (R) April (R) Sales 140 000 120 000 190 000 230 000 Purchases 70 000 60 000 85 000 115 000 Wages 9 000 9 000 ? ? 2. Forty percent (40%) of the sales are for cash and the balance is on credit. Collections for credit sales are as follows: 30% during the month of the sale; 65% in the month following the sale. The remaining 5% is written off as bad debts. 3. All purchases are on credit. Creditors are paid two months after the month of purchase. 4. Ashleigh Enterprises will make an investment of R60 000 in fixed deposit on 01 March 2021. Interest of R400 per month is expected to be received from March 2021. 5. Rent expense amounts to R156 000 per year and is payable monthly. 6. Wages will be increased by 9% on 01 March 2021. 7. A new computer is expected to be purchased for R15 000 cash during April 2021. 8. Commission payable to sales personnel is calculated at 10% of sales and it is paid one month later. 9. The bank balance on 28 February 2021 is expected to be R30 000 (favourable).
In: Accounting