A large manufacturer purchases an identical component from three independent suppliers that differ in unit price and quantity supplied. The relevant data for 2012 and 2014 are given here.

(a)

Compute the price relatives for each of the component suppliers separately. Compare the price increases by the suppliers over the two-year period.

(b)

Compute an unweighted aggregate price index for the component part in 2014.

(c)

Compute a 2014 weighted aggregate price index for the component part. What is the interpretation of this index for the manufacturing firm?

For a three-period binomial model for modeling the price of a stock, you are given:

1. The current price of the stock is 125.
2. The length of each period is one year.
3. u = 1.2, where u is one plus the rate of capital gain on the stock if the price goes up.
4. d = 0.8, where d is one plus the rate of capital loss on the stock if the price goes down.
5. The continuously compounded risk-free interest rate is 6%.
6. The price of a three-year $90-strike European put option is $0.89.

Calculate the price of a three-year $100-strike European put option.

1. 1.23

2. 1.49

3. 1.78

4. 2.01

5. 2.48

Please provide full explanation

1) Given the following equations:

   QD = 5,000 + 0.5 I + 0.2 A - 100P, and QS = -5000 + 100P

where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.

  a.   If A = $10,000 and I = $25,000, what is the demand curve?

b.   Given the demand curve in part a., what is equilibrium price and quantity?

c.   If consumer incomes increase to $30,000, what will be the impact on equilibrium price and quantity?

2) Industry supply and demand are given by QD = 1000 - 2P and QS = 3P.

a.   What is the equilibrium price and quantity?

b.   At a price of $100, will there be a shortage or a surplus, and how large will it be?

c.   At a price of $300, will there be a shortage or a surplus, and how large will it be?

1) Given the following equations:

   QD = 5,000 + 0.5 I + 0.2 A - 100P, and QS = -5000 + 100P

where Q is the quantity per year, P is price, I is income per household, and A is advertising expenditure.

  a.   If A = $10,000 and I = $25,000, what is the demand curve?

b.   Given the demand curve in part a., what is equilibrium price and quantity?

c.   If consumer incomes increase to $30,000, what will be the impact on equilibrium price and quantity?

2) Industry supply and demand are given by QD = 1000 - 2P and QS = 3P.

a.   What is the equilibrium price and quantity?

b.   At a price of $100, will there be a shortage or a surplus, and how large will it be?

c.   At a price of $300, will there be a shortage or a surplus, and how large will it be?

A stock provides dividend of $1 at the end of the first, second, and third year, its spot price is $30 and the risk-free rate for all maturities (with continuous compounding) is 10%.

What is the four year forward price?

What is the value of this forward contract two years later if the forward price at that time is $40?

. The following is the annual demand function for good A:

                Q_DA = 400 – 20P_A + 10P_B + 0.01Y

where P_A is the price of good A; P_B is the price of another good, good B; Y is income.

1. Is good A a normal good or an inferior good? Explain.
2. Is good B a complement or a substitute for good A? Explain.

Assume that the current price of good B is £5, income is £50 000, and the annual supply function for good A is:

                Q_SA = 100 + 10P_A

3. Calculate the equilibrium price and quantity.

4. Calculate price elasticity of demand if the price of good A rises by £5 from the equillibrium price and the demand decreases by 7% and what does this show about the product ?

5. Calculate the price elasticity of supply if the amount supplied increases by 26.60 units (from the equillibrium) and this results in a decrease in price of 4%. Suggest what this figure shows             

    31. The following is the annual demand function for good A:

                Q_DA = 400 – 20P_A + 10P_B + 0.01Y

where P_A is the price of good A; P_B is the price of another good, good B; Y is income.

1. Is good A a normal good or an inferior good? Explain.
   
2. Is good B a complement or a substitute for good A? Explain.
   

Assume that the current price of good B is £5, income is £50 000, and the annual supply function for good A is:

                Q_SA = 100 + 10P_A

3. Calculate the equilibrium price and quantity.

4. Calculate price elasticity of demand if the price of good A rises by £5 from the equillibrium price and the demand decreases by 7% and what does this show about the product ?

5. Calculate the price elasticity of supply if the amount supplied increases by 26.60 units (from the equillibrium) and this results in a decrease in price of 4%. Suggest what this figure shows              

1. The purchasing manager of a distillery company is considering three sources of supply for oak barrels. The first supplier offers any quantity of barrels at `150 each. The second supplier offers barrels in lots of 150 or more at `125 per barrel. The third supplier offers barrels in lots of 250 or more at `100 each. The distillery uses 1,500 barrels a year at constant rate. Carrying costs are 40 percent of purchase price, and it costs the purchasing agent `400 to place an order. Calculate the total annual cost for the orders placed to the probable suppliers, and find out the supplier to whom the orders should be placed.
2. A company uses 8,000 units of a product as a raw material, costing `10 per unit. The administrative cost per purchase is `40. The holding costs are 28% of the average inventory. The company is following an optimal purchase policy and places orders according to the EOQ. It has been offered a quantity discount of 1% if it purchases its entire requirement only four times a year. Should the company accept the offer of quantity discount of one percent? If not what minimum discount should the company demand?
3. Chris Sandvig Irrigation has summarized the price list from four potential suppliers of an underground valve given in the table below. Annual usage is 2400 valve, order cost is `10 per order and annual inventory holding cost are `3.33 per unit. Which vendor should be selected and what order quantity is best if Sandvig Irrigation wants to minimize total cost?

4. MP VanOyen Manufacturing has gone out on bid for a regular component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is `50 and the annual holding cost per unit is`5.

1. What is the economic order quantity?
2. Which supplier should be used and why?
3. What is optimal order quantity and total annual cost of ordering, purchasing and holding the component?
   5. Radovilsky Manufacturing Company in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs `50. The cost of each light is `1. The holding costs is `0.10 per light per year.
      1. What is the optimal size of the production run?
      2. What is the average holding cost per year?
      3. What is the average set up cost per year?
      4. What is the total cost per year including the cost of the lights?

Q1 .. Ministry of Social Works of Kuwait will build one new school in Salmiya and one new hospital in Ahmadi

Write the short essay (70-100 words) by answering the below questions:

a. What is changing, AD or SRAS?

b. Will it increase or decrease? Explain how this change will take place.

c. Draw the appropriate change below.

d. What happened to Real GDP?

e. What phase of the business cycle would the economy be in?

f. What is likely happening to unemployment?

g. What happened to price level?

Q2 . Banks offer lower interest rate than last month

Write the short essay (70-100 words) by answering the below questions:

a. What is changing, AD or SRAS?

b. Will it increase or decrease? Explain how this change will take place.

c. Draw the appropriate change below.

d. What happened to Real GDP?

e. What phase of the business cycle would the economy be in?

f. What is likely happening to unemployment?

g. What happened to price level?

Q3 - Firms expect lower price level in the future

Write the short essay (70-100 words) by answering the below questions:

a. What is changing, AD or SRAS?

b. Will it increase or decrease? Explain how this change will take place.

c. Draw the appropriate change below.

d. What happened to Real GDP?

e. What phase of the business cycle would the economy be in?

f. What is likely happening to unemployment?

g. What happened to price level?

Q 4 - Country experiences a decrease of the number of expats

Write the short essay (70-100 words) by answering the below questions:

a. What is changing, AD or SRAS?

b. Will it increase or decrease? Explain how this change will take place

. c. Draw the appropriate change below.

d. What happened to Real GDP?

e. What phase of the business cycle would the economy be in?

f. What is likely happening to unemployment?

g. What happened to price level?

J.D. is an 80-year old woman with diabetes. She is hospitalized in respiratory failure. She is placed on a ventilator and sometimes responds by opening her eyes. She has advanced directives that her husband brings to the hospital. He says that she must be taken off the ventilator and provide comfort care only. However, their only child, a daughter, tells you she will sue the hospital if her mother is not given all care possible. What should you do? What outcome should you expect?