A monopolist faces the following demand curve: P = 400 - 3Q, its total cost is given by: TC = 3000 + Q² and its marginal cost is given by: MC = 2Q.

(a) If it is a single price monopolist, what is its profit maximizing price and quantity? Show your work. How much is the profit? How much are consumer surplus and producer surplus?

(b) Suppose it is a first degree price discriminator instead of a single price monopolist. What is the lowest price that the monopolist will charge? How much will be the profit (loss) of the firm? Show your work. How much are consumer surplus and producer surplus?

European call option on Sunny Resorts Inc (SRI) has a strike price of $40 and exercise date of three months.

a)With respect to the buyer of the call option, draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

b)With respect to the seller of the call option, draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration

Question 2: Put Option

A European put option on Sunny Resorts Inc (SRI) has a strike price of $40 and exercise date of three months.

a)With respect to the buyer of the put option, draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.

b)With respect to the seller of the put option, draw a payoff diagram showing the value of the put at expiration as a function of the stock price at expiration.

Question 3 Option Premiums

Sunny Resorts Inc (SRI) stock is trading today at $50 per share.There are multiple European options on SRI, which all have an exercise date of three months.

a)The first call option has the strike price of $45, whereas, a second call option has the strike price of $55.What can you conclude about the premium of each of the call options?

b)The first put option has the strike price of $45, whereas, a second put option has a strike price of $55. What can you conclude about the premium of each of the put options

A monopolist seller faces two buyer A and B. Each buyer has his own incremental reservation price for 1, 2, 3, or 4 units of Widgets as shown on the table below.

So for example, the A buyer has a total reservation price of 15 for 3 units of Widgets.

1) Suppose the seller cannot separate the buyers, and must charge the same per unit price to both of them. (Perhaps the seller cannot tell them apart) What price maximizes the sellers revenue?

To answer this first fill in the table below. You may restrict attention to the prices in the table ( price range 2-8) and state how many units of widgets each buyer would demand for each of these prices.

Second calculate the revenue the seller would earn at each of those prices, and determine the best price.

2) Now suppose the seller can distinguish the A buyer from the B buyer, and furthermore can charge them different prices. ( Perhaps the widgets are protected by import/export regulations, so the buyers in different countries are forced to pay their local prices) What two prices should the seller set to the two buyers to maximize revenue? For this problem consider and price in the range of( 1-14)

Carr Corporation issued $59,000 of 8 percent, 11-year bonds on January 1, Year 1, for a price that reflected a 9 percent market rate of interest. Interest is payable annually on December 31.

Required
a. What was the selling price of the bonds? (Round your intermediate calculations and final answer to the nearest dollar amount.)

b. Prepare the journal entry to record issuing the bonds. (Round your intermediate calculations and final answers to the nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

c. Prepare the journal entry for the first interest payment on December 31, Year 1, using the effective interest rate method. (Round your intermediate calculations and final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

A principal told his agent to sell 3 acres of land in an orchard for $ 6 million, in return for a 1 percent of the sale proceeds as commission. The agent was aware that the price of the land was on the rise and it was well sought after by Singaporean investors, but he did not disclose it to the principal. The agent then told the principal he found a first buyer who was willing to buy for $ 6 million and sold the land. Several months later, the principal discovered that the same piece of land fetched a higher price and it was sold for $ 8 million by another buyer. Upon investigation, the principal discovered that the agent and the first buyer were actually friends. He also came to realize that both the first buyer and the agent shared the profits from the sale. Advise the principal on his rights. Support your answer with reference to the relevant statutory provision and case laws.

Jack’s friend plans to buy a boat 45 years from now, when he retires. Today’s price for the boat is $300,000. The price is expected to rise 3% per year. The friend also wants to send his child to BC in 12 years. College is expected to cost $117,000 in the child’s first year, growing at 4% per year while in school. College lasts for 4 years and the first payment is due the first day of school. The friend has $25000 saved now and expects to put a certain fraction of his salary away each year, starting in 1 year with the final payment on the retirement date. His salary will grow by 2% per year. He currently makes $120,000. If Jack can earn 6% per year on the friend’s investments, what fraction of the friend’s salary must be saved?

12. Assume the BonBon Candy Company is a constant growth company whose last dividend was $3,00 and whose dividend is expected to grow indefinitely at 6% rate. It normally discounts all cash flow at 10% .

a. what is the firm’s expected dividend stream over the next three years ?

b. what is the firm’s current stock price ?

c. what is the stoch’s expected value one year from now ?

d. what are the following :

      i. the expected dividend yield during first year ?

      ii. the capital gain yield during the first year ?

      iii. the total return during the first year ?

e. now assume that the stock is currently selling at $79.50 . what is the expected rate of return on the stock?

f. what would the stock price be if its dividends were expected to have zero growth?

Pine Valley Catering uses a job order cost system. The following data summarize the operations related to the month of October, the first month of operations:

Materials purchased for $10,000 in cash.

Material requisitioned and labor used:

Factory overhead cost incurred in cash, $1,050

Depreciation of machinery, $700

Factory overhead applied at a rate of 50% of direct labor costs

Jobs completed: Nos. 100, 101, and 102

Jobs 100, and 101, were billed to customers at $6,000 and $3,000 respectively.

Adjust the Cost of Goods Sold Account for the under-or-over applied overhead.

Please show in details how do you Journalize the above transactions.

Please complete the 2019 Form 1040 (Stop after completing Line 12a),

Schedule-1 and Schedule A for the taxpayer:

Julie Anderson is a single parent and lives with her dependent daughter Alice who is 17-years old. Julie is a project manager and her W-2 wage is $75,200. Julie's father passed away on April 14. She inherited cash of $50,000 from her father and his baseball card collection, valued at $2,000. Every year she also receives interest income from a trust fund, which does not invest in municipal bonds or other tax-exempt securities. She took the standard deduction on her 2018 federal tax return.

Her 2019 filing status is head of household. She also has the following items for 2019:

Interest income from the trust fund……. $2,000

Ordinary dividend income.....................................................$500

(All the dividends are qualified for the 15% tax rate)

She also bought 50 shares Apple Inc. stock (AAPL) when the price was $100 per share. AAPL's market closing price for December 2019 is $250 per share.

During the year she went to Vegas and won $ 1,300 in a poker game. However, she lost $2,000 at other casinos. She also provided the following information:

Illinois state income tax refund………….. $ 250

Federal income tax refund……………… $2,400

Child support from her ex-husband…….. $6,000

Alimony payment from her ex-husband. Their divorce was finalized on August 15, 2019…..$12,000

During the year she received $4,000 insurance payout from AFLAC due to a temporary disability. She bought the insurance policy herself.

In addition, she also provided the following information:

State income tax withheld from her paycheck…………………. .$ 3,200

Federal income tax withheld from her paycheck………………. $ 9,000

Social security tax paid as an employee............. $ 5,640

Home mortgage loan interest…………………     $ 5,500

Real estate tax on her house…………………     $ 4,000

Personal-use car loan interest……………….. $ 2,000

She also paid $2,000 of qualified student loan interest.

Ms. Anderson had a medical procedure and incurred qualified medical costs of $30,000. Her health insurance policy pays 80% of the medical cost and Julie paid the remaining 20% out of her own pocket.

Her car was completely damaged in hurricane Hana, a federally declared natural disaster. Before the disaster the car has a fair market value of $12,000. She bought the car for $25,000 when it was new.

PLEASE ANSWER THIS QUESTION FROM ABOVE INFO

1. Form 1040 Line 1 _____ (W-2 wages, enter without comma or $)

2. Taxable interest on 1040 Line 2b _______

3. 1040 Line 3a _______

4. 1040 Line 3b ________

5. Schedule 1, Line 1 Taxable refunds (enter 0 if none) ______

6. Schedule 1, Line 8 Other income (enter 0 if none) ______

7. Schedule 1, Line 20 (Student loan interest) ______

8. Form 1040, Line 8b (Adjusted Gross Income) ______

9. Schedule A LIne 4 (Medical and Dental) ______

10. Schedule A Line 5a (State income tax paid) ______

11. Schedule A Line 5b (Real estate taxes) ____

12. Schedule A Line 7 _______

13. Schedule A LIne 10 (Interest you paid) ____

14. Schedule A Line 15 (Deductible Casualty Loss

15. Schedule-A Line 16 Other Itemized Deductions ____

16. Schedule-A Total Itemized Deductions _____

17. Form 1040 Line 9 (Standard or Itemized Deduction) _____

18. Taxable income _______

19. Total Tax (Form 1040 Line 12a) _______

Please be more specific what information you need more?

15) Suppose that the supply of avocado increases due to an improvement in the technology for growing avocado with less watering costs. Which of the following describes the mechanism of price and quantity adjustment assuming that there is no change in the demand curve?

a. There is a downward pressure on prices and an increase in the equilibrium quantity.

b. There is an upward pressure on prices and an increase equilibrium quantity.

c. There is no change in equilibrium price and quantity. d. There is a downward pressure on prices and a decrease

equilibrium quantity. e. None of the above.

in the in the

16) In answering the following question, it may be helpful to draw a supply and demand diagram. What is the effect on equilibrium price and quantity of an decrease in both supply and demand?

1. There is an increase in equilibrium price and an increase in equilibrium quantity.

2. There is no change in equilibrium price but a decrease in equilibrium quantity.

3. There is a decrease in equilibrium price and an increase in equilibrium quantity.

4. There is no change in equilibrium price or quantity.

5. There is an ambiguous effect on equilibrium price and a decrease in

   equilibrium quantity.

17) Suppose we know that the price elasticity of demand for organic apples is -1.2. If a grocer increases the price of organic apples by 15%, what would we expect to happen to the quantity of organic apples purchased?

a) Decrease b) Decrease c) Decrease d) Decrease e) Decrease

by 1.2% by 12% by 1.8% by 18% by 2.4 %

18) Suppose we know that the price elasticity of demand for sandals is -1.5. A shoe stores normally sells 100 pairs of sandals each month. If it decides to raise the price of its sandals by 30%, how many sandals would it then sell per month?

a) 115

4

b) 85 c) 70 d) 60 e) 55

19) If a increase in the price of apples from $1 to $2 per pair leads to an decrease in the quantity of apples demanded from 150 million to 100 million kg, then applying the midpoint formula, the price elasticity of demand equals:

a) -4/10 b) -6/10 c) -2/3 d) -3/2 e) -4/3

20) Suppose we observe that the revenue a music store receives from CD sales increases when the price of CDs is decreased. What can we conclude?

a) The price elasticity of demand for CDs is zero.
b) The demand for CDs is perfectly inelastic.
c) The price elasticity of demand for CDs is -1.
d) The price elasticity of demand for CDs is greater than -1 .

e) The price elasticity of demand for CDs is less than -1.