You are bearish on Telecom and decide to sell short 100 shares at the current market price of $39 per share.

a. How much in cash or securities must you put into your brokerage account if the broker’s initial margin requirement is 50% of the value of the short position?

b. How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position? (Round your answer to 2 decimal places.)

A producer of athletic shoes produces all of its basketball shoes at a constant marginal cost of $50 per pair. It sells a brand-name version of the shoe with a basketball star endorsement to one market (A) and an identical “discount” brand version to another separate market (B). The demand for the shoes in each market is given by:

QA = 100 – 0.2p
QB = 40 – 0.4p

• What is the price per pair in the brand-name market (A) dollar?
• What is the price per pair in the discount market (B) dollar?

1. The Midwest Clinic is a profit-maximizing organization in a monopolistic market. Its demand function is P = 100 – 10Q, where P is the price of the service and Q is the quantity of service visits demanded. Its cost conditions are as follows: fixed costs are $50 and marginal cost is $30 per visit in volume.

1. Use Twice As Steep Rule to form the marginal revenue function.
2. Draw demand curve, marginal revenue curve, and marginal cost curve.
3. Find the profit-maximizing quantity and price.

2. Mattie Liu’s Tea Company produces and sells teapots in a perfectly competitive market. The minimum of Liu’s average total cost is $10 at q=200 teapots. The minimum of Liu’s average variable cost is $6 at q=100 teapots. The market price for teapots is $7.

a. Draw market and firm graphs of this situation. Is Liu making a profit? Explain and show on the graph.

b. Will Liu stay in business? Why or why not? At what price will Liu make a positive economic profit?

The table shows the Hornet nation’s demand for stingers. The marginal cost of stingers for each seller is $10. If there are six sellers of stingers in Hornet and if they collude, then what will be the price and quantity of each seller?

Bramble Corp. adopted the dollar-value LIFO method of inventory valuation on December 31, 2016. Its inventory at that date was $1102000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

What is the cost of the ending inventory at December 31, 2019 under dollar-value LIFO?

Suppose an economy has only three goods and the typical family purchases the amounts given in the following table. The base year is 2012.

b. Compute the cost of consumption basket in 2012 and 2017 using base year quantities.

c. What is the CPI for in 2017?

d. What is the inflation rate between 2012 and 2017?