1.

The US and Germany both produces beef and computers. In one day, the US can produce either 500 pounds of beef or 200 computers. Germany on the other hand can produce 250 pounds of beef and 500 computers

1a) what is the pre-trade (autarkic) price of computers in the US? _______________________

1b) What is the pre-trade (autarkic) price of computers in Germany? ____________________

1c) Which country has comparative advantage in producing computers? __________________

1d) Going by Ricardo, which country should specialize in computer production? _______________________

1e) If the US and Germany decide to trade with each other, what will be the range of the international trade price of computers ?

_______________________________________________

1f) If the negotiated trade price is 1 computer for 1 pound of beef and Germany decides to keep 300 computers at home and sell the rest, how many pounds of beef can it get in exchange? _______________________________

1g) Based on your answer in part (e), does Germany gain by trading computers with the US? If so, how? Explain.

2.  

Suppose that all goods are made with two factors, labor and capital. The table below shows the total endowments of each factor in the U.S. and Canada.

Endowment for Labor and Capital

2a) Which country has a relative abundance in labor? Which country has capital abundance? How do you know?

2b) What should be the direction of specialization and trade for the US? what should be the direction of trade for Canada? Explain why. Which theory are you utilizing to answer the question?

Bell Computers purchases integrated chips at $350 per chip. The holding cost is $33 per unit per year, the ordering cost is $122 per order, and sales are steady, at 395 per month. The company's supplier, Rich Blue Chip Manufacturing Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

Quantity Purchased
1-99 units= $350 price/unit
100-199 units= $325 price/unit
200 or more units= $300 price/unit

a) What is the optimal order quantity and the minimum cost for Bell Computers to order, purchase, and hold these integrated chips?

b) Bell Computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in part a. What is the optimal order quantity and what is the optimal cost?

Microeconomics:

1. Suppose the demand and supply functions of cigarettes in a competitive market are as follows:

Demand: Q = 100 – 4P

Supply: Q = –20 + 2P

a. Find the equilibrium price and quantity of cigarettes.

b. Suppose the government imposes a $6 per-unit tax on consumers of cigarettes. Find the per-unit price of cigarettes paid by consumers and the per-unit price of cigarettes received by sellers after the imposition of the tax. Show your workings.

c. Draw a well-labeled diagram showing the effect of the tax on the price of cigarettes paid by buyers, the price of cigarettes received by sellers, the government tax revenue and the equilibrium quantity of cigarettes.

d. Calculate the per-unit tax burden on consumers and sellers. Show your workings.

e. Calculate the after-tax consumer surplus, producer surplus, and deadweight loss. Show your workings.

A monopolist firm has the following cost function:

C(q)=0.5q^2 +10q+2

The (inverse) demand function for the monopolist’s output is as follows:

P(q) = 100 - q

a. Assume that the monopolist must charge the same price for all units of output (i.e. the monopolist cannot price discriminate). How many units of output will the monopolist produce to maximize profits? At what price will this output be sold? Illustrate this outcome in a graph.

b. How much profit does this monopolist earn?

c. Compute the own price elasticity of demand at the monopoly price and quantity. What is the value of the Lerner Index at the monopoly outcome?

d. Does this monopoly outcome maximize welfare? Why or why not?

If this outcome is inefficient, calculate the value of the deadweight loss the monopoly imposes on society. Which region on your graph represents this deadweight loss?

The inverse demand curve a monopoly faces is

p = 100 - 2Q

The​ firm's cost curve is

C (Q) = 20 + 6Q

What is the​ profit-maximizing solution?

The profit-maximizing quantity is _______. (Round your answer to two decimal places.)

The profit-maximizing price is $________. (Round your answer to two decimal places.)

What is the firm's economic profit?

The firm earns a profit of $________. (Round your answer to two decimal places.)

How does your answer change if C(Q) = 150 + 6Q? The increase in fixed cost

A. has no effect on the equilibrium​ quantity, but the equilibrium price increases and profit increases.

B. has no effect on the equilibrium price and​ quantity, but profit will decrease.

C. causes the firm to increase both the price and​ quantity, and profit increases.

D. has no effect on the equilibrium​ quantity, but the equilibrium price increases and profit decreases.

1-The statement of changes in stockholders' equity:

Multiple Choice

Is part of the statement of retained earnings.

Shows only the ending balances in stockholders' equity.

Describes changes in paid-in capital and retained earnings subcategories.

Does not include changes in treasury stock.

Is reported by very few companies.

2- Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the balance in the Treasury Stock account on August 2?

Multiple Choice

$5,050.

$2,600.

$100.

$1,200.

$0.

3- Which of the following is true of a stock dividend?

Multiple Choice

It is a liability on the balance sheet.

The decision to declare a stock dividend resides with the shareholders.

Transfers a portion of equity from retained earnings to a cash reserve account.

Does not affect total equity, but transfer amounts between the components of equity.

Reduces a corporation's assets and stockholders' equity.

4- All of the following statements regarding stock dividends are true except:

Multiple Choice

Directors can use stock dividends to keep the market price of the stock affordable.

Stock dividends provide evidence of management's confidence that the company is doing well.

Stock dividends do not reduce assets or equity.

Stock dividends decrease the number of shares outstanding.

Stock dividends transfer a portion of equity from retained earnings to contributed capital.

5- Alto Company issued 7% preferred stock with a $100 par value. This means that:

Multiple Choice

Preferred shareholders have a guaranteed dividend.

The amount of the potential dividend is $7 per year per preferred share.

Preferred shareholders are entitled to 7% of the annual income.

The market price per share will approximate $100 per share.

Only 7% of the total paid-in capital can be preferred stock.

6- Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

Multiple Choice

$1.65.

$1.99.

$1.31.

$0.34.

$4.89.

7- The following data has been collected about Keller Company's stockholders' equity accounts:

Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is:

Multiple Choice

1,150.

1,000.

575.

11,000.

21,000.

8- A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

Multiple Choice

$100.

$600.

$1,000.

$6,000.

$7,000.

9- Sweet Company’s outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 5,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends.

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Multiple Choice

$15,000 preferred; $25,000 common.

$11,000 preferred; $29,000 common.

$5,000 preferred; $35,000 common.

$12,000 preferred; $28,000 common.

$10,000 preferred; $30,000 common.

10- Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

Multiple Choice

Financial leverage.

Discount on stock.

Premium on stock.

Preemptive right.

Capital gain.

1. For a new product, sales volume in the first year is estimated to be 50,000 units and is projected to grow at a rate of 7% per year. The selling price is $100 and will increase by $10 each year. Per-unit variable costs are $22 and annual fixed costs are $1,000,000. Per-unit costs are expected to increase 4% per year. Fixed costs are expected to increase 10% per year. Develop a spreadsheet model to predict the net present value of profit over a three-year period, assuming a 4% discount rate.

Note: Please include Excel worksheet with all the details with your answer.

2. Suppose that a firm can produce a part it uses for $500 per unit, with a fixed cost of $12,000. The company has been offered a contract from a supplier that allows it to purchase the part at a cost of $510 per unit, which includes transportation. The key outputs in the model are the difference in these costs and the decision that results in the lower cost. Assume that the production volume is uncertain. Suppose the manufacturer has enough data and information to estimate that the production volume will be normally distributed with a mean of 1,200 and a standard deviation of 85. Use a 100-trial Monte Carlo simulation to find the average cost difference and percent of trials that result in manufacturing or outsourcing as the best decision. (Your data table should show both the cost difference and decision for each trial.)

Note: Please include Excel worksheet with all the details with your answer.

3. Find the feasible region for the following system of inequalities and show it on a graph.

       x + y > 3

     3x + 2y ≤ 12      

Advanced Products Corporation has supplied the following data from its activity-based costing system:

During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow:

Required:

1. Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. Calculate the total overhead costs for the order from Shenzhen Enterprises including customer support costs.

4. Calculate the customer margin for Shenzhen Enterprises.

What is the purchase price if Benjamin purchases a commercial building on 1/1/2011 and agrees to pay the purchase price in seven installments of $16,000 with the first payment is due on 1/1/2012. Assuming an annual compounded implicit rate of 8%, what is the purchase price?

(PV annuity due of 1 is 5.62288)                                                   (FV ordinary annuity of 1 is 8.92280)

(PV ordinary annuity of 1 is 5.20637)                                           (FV of annuity due of 1 is 9.63660)

Assume that in a two period model the current stock price is $25/share. The gross rate of return on the stock over each period is either +40% or -20% while the single period simple rate of interest is 10%. Can you price a European put option on the stock with a strike of $30/share that expires at the end of the second period? Would you be able to price an American put with the same characteristics as the one above? Does it ever make sense to exercise the put at the end of the first period?