Question 5

Complete parts 1 and 2 below:

Part 1:

Suppose in Janet’s utility function 2 hot dogs are perfect substitutes for 1 cheeseburger. If the price of one hot dog is $1 and the price of one cheeseburger is $3, how should Janet allocate her $15 budget between hot dogs and cheeseburgers to maximize her satisfaction?

A. she should spend all money on cheeseburgers

B. she should purchase 6 hot dogs and 3 cheeseburgers

C. she should purchase 9 hot dogs and 2 cheeseburgers

D. none of the others

E. she should spend all money on hot dogs

Suppose in Janet’s utility function 2 hot dogs and 1 bottle of coke are perfect complements. If the price of one hot dog is $1 and the price of one coke is $1.5, how should Janet allocate her $7 budget between hot dogs and cheeseburgers to maximize her satisfaction?

A. she should spend all money on hot dogs

B. she should purchase 4 hot dogs and 1 bottle of coke

C. she should purchase 1 hot dog and 4 cheeseburgers

D. none of the others

E. she should spend all money on cheeseburgers

Part 2:

We observe that Shelton purchased 20 apples and 10 orange in period 1, when the price of apple is $1 and the price of orange is $2. Suppose Shelton has regular preference (strictly monotone, transitive, complete, convex). Which statement cannot be inferred from the given information?

A. Shelton prefers (20,10) to (30,3)

B. Shelton prefers (30,22) to (20,10)

C. Shelton prefers (20,10) to (10,10)

D. Shelton prefers (20,10) to (10,20)

We observe that Shelton purchased 20 apples and 10 oranges in period 1, when the price of apple is $1 and the price of orange is $2. We also observe that Shelton purchased 10 apples and 20 oranges in period 2, when the price of apple is $1.5 and the price of orange is $1.

A. Shelton prefers (20,10) to (10,20)

B. We can say for sure Shelton is not maximizing utility

C. Shelton‘s income is not changing

D. Shelton prefers (10,20) to (15,10)

Balance Sheet
Brand Brew Inc.
Years 1 & 2 ($000's)
Year 1 . Year 2 .
Cash & Marketable
Securities 309,705 59,167
Accounts Receivable 108,732 705,426
Inventories 138,577 215,159
Other Current Assets 49,515 74,144
Total Current Assets 606,529 1,053,896
PP&E, Net 869,710 1,380,239
Intangibles 86,289 1,256,145
Other Assets 177,164 607,131
Total Assets 1,739,692 4,297,411
Accounts Payable 222,493 334,647
Other current liabilities 210,052 669,195
Short-term Debt 85,000 144,049
Total Current Liabilities 517,545 1,147,891
Long-term debt 20,000 1,383,392
Other long-term liabilities 250,835 784,277
Total liabilities 788,380 3,315,560
Capital Stock 8,922 28,334
Retained earnings 954,981 1,086,965
Adjustments -12,591 -133,448
Total shareholders' equity 951,312 981,851
Total Liabilities & Equity 1,739,692 4,297,411

Income Statement for Brand Brew Inc. Year 1 Year 2 Revenues 2,429,462 3,776,322 COGS 1,537,623 2,414,530 Depreciation 121,091 230,299 SG&A 619,143 833,208 EBIT 151,605 298,285 Interest Expense –14,403 49,732 Other income 32,005 8,047 Pre-Tax Income 198,013 256,600 Income Tax 75,049 94,947 Net Income 122,964 161,653

7. Refer to Brand Brew, Inc. financial statements,
Which of the following statements is correct?
(x) Both total asset turnover and ROA for the
firm decreased from Year 1 to Year 2.
(y) The amount of debt held by Brand Brew, Inc.
increased by more than 300 percent from
Year 1 to Year 2.
(z) The ROE for Brand Brew, Inc. rose from
12.9% in Year 1 to more than 17.4% in
Year 2.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

8. Refer to Brand Brew, Inc. financial statements.
What is the most important determinant of the
change in ROE?
A. ROA
B. Profit Margin
C. The change in leverage
D. Total Asset Turnover
E. Both A and B are important determinants

1. Consider the cost function, C = 2q^2(wr)^1/2. Suppose the firm with this cost function is perfectly competitive in its output market and faces an output price, p. A. Find the marginal cost function for output. B. Find the average cost function. Show your work. C. Is this a long-run or short-run cost function? Explain. D. Derive the cost elasticity with respect to output. Show your formula and all calculations. What does this value of cost elasticity tell you about the degree of scale economies? Explain. E. Derive the supply function for output. Show all your logic and work. 2. Consider the cost function, C(q) = 0.5 q^2 − 10q + 200. A. Is it a short or long run cost function. Explain. B. Calculate the short-run average total cost function. C. Find the output level at which average total cost is minimized. Show your logic and work. D. Calculate the output supply function for a competitive firm whose market determined price of output is given by p. Show your logic and work. E. What is the shut-down condition? Explain its logic. 3. Consider the production function, q = L^1/4E^1/4K^1/4, where L is labor, E, energy, and K, capital. Their prices are respectively w, u, and r. The price of output is given by p. Output and input prices are competitively determined so that they are parametric (constants). Capital, K, is a fixed input. The short-run variable cost function is given by CV(q, w, u, K) = 2q2(wu/k)1/2. A. Use the short-run variable cost function to find the profit-maximizing output supply function. B. Find the maximum profit function. C. Compute the derivative of the maximum profit function with respect to output price, p. Does it look familiar? D. Compute the derivative of the maximum profit function with respect to input price, w, and multiply it by − 1: − ∂π/∂w where π denotes the maximum profit function. This derivative gives the profit-maximizing demand for labor. Together, the derivatives, − ∂π/∂w, − ∂π/∂u, and ∂π/∂p, constitute Hotelling’s lemma, the analog to Shephard’s lemma for the cost and expenditure functions.

Potential Answers :

A.

B.

D.

An equipment costs $1,000,000, the loan rate on the equipment is 10%, and the marginal tax rate is 40%. Assume that the equipment will have 3-year MACRS life but will be used for four years (with the annual depreciation rates of 33.33% the first year, 44.5% the second year, 14.75% the third year, and 7.5% the fourth year). If the company borrows and buys, assume that it can obtain a maintenance contract at a cost of $20,000 per year. The equipment will have a residual value of $ $200,000 at the end of year 4. Assume that the firm can lease the equipment, instead of borrowing and buying it, at a cost of $250,000 per year. Please answer the following questions: 1) What is the present value of the cost of owning? 2) What is the present value of the cost of leasing? 3) Should the firm buy or lease the equipment?

Module 2 Course Work

1. Read Pages 12-30.
2. Use the week 1 video's and this week's reading to complete Lab 1.

Lab 1

This week’s assignment must be done using Microsoft Access.

Please use this assignment as a rubric.

Cross-off each step as you complete it.

1. Create a new Access Database. Name the database using your name.
2. 
   Create a table called Address.
3. 
   Within the Address table create the following fields:
4. 
   FirstName
5. LastName
6. 
   StreetAddress
7. 
   City
8. 
   State
9. 
   Zipcode
10. 
    Telephone
11. Please note:
    (Database table and field names should never contain spaces)
12. 
    Default data should be text.
13. 
    Primary Key is the first and last name.
14. 
    (Please research how to create 2 primary keys in a table.)
15. Create another table named Event.
16. 
    In the Event table create one field named EventName.
17. 
    The data entered in the EventName field should be text data.
    Primary Key is EventName.

18. Create another table named Price
19. 
    In the Price table create one field named Package.
20. 
    Primary key is Package.
21. 
    Create another field named Amount.
22. 
    Create a third field named Discount.
23. 
    Insert 5 records in the address table – make up the data.
24. 
    Insert the name of five holidays in the Event table.
25. 
    Do not insert any records into the Price table.

26. Save your database with your firstnamelastname (no spaces).
27. 
    Upload this database by the deadline. See below

how many 1/2 teaspoons of salt will dissolve in 1/2 cup room temp. water and how many in boiling water and why?

Types of Interview Questions

I. Getting Acquainted

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2.


II. Experience & Qualifications

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III. About the Company

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IV. About the Future

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V. Challenging

1.

2.


VI. Situational

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2.


VII. Behavioral

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VIII. Salary

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IX. Asking your own question

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2.

Suppose the expenditure function is e(p, u) = p1 * p2 + 2p1^1/2 * p2^ 1/2 * u. Then ∂e/∂p1 (p, u) = p2 + (p2/p1)^1/2*u and ∂e/∂p2(p, u) = p1 + (p1/p2)^1/2*u

1. (a) Find the Hicksian demand function h(p, u).

2. (b) Find the indirect utility function v(p,w) (this should be a function of w, p1, and p2).

3. (c) Find the demand function x(p, w). Are goods 1 and 2 substitutes or complements?

Wilfley and colleagues (2008) tested whether the antiobesity drug sibutramine would be an effective treatment for people with binge eating disorder. They measured the frequency of binge eating every 2 weeks for 24 weeks during treatment. The following table lists a portion of the data similar to results reported by the authors for the frequency of binge eating over the first 8 weeks of the drug treatment.

(a) Complete the F-table. (Round your answers to two decimal places.)

Make a decision to retain or reject the null hypothesis. (Assume experimentwise alpha equal to 0.05.)

Retain the null hypothesis.Reject the null hypothesis.    

(b) Use the Bonferroni procedure to make the post hoc test. In which week do we first see significant differences compared to baseline?

Week 2 is the first week where significant differences from baseline are evident.Week 4 is the first week where significant differences from baseline are evident.    Week 6 is the first week where significant differences from baseline are evident.Week 8 is the first week where significant differences from baseline are evident.None of the weeks are significantly different from the baseline.