Jim is a lawyer who works for GT Law Firm in Dallas, Texas. Jim lives in Frisco, Texas which is 25 miles from his office in Dallas. Jim does not like Frisco and ankdecides it would be best to move to Fort Worth, Texas and commute the 109 miles to the firm in Dallas. Jim incurs $2,500 of moving expenses. After moving to Fort Worth, the partners in the law firm take notice of Jim’s dedication and give him 100 stock options as part of his compensation. The value of the firm’s stock is $100 per share and the option exercise price is $105. Two years after receiving the options,Jim exercises the options when the stock price is $125 per share. Three years after that, Jim sells the stock for $120 per share and then leaves the firm to start his own firm. How much (if any) of a deduction for moving expenses is Jim entitled to? What are the tax consequences of the transactions related to the stock options?

How much does a sleeping bag cost? Let's say you want a sleeping bag that should keep you warm in temperatures from 20°F to 45°F. A random sample of prices ($) for sleeping bags in this temperature range is given below. Assume that the population of x values has an approximately normal distribution.

80 65 95 90 105 100 30 23 100 110 105 95 105 60 110 120 95 90 60 70

(a) Use a calculator with mean and sample standard deviation keys to find the sample mean price x and sample standard deviation s. (Round your answers to two decimal places.)

x = $

s = $

(b) Using the given data as representative of the population of prices of all summer sleeping bags, find a 90% confidence interval for the mean price μ of all summer sleeping bags. (Round your answers to two decimal places.)

lower limit $

upper limit $

Compute the diluted earnings per share for 2015.

D & H Inc. has 9,000,000 shares of $1 par value common stock outstanding at January 1. On April 1, D & H issued 1,000,000 shares at a cost of $26 per share. In addition, at December 31, 2015, 400,000 shares were issuable upon exercise of executive stock options which an exercise price of $20 per share. The average market price of the company’s stock was $30 per share.

Dun & Harvey Inc. also has two convertible securities.

Convertible bonds, $5,000,000 face value, 6% interest, convertible into 200,000 shares of common stock.

20,000 shares of $100 par value convertible preferred stock with a dividend rate of 5%. Each $100 par value share is convertible into 8 shares each.

During 2015, D & H’s net income was $20,700,000 and all preferred stock dividends were declared and paid.The company’s tax rate is 40%.

Chip Monk has been in the business of supplying commercial carpet to companies for several years. On 11/1 Polly Ester’s Supplies calls to purchase 100 yards of “Heather Blue, Industrial Grade” carpet. Chip offers the carpet at $37 per yard, with delivery on or before 12/31, payment on delivery. Polly accepts. On 11/3 Polly sends the following letter confirming the deal: “As discussed and agreed, we hereby accept your offer for 100 yards of “Heather Blue, Industrial Grade” carpet at a price of $37 per yard, delivery on 12/31 or earlier, payment on delivery. We also reserve the right to purchase up to 500 yards more at the same price for a period of six months from this date (signed) Polly Ester (owner of Polly Ester’s Supplies.) As of 11/21 Chip has not responded to Polly. You have been asked by Chip to draft a memo indicating the following: Is there a contract? If so, for what? What law applies here and why?

Compact fluorescent bulbs are much more efficient at producing light than are ordinary incandescent bulbs. They initially cost much more, but last far longer and use much less electricity. According to one study of these bulbs, a compact bulb that produces as much light as a 100 W W incandescent bulb uses only 23.0 W W of power. The compact bulb lasts 10000 hours, on the average, and costs $ $ 11.00, whereas the incandescent bulb costs only $ $ 0.75, but lasts just 750 hours. The study assumed that electricity cost $ $ 0.070 per kilowatt-hour and that the bulbs were on for 4.0 h per day.

a.What is the total cost (including the price of the bulbs) to run incandescent bulbs for 3.0 years

b. What is the total cost (including the price of the bulbs) to run compact fluorescent bulbs for 3.0 years?

c.What is the resistance of a "100 WW" fluorescent bulb? (Remember, it actually uses only 23 WW of power and operates across 120 VV.)

QUESTION 1 (1,500 pts)

Consider an economy that produces and consumes breads and automobiles. In the following table are data for two different years.

1. Using 2000 as the base year, compute the following statistics for each year: Nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed-weight price index such as the CPI. (Present your results neatly and concisely in a table. You do not need to show your workings)

2. How much did prices rise between 2000 and 2010? Compare the answers given by the Laspeyres and Paasche price indices. Explain the difference.

3. Suppose you are a senator writing a bill to index Social Security and federal pensions. That is, your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Why?

1. Total 20pts. Suppose the firm knows that, there are two types of buyers: ?? = 100 − 4?, ?? = 400 − 2?. The firm’s ATC=MC=5.

   1. a) Suppose the firm operates as a single price monopoly (the same price in both markets), what will be the market price, market quantity, and profit? (HINT: You need to find market demand for both type a and type B, Q=Qa+Qb, then solve! Draw diagram for yourself.) (3pts)

   2. b) What will be consumer surplus, producer surplus, and deadweight loss? Draw a graph

      (5pts)

   3. c) Under which conditions can this firm use segmented price discrimination? (2pts)

   4. d) Suppose that the firm conditions from c) hold, what should the firm charge in each

      market? (7pts)

      1. What is output in each market?

      2. What is total market quantity?

      3. What is the firm’s profit?

   5. e) Does segmented price discrimination of the market improve efficiency? Why? (3pts)

The flat screen TV market is dominated by Sony (firm 1) and Samsung (firm 2) in a
city. The demand during a typical month for Sony’s product is Q1 = 5000-10P1 +5P2 and
for Samsung’s product is Q2 = 5000-10P2 +5P1, where P1 is Sony’s price, P2 is Samsung’s
price. Both firms’ marginal cost is constant at $100 per TV. Both compete by choosing a
price for the whole month simultaneously.

Task 1: Find the Bertrand Competition Equilibrium. Illustrate it in a graph of best response curves.

Task 2: Now suppose the month before Christmas is a special month where the demand
is higher. The new demand functions are: Q1 = 8000-10P1+5P2 and Q2 = 8000-10P2+5P1.
Find the new equilibriumand show how the best response curves move in a figure with
Sony’s price choice on the horizontal axis and Samsung’s price choice on the vertical axis

Consider a competitive market served by many domestic and foreign firms. The domestic demand for these firms’ product is Qd = 1200 - 2P. The supply function of the domestic firms is QSD = 200 + 1P, while that of the foreign firms is QSF = 250. Instructions: Enter your responses for equilibrium price rounded to the nearest penny (two decimal places). Enter your responses for equilibrium quantity rounded to one decimal place.

a. Determine the equilibrium price and quantity under free trade. Equilibrium price: $ Equilibrium quantity: units

b. Determine the equilibrium price and quantity when foreign firms are constrained by a 100-unit quota. Equilibrium price: $ Equilibrium quantity: units

c. Are domestic consumers better or worse off as a result of the quota? Better off Worse off Neither better nor worse off

d. Are domestic producers better or worse off as a result of the quota? Neither better nor worse off Worse off Better off

Construct profit diagrams at expiration time to show what position in IBM puts, calls and/or underlying stock best expresses the investor’s objectives described below. IBM currently sells for $150 so that profit diagrams between $100 and $200 in $10 increments are appropriate. Also assume that at-the-money puts and calls currently cost $20 each. The call with strike $140 costs $25 and the call with strike $160 costs $17

(a) An investor wants to benefit from IBM price drops, but does not want to lose more than $20 on the investment.

(b) An investor wants to capture profits if IBM price declines and losses if IBM price increases. The investor wants to break even if IBM price does not change.

(c) An investor wants to bet that the upcoming IBM earnings announcement is very close to market expectations—meaning that the price will not move by more than $10 dollars.