A chemical company produces a special industrial chemical that is a blend of three chemical ingredients. The beginning-year cost per pound, the ending-year cost per pound, and the blend proportions follow. (Round your answers to the nearest integer.)

(a)

Compute the price relatives for the three ingredients.

(b)

Compute a weighted average of the price relatives to develop a one-year cost index for raw materials used in the product.

I =

What is your interpretation of this index value?

Cost of raw materials is up  % for the chemical.

Quantities Produced Prices CDs Tennis Rackets Price per CD Price per Tennis Racket 2011 110 210 ?$21 ?$100 2012 125 230 ?$25 ?$125 Real GDP in 2011 using 2012 prices is ?$25625 . ?(Enter your response as an? integer.) Real GDP in 2012 using 2012 prices is ?$31875 . ?(Enter your response as an? integer.) Real GDP grew by 24.39 percent. ?(Enter your response rounded to two decimal? places.) The price index for GDP for 2012 using 2012 as the base year is nothing . ?(Enter your response rounded to two decimal? places.) Prices increased by nothing percent. ?(Enter your response rounded to two decimal? places.)

An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to the nearest cent and percentage answers to two decimal places.

1. Alan states that he does not care whether he drinks Coke or Pepsi “as long as it is soda.” Assume that Alan can spend $100 per month on soft drinks.

1. Does Alan's statement violate any of the properties we require for preferences?
2. How many cans of Coke and Pepsi does Alan consume, respectively, if the price of Coke is $4 per can and the price of Pepsi is $2.50 per can?
3. How does your answer change, if the price of Pepsi increases to $3? What if it increases to $5?
4. Assume the original prices, but now assume that Alan's income doubles. Is he better off? How does his consumption of Coke and Pepsi change?
5. Illustrate your answers A) through C) graphically.

A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 7%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places.

An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 9% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to the nearest cent and percentage answers to two decimal places.

Price @ 9% Price @ 5% Percentage Change

10-year, 10% annual coupon

10-year zero

5-year zero

30-year zero

$100 perpetuity

2.-Airtight and Longlife are competitors in the commercial container industry. The demand curves for an important product of both companies are:

Airtight PA = 1000 - 5QA QA = 200- .2Pa
Longlife PL = 1600 - 4QL

The companies currently sell 100 and 250 units of their product, respectively:
a) What are the price point elasticities currently facing the two firms?
b) Suppose Longlife lowers its prices and increases its sales to 300 units, and that this action results in Airtight's sales decrease to 75 units. What is the indicated cross price elasticity between Airtight and Longlife containers?
c) Does Longlife's supposed price reduction make sense from an economic point of view, assuming that the managers of that company operate under the slogan of maximizing profits?

An investor purchased the following five bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to the nearest cent and percentage answers to two decimal places. Price @ 8% Price @ 6% Percentage Change 10-year, 10% annual coupon $ $ % 10-year zero 5-year zero 30-year zero $100 perpetuity

The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:

The net income was $822,000 and the declared dividends on the common stock were $60,000 for the current year. The market price of the common stock is $21.00 per share.

For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places.