The demand for potato chips in a comptitive market is P=100-2Q and supply is P=Q.
- What is the equilibrium price and quantity?
- What is the value of the area of consumer and producer surplus?
- What are the gains to trade in the market?
Suppose the potato chip market is monopolized by one firm. Assume the suupply function now represents the monopolist's marginal cost schedule. The demand schedule is unchanged.
- What is the monopolist's marginal revenue mathematically?
- With a monopoly, what is the equilibrum price and quantity?
- What is the value of the area of consumer and producer surplus?
- What are the gains to trade in the market?
- What is the value of the dead weight loss?
In: Economics
The market for Soda was represented by the following demand and supply: Qd= -100P + 1150 and Qs= 400P +100. After the FDA required additional information on calories on labels, the cost to the Bottling Co. increased and the Supply shifted to Qs= 400P + 150 a. What is the Pre-Regulation equilibrium quantity and price? b. What is the Post-Regulation Equilibrium price and quantity? c. What is the pre and post regulation producer surplus? d. Based on the change in producer surplus, do you think the supplier would have volunteered to provide label on calories information without it being required? Explain.
In: Economics
3. An investor decides to buy USD 10,000,000 of an annual bond with a coupon of 1.75%, with exactly 3 years to maturity and giving a yield to maturity of 1.68%.
(a) Firstly, calculate the price of the bond. Do all your calculations to 2 decimal places. (10%)
(b) Now from this price calculate the Macaulay duration of the bond.
(c) Next, you should calculate the Modified duration and explain what this is telling you.
(d) And finally, calculate the BPV of the bond and explain what this is telling you. Remember for this one the market convention is to quote to 4 decimal places. Maximum word count: 100 words
In: Finance
Chapter Three Exercises
Exercise 3.9
At a used dealership, let X be an independent variable representing
the age in years of a motorcycle and Y be the dependent variable
representing the selling price of used motorcycle. The data is now
given to you.
X = {5, 10, 12, 14, 15}
Y = {500, 400, 300, 200, 100}
A.) Predict the selling price of a used motorcycle when the age is
11 years.
B.) Find a 95% confidence interval for E(y) when x = 11 years of
age.
C.) Find a 95% prediction interval for y when x = 11 years of
age.
In: Statistics and Probability
Western Electric has 25,500 shares of common stock outstanding at a price per share of $66 and a rate of return of 13.65 percent. The firm has 6,650 shares of 6.50 percent preferred stock outstanding at a price of $88.50 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $365,000 and currently sells for 104.5 percent of face. The yield to maturity on the debt is 7.69 percent. What is the firm's weighted average cost of capital if the tax rate is 40 percent?
Multiple Choice
10.57%
10.95%
11.39%
10.15%
10.38%
In: Finance
Given the following information: Year 1 free cash flow: 40 million Year 2 free cash flow 90 million Year 3 free cash flow 100 million After year 3, expected FCF growth is expected to be 4% The cost of capital is 9% Short term investments is 50 million Debt is currently 25 million Preferred shock is 5 million There are 20 million outstanding stock shares.
1. Calculate the intrinsic stock price
. If the current stock price was $100.00, would you buy the stock? Why/ why not.
In: Finance
3. Bart is a fisherman in Rend Lake Illinois and has a job paying $100/day. He has to decide whether to work at the store or fish in the lake and sell the fish. Demand for fish is Qd = 1000 – 2P per day where, P is price per kilo and Qd is quantity demanded. a) Assume the Rend Lake is a public property and find the optimum fish catch for Bart. b) Find the price and the total revenue Bart will make each day. c) Suppose Bart owned Rend Lake. Find the optimum catch per day and show that in this situation fish will last longer.
In: Economics
Western Electric has 24,000 shares of common stock outstanding at a price per share of $63 and a rate of return of 13.80 percent. The firm has 6,500 shares of 6.20 percent preferred stock outstanding at a price of $87.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $356,000 and currently sells for 103 percent of face. The yield to maturity on the debt is 7.60 percent. What is the firm's weighted average cost of capital if the tax rate is 40 percent?
Multiple choice...
10.08%
11.33%
10.87%
10.49%
10.30%
In: Finance
Circle the letter that correspond the best suitable answer:
The table below contains data for a country, which produces only X and Y.
The base year is 2010.
|
Year |
Price of X |
Q of X |
Price of Y |
Q of Y |
N GDP |
R GDP |
Def |
|
2010 |
$3.00 |
90 |
$1.00 |
150 |
|||
|
2011 |
$4.00 |
100 |
$2.00 |
180 |
|||
|
2012 |
$5.00 |
120 |
$3.00 |
200 |
For an economy as a whole,
|
a. |
wages must equal profit. |
|
b. |
consumption must equal saving. |
|
c. |
income must equal expenditure. |
|
d. |
the number of buyers must equal the number of sellers. |
In: Economics
A monopolist faces two totally separated markets with inverse
demand p=100 – qA and
p=160−2qB respectively. The monopolist has no fixed costs and a
marginal cost given by mc= 2 /3q
Find the profit maximizing total output and how much of it that
is sold on market A and market
B respectively if the monopoly uses third degree price
discrimination.
a) What prices will our monopolist charge in the two separate
markets?
b) Calculate the price elasticity of demand in each market and
explain the intuition behind the
relationship between the prices and elasticities in these two
separate markets.
In: Economics