The table below shows the supply and demand schedules for sales of bags of chips. PRICE (dollars/bag) QUANTITY DEMANDED QUANTITY SUPPLIED (bags/week) $1.00 200 110 $1.25 175 130 $1.50 150 150 $1.75 125 170 $2.00 100 190 Question 1: What is the market equilibrium? Question 2: Describe the situation in the chip market if the price were $1.75 per bag. Question 3: If the price is $1.75/bag, explain how the market reaches equilibrium. Question 4: A bad year for potatoes decreases the quantity of chips supplied by 45 bags a day at each price. What is the new equilibrium, and how does the market adjust to it? Question 5: Population increases, so the quantity demanded increases by 5 bags a day at each price. More farmers enter the market to supply potatoes, so the supply of chips increases by 50 bags a day at each price. If no other events occur to change supply or demand, what is the new equilibrium and how does the market adjust to it?

1) Imagine a perfectly competitive market that is currently in a long-run equilibrium with price=$10, individual firm quantity set at 10 units, and 100 active firms. Scientific discoveries about the health benefits of this good lead to a permanent increase in demand for this good (but no changes in firm costs).

Once the market is able to fully adjust, then compared to the original long-run equilibrium, the new long-run equilibrium will have

A) a lower price and fewer active firms

B) the same price, but fewer active firms

C) the same price, but more active firms

D) a higher price and more active firms

2) On the downward sloping portion of a firm's long-run average cost curve (LRAC), it is experiencing

A) diseconomies of scale

B) diminishing marginal returns

C) economies of scale

D)constant returns to scale

3) True/False: In the short run, a firm suffering losses will continue to operate (produce some positive quantity) as long as the price at least covers average variable cost.

A) True

B) False

Supply: p= q Demand: p= 200-q

25.The government enacts a price ceiling of $120. What is the new Consumer Surplus?

A)$10,000 (B)$1,000 (C)$2,225 (D)None of the above

26.Assume now that the government enacts a price ceiling of $20. What is the new consumer Surplus?   

A)$3,200 (B)$3,400 (C)$312.50 (D)$6,400

27.When the price ceiling is $20, consumer surplus declines, compared to the marketequilibrium. Why?

(A)The lower prices do not overcome reduced quantity (B)The lower quantity does compensate for higher prices (C)Both A and B

(D)The lower prices create a marginal elasticity of demand

28.What is the Deadweight Loss from a price ceiling of $20?

(A)$3,200 (B)$3,400 (C)$10,800 (D)$6,400

29.What is the Producer Surplus under a price ceiling of $20?

(A)$400 (B)$200 (C)$100 (D)$166.67

30.Which of the following policies is an example of a price ceiling?

(A)Rent controls (B)Minimum wages (C)Taxes (D)Subsidies

Today is 1 July 2020. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2013 to create this portfolio and this portfolio is composed of 35 units of instrument A and 32 units of instrument B. Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. Instrument B is a Treasury bond with a coupon rate of j2 = 3.06% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2023. (b) Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 3.69% p.a. and Joan has just received the coupon payment.

Select one: a. 94.9899

b. 98.2263

c. 100.0386

d. 98.5086

Today is 1 July 2020. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2013 to create this portfolio and this portfolio is composed of 26 units of instrument A and 47 units of instrument B.

• Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030.
• Instrument B is a Treasury bond with a coupon rate of j₂ = 4.79% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2023.
• 
  
• (b) Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j₂ = 2.03% p.a. and Joan has just received the coupon payment.

Select one:

a. 123.7377

b. 107.9936

c. 109.0898

d. 106.6948

1. On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On December 1, 20x1, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On December 31, 20x1, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees.

What is the fair value of the option on December 1, 20x1?

A.     $0

B.     $500

C.     $400

D.     $10,000

What is the fair value of the option on December 31, 20x1?

A.     $0

B.     $500

C.     $400

D.     $10,000

What is the foreign currency exchange gain or loss on December 31, 20x1?

A.     $50,000 loss

B.     $50,000 gain

C.     $10,000 gain

D.     $10,000 loss

2. Demand for hotel rooms in Tallahassee takes two possible values: on game days, demand is described by the demand curve q = 100−p, while on non-game-days demand is described by the demand curve q = 60 − 2p.

(a) Suppose that the hotel price on game days is ph = 80. What quantity is demanded at this price?

(b) Find the inverse demand curve on non-game-days. Assuming that the price on game days is ph = 80 as above, what price would induce the same quantity demanded on non-game-days as on game days?

(c) Plot the demand curves on game days and on non-game-days. Pay careful attention to the price and quantity intercepts for both curves.

(d) Assuming the price on non-game-days is as you found in (ii), what is consumer surplus in this market on non-game-days? What is consumer surplus on game days?

(e) Suppose that you encounter the following claim: “Because the hotel price is higher on game days than on non-game-days, consumer surplus in the hotel market must be lower on game days.” What is wrong with this claim?