Exercise 2:

You are employed as a work study student on campus and have been asked by a professor to create a spreadsheet to help with final grade reporting. The professor would like to record final grades for 10 students. The first column should contain the student’s last name (input), the second column should contain the student’s first name (input), and the third column should contain the student’s final course percentage grade (input) -- enter as a whole number, not a percent…ie: 85 not .85 or 85%. The fourth column will be the output and will use a LOOKUP formula to calculate the letter grade earned in the course.

The professor’s grading scale is as follows:

A            90-100

B            80-89

C            70-79

D            60-69                  

F            Below 60

We conduct a simple, computerized response time experiment, where participants are instructed to press the space bar as soon as a light flashes on the screen. The resulting response times are heavily right skewed, with a mean of 300 milliseconds and variance of 1000 milliseconds.

If we collect samples of 100 participants at a time, the sampling distribution of the average response time is

Group of answer choices

a.normal

b. right skewed

c. left skewed

d. bimodal

Referring to the scenario from the previous question, what is the mean of the sampling distribution? (round to nearest whole number)

Referring to the scenario from the first question, what is the variance of the sampling distribution? (round to one decimal place)

Referring to the scenario from the first question, what is the standard deviation of the sampling distribution? (round to one decimal place)

The following table shows the length of stay distribution for guests staying at a beach resort, in days. The resort management makes a net profit of $250 per day per guest during the first 2 days of the stay, and $150 per day per guest after the first 2 days. How much profit will the resort owners make in a month (assuming 30 days in a month) if there are 100 guests arriving per day? [Hint: Note that a guest who only stays for two days is billed $500; find the average profit for one guest then work out for the entire month.]

Must be completed in Excel

Tommy, a former student in Dr. Smith from Economy class, opened an account at First National Bank on July 1, 2008 and made an initial deposit of $500. She then made 8 additional yearly deposits beginning with July 1, 2009. The first additional deposit was $1,000 and this decreased by $100 per deposit after that. The bank paid a nominal interest rate of 4% compounded quarterly through July 1, 2014. After July 1, 2014 it changed the nominal rate to 3.0% compounded monthly.

Immediately after making the last deposit (total 9 deposits), Sally decided to close out his account on July 1, 2016. Using Excel functions, determine how much money Sally received when she closed out the account.

6. Suppose firms in a perfectly competitive industry are experiencing economic profits. One can predict that the:

1. (a) market price will fall as more firms enter the industry.

2. (b) market price will rise further to take advantage of profitable opportunities.

3. (c) market price will stay the same.

4. (d) number of firms in the industry will not change.

5. (e) both (a) and (d).

7. When total revenue for a firm is more than the explicit costs:

1. (a) both accounting profit and economic profit are positive.

2. (b) accounting profit is positive and economic profit may be positive or negative.

3. (c) normal profit will be larger than zero.

4. (d) an economic profit must also occur.

5. (e) economic profit is negative but normal profit is positive.

8. Which of the following statements is TRUE?

1. (a) Economic profit is always the same as accounting profit.

2. (b) Normal profit indicates opportunity cost has been recovered.

3. (c) Accounting profit includes implicit costs.

4. (d) Economic profit only includes explicit costs.

5. (e) When accounting profit is positive, economic profits will always be positive.

9. Pete use to work for a small building company and earned $40,000 per year. He decided to work for himself and bought a fish and chip shop where he generated revenue of $120,000 in the first year. Rental, utility and supply costs for the business were $58,000 in the first year. Pete pays a part time book keeper $12,000 per year. Based on this information, Pete’s economic profit in the first year is:

1. (a) $80,000

2. (b) $58,000

3. (c) $50,000

4. (d) $28,000

5. (e) $10,000

10. For a profit maximising firm in a perfectly competitive industry in the short run:

1. (a) economic profit is always zero.

2. (b) economic profit may be positive, zero, or negative.

3. (c) price will be greater than marginal revenue.

4. (d) price will be less than marginal revenue.

5. (e) economic profit will never be positive.

6: When we have a homogeneous product duopoly, each firm has constant marginal cost of 10.  The market inverse demand curve is p = 250 – 2Q  where Q = q₁ + q₂ is the sum of the outputs of firms 1 and 2, and p  is the price of the good. Marginal and average cost for each firm is 10.  

(a) In this market, what are the Cournot and Bertrand equilibrium quantities and prices? Will the firms collude in a two period version of the model in which each firm can observe the other’s behaviour in the first period?

(b) Assuming firm 1 is the “leader” (i.e., first mover) and firm 2 is the “follower” (i.e., moves following the first), find the outcome for the Stackelberg model.

6: When we have a homogeneous product duopoly, each firm has constant marginal cost of 10. The market inverse demand curve is p = 250 – 2Q where Q = q1 + q2 is the sum of the outputs of firms 1 and 2, and p is the price of the good. Marginal and average cost for each firm is 10. (a) In this market, what are the Cournot and Bertrand equilibrium quantities and prices? Will the firms collude in a two period version of the model in which each firm can observe the other’s behaviour in the first period? (b) Assuming firm 1 is the “leader” (i.e., first mover) and firm 2 is the “follower” (i.e., moves following the first), find the outcome for the Stackelberg model.

You plan to purchase a $200,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 7 percent. You will make a down payment of 10 percent of the purchase price.

a. Calculate your monthly payments on this mortgage.
b. Construct the amortization schedule for the first six payments.  

Construct the amortization schedule for the first six payments. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

3. Problems and Applications Q3

A recent study found that the demand and supply schedules for flying disks are as follows:

Complete the first row of the following table by indicating the equilibrium price and the equilibrium quantity of flying disks in the absence of any price controls.

Flying disk manufacturers persuade the government that flying disk production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $1 above the equilibrium price.

Complete the second row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price floor $1 above the equilibrium price. Then indicate whether the price floor is binding or not binding.

Irate college students march on Washington and demand a reduction in the price of flying disks. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $2 below the former price floor.

Complete the final row of the previous table by indicating the new price and quantity of flying disks when Congress imposes a price ceiling $2 below the former price floor. Then indicate whether the price ceiling is binding or not binding.