Alpha Electronics is a profit-maximizing firm and it can produce any one of the following three combinations of HD TV sets per production run, operating at capacity. Its total cost per production run is $1,500. The market price for the Large Screen, Medium Screen, and Small Screen models are $11, $9, and $7, respectively.

4. The total cost associated with combination B is _______.
5. This firm will produce combination ________.
6. If the market price of a Large Screen increases to $12, ceteris paribus, then this firm will produce combination _______.

The stock of XYZ Corp. is trading for $100 on the New York Stock Exchange and $97 on the London Stock Exchange. Assume that the costs of buying and selling the stock on both exchanges are negligible.

a. What could you do to make a profit in this situation? What is this called? (2 pts)

b. As you keep doing what you’re doing to make a profit, what would you expect to happen to the price on the New York Stock Exchange and the price on the London Stock Exchange? (2 pts)

c. Now assume that the cost of buying and selling shares of XYZ Corp. is 4% per transaction. How does this affect your answer? (2 pts)

Suppose you are the manager of a theatre company. You have identified two groups of customers. Group 1 has a demand given by Q 1 = 100 - P and Group 2 has a demand given by Q 2 = 120 -3P. You are currently charging the same price - 40 euros - to both groups. To maximize revenue, you should charge a price of

(a) 12.50 euros to group 1 and 20 euros to group 2

(b) 50 euros to group 1 and 20 euros to group 2

(c) 30 euros to group 1 and 20 euros to group 2

(d) 25 euros to group 1 and 60 euros to group 2

A non-profit program for youths sends students to summer camp. The price of the program is $800 per student, and there are 8 students that can participate in each program. Each program runs for 11 days. The price for all food and equipment is $100 per student per day. Also, the two program guides cost $150 a day to hire.

a. What is the profit margin for the program?

b.The non-profit was able to get a grant to cover $200 per student per day. Will this be enough to cover the full cost of the program?

c. Given the cost of the program, if the non-profit secured the grant, would you recommend they continue to operate the program based on the economics?

A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $2,025,000 $4,050,000 Number of shares of stock outstanding 270,000 1,080,000 Earnings per share $7.50 $4 Price-earnings ratio (P/E) 10X 20X Market price per share $75 $75 a. Assume a 100 percent premium will be paid and there is a 32 percent synergistic benefit to total earnings from the merger. What is the change in Mickey Corporation's earnings if it merges with Minnie Corporation? (Round the final answer to 2 decimal places.) Change in earnings per share post merge

Suppose the United States could import footwear from Thailand at the price of $20 per pair or from Mexico at $24 per pair. The domestic price of footwear in the United States is $35. Suppose prior to NAFTA, the U.S. imposed a 50% tariff on all footwear entering the country. a. Prior to NAFTA, would the United States import footwear? If yes, from which country? (3 points)

b. Suppose the US demand for footwear is given by Q = 100 – 2P. Assume US producers face a constant MC = $35. What is the welfare effect of joining the NAFTA for the US if doing so requires eliminating the tariff on Mexican made footwear? (7 points)

During droughts, cities often impose water use restrictions on consumers. Suppose a representative consumer has preferences for Water (W) and other goods (X) given by the utility function: U(W,X) = WX. Suppose the price of other goods is $1 and the price of water is initially 50¢. The consumer has a budget of $100/week. a. How much water will the consumer purchase each week? b. Suppose the government imposes a quota on water use of 50 units/week. Show that the quota reduces the representative consumerʹs utility. c. By how much does the quota harm the representative consumer? Specifically, compute the equivalent variation of the quota.

Western Electric has 31,000 shares of common stock outstanding at a price per share of $77 and a rate of return of 13.10 percent. The firm has 7,200 shares of 7.60 percent preferred stock outstanding at a price of $94.00 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $398,000 and currently sells for 110 percent of face. The yield to maturity on the debt is 8.02 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent?

           
            A)    10.52%  
            B)    10.72%
            C)    11.10%
            D)    11.50%
            E)    10.29%
           

Please show work - we are not allowed to use excel on exam

4. Suppose that people consume only three goods. Also assume that quantities of the goods are fixed during this period of time, as follows: 100 tennis balls, 10 tennis racquets, and 200 Gatorade bottles. The prices of the goods for the years 2011 and 2012 are shown in the table below

1. What is the percentage change in the price of each of the three goods? What is the percentage change in the overall price level?

2. Do tennis racquets become more or less expensive relative to Gatorade? Does the well- being of some people change relative to the well-being of others? Explain.