1. Suppose that the demand for a special kind of silica is given by Q = 55 – 0.5P, where Q is in tons of silica per day and P is the price per ton. This special kind of silica is produced by Thorpe Industries (a monopolist) that has a constant marginal and average total cost of $10 per ton.
   1. Derive the inverse demand and marginal revenue curves faced by Thorpe Industries.
   2. Equate marginal cost and marginal revenue to determine the profit-maximizing level of output.
   3. Find the profit maximizing price for Thorpe Industries.
   4. How would your answer change if marginal cost were instead given by MC = 10+Q?

Refer to Figure 9.6 on page 215. On a piece of paper, draw the monopolists demand curve, marginal revenue and marginal cost curves and answer the following questions: (you do not need to submit a graph with your work, but you need to draw one in order to answer these questions) -What price the monopolist will charge and the quantity of output they will produce? -Describe what would happen to the demand curve if the demand for the monopolist's product increased dramatically. -Describe what would happen to the marginal revenue curve as a result. -Describe what would happen to the marginal cost curve. -Describe the overall change in profit-maximizing quantity and price for the monopolist.

Umbrella Corporation sold 700 tractors on January 1, 2006. Umbrella paid $80,000 and $60,000, respectively, during 2006 and 2007 servicing the 3-year warranties that accompany the tractors. The warranties are not an integral part of the sale. Of the total revenues of $4.5 million derived from tractor sales, $450,000 were attributable to the sale of warranties.                  
Umbrella estimated the total cost of servicing the 3-year warranties to be $320,000 as of December 31, 2006 and revised that estimate to $140,000 on December 31, 2007. Umbrella records warranty revenue prorata over the term of servicing the warranties.                  
What is the balance of unearned warranty revenue as of December 31, 2007?                  

On January 1, 2020, Sarasota Company purchased 10% bonds having a maturity value of $380,000, for $410,343.38. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Sarasota Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare the journal entry at the date of the bond purchase.Prepare a bond amortization schedule.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020.Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021.

Suppose the demand is a typical downward sloping linear curve and the supply curve is perfectly price elastic. If 3 million tickets are currently sold at a price of $5, approximately how much tax revenue could the government generate from a $1 per unit tax on sellers? The arc-price elasticity of demand between P=$5 and the new equilibrium price is -1.0 (Note: dQ = Change in Q and dP=Change in P)

i. Draw a completely labeled D&S graph to show the market described above.

ii. Calculate new quantity and the tax revenue. Please show your calculations.

Flounder’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $86 on January 2, 2017. In addition, Flounder will receive an additional commission of $10 each year for as long as the policyholder does not cancel the policy. After selling the policy, Flounder does not have any remaining performance obligations. Based on Flounder’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years. It has no evidence to suggest that previous policyholder behavior will change.

Determine the transaction price of the arrangement for Flounder, assuming 100 policies are sold.

Transaction Price. $13,100

Determine the revenue that Flounder will recognize in 2017.

Revenue ___________????

Identify the financial statements in which you would find each of the items listed below. Some items may appear on more than one statement. Indicate all financial statements that apply to each item. The possible choices are:

These financial statement items are for Monty Company at year-end, July 31, 2019.

Prepare an income statement for the year

Prepare a retained earnings statement for the year.

Prepare a classified balance sheet at July 31.

EXERCISE 6-2. [LO 2] Mansard Hotels has five luxury hotels located in Boston, New York, Chicago, San Francisco, and Los Angeles. For internal reporting purposes, each hotel has an income statement showing its revenue and direct expenses. Additionally, the company allocates to each hotel a share of general administrative and advertising costs (e.g., salary of the company president, salary of the company CFO, hotel chain advertising, etc.) based on relative revenue.

a. Write a paragraph explaining why the allocation of general administrative and advertising costs to the specific hotels is potentially useful or potentially harmful.

• Given the information below, answer questions from #9 to #10.
The owner of Cheesecake Factory at the Forum Shop is renegotiating the operation’s lease and has the option of either (1) an annual fixed lease of $55,000 or (2) an annual fixed lease of $10,000 plus a variable lease set at 5% of annual revenue.

What is the indifference point?

A. $900,000

B. $1,100,000

C. $1,000,000

D. $1,300,000

Which option will cost less for the owner if annual revenue is expected to be $5,000,000?

A. Cannot be determined from the information given

B. The mixed lease (option 2)

C. The fixed lease (option 1)

D. Both options cost the same.