1. A single community is comprised of just three voters i = {1, 2, 3}, each of whom have differing tastes for public parks, as described by the following three demand functions.

q₁ = 100 – 2p

q₂ = 110 – 2p

q₃ = 126 – 2p  

(a)        Public parks are a local public good. Assuming that the marginal cost to society,

mc^s, of providing each unit of park space is $90, what is the socially optimal quantity of parks? Provide a graph with your answer. Please show all of your work. 3pt

(b)        Assume that the price tag for each unit of park is split evenly across the community

members so that the marginal cost to each member is just $30. At this price, what is

each member’s optimal quantity of park space? Is there unanimity across the three individuals regarding the desired level of park space? 3pt

(c)        Using Lindahl pricing (aka Lindahl taxing), what price schedule would guarantee unanimous agreement across all three members and would also yield a socially optimal outcome? Please show your work. 3pt

2. Please refer back to Q1 when answering the following questions.

(a)        Draw each individual’s demand curve for park space. Then calculate each person’s

consumer surplus at each of the three optimal quantities. Please show your work. 3pt

                        Hint: remember that each person must pay $30 per unit of park space consumed.

(b)        Using the consumer surplus calculations from Q2(a), fill in the following table by

assigning a rank to each person’s park space options. 3pt    

(c)        In a political environment with direct democracy through majority rule, which of the

three park space alternatives will consistently win a series of pair-wise votes? 3pt

d) Is the winning option aligned with what would be predicted by the median voter

            theorem? Is this outcome socially optimal? Explain why or why not. 3pt  

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15.Required information

On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $1,550,000 at 7% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018: $9,000,000, 11% bonds $3,000,000, 7% long-term note Construction expenditures incurred during 2018 were as follows: January 1 $ 680,000 March 31 1,280,000 June 30 896,000 September 30 680,000 December 31 480,000 Required: Calculate the amount of interest capitalized for 2018 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)

On January 1, 2021, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2022. The company borrowed $2,500,000 at 8% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2021:

Construction expenditures incurred during 2021 were as follows:

Required:
Calculate the amount of interest capitalized for 2021 using the specific interest method. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
  

LaVilla is a village in the Italian Alps. Given its enormous popularity among Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter season and there are, on average, 1,200 skiers in the village. On average, skiers stay in LaVilla for 10 days.

A. How many new skiers are arriving – on average – in LaVilla every day?

B. A study done by the largest hotel in the village has shown that skiers spend on average $50 per person on the first day and $30 per person on each additional day in local restaurants. The study also forecasts that – due to increased hotel prices – the average length of stay for the 2014/2015 season will be reduced to five days. What will be the percentage change in revenues of local restaurants compared to last year (when skiers still stayed for 10 days)? Assume that hotels continue to be fully booked!

Exercise 1: Average daily hotel room rate (x) and amount spent on entertainment (y) is given in the following table for different cities. a.       Use these data to develop an estimated regression equation that could be used to predict the amount spent on entertainment for a given average daily hotel room rate. b.       What is the value of sample correlation coefficient? c.       Compute the coefficient of determination. What percentage of the variation in total amount spent on entertinment can be explained by room rate? d) Predict the amount spent on entertainment for a particular city that has a daily room rate of $89. City Room Rate ($) Entertainment ($) Boston 148 161 Denver 96 105 Nashville 91 101 New Orleans 110 142 Phoenix 90 100 San Diego 102 120 San Francisco 136 167 San Jose 90 140 Tampa 82 98

Review Question

1. What is sales revenue forecasting?

2. What types of data are needed to forecast sales or revenues?

3. What is cost estimation?

4. What is the first step managers need to complete when estimating costs?

20. How does technology affect costs?

22. Identify three environmental factors that affect business decisions related to costs.

25. How does technological innovation generally affect a firm' s costs?

27. What is meant by the learning curve?

28. What are controllable costs?

Exercise and Problems

6. Mega Profits Company estimated its annual total cost function to be: Y = $150,000 + $.57 x Assuming that Y represents total cost and x equals the number of units sold, use this equation to answer the following questions:

a. What is the firm' s total fixed cost?

b. What is the firm' s variable cost per unit?

c. Compute total costs if the firm sells 100,000 units.

d. Compute total costs if the firm sells 200,000 units.

e.  If the firm' s product sells for $1.00, how many units does the firm need to sell to break even?

f.  If the firm' s product sells for $1.50, how many units does the firm need to sell to break even?

7. Morrison Hotel uses its banquet room to host parties, dinner dances, and business meetings. The hotel serves meals and provides a variety of services for each event. A local consultant analyzed recent cost data and estimated the total cost function per event to be as follows: Y = $1,000 + $9.00 x Assuming that Y represents total cost and x equals the number of guests, use this equation to answer the following questions:

a. What is the firm' s total fixed cost per event?

b. What is the firm' s variable cost per guest?

c. Compute total costs if 50 guests attend the event.

d.  Compute total costs if 100 guests attend an event.

e.  If the hotel charges $25.00 per guest, how many guests must attend for the hotel to break even at each event?

f.  If the hotel charges $28.00 per guest, how many guests must attend for the hotel to break even at each event?

g.  If the hotel charges $28.00 per guest, would you advise this hotel to host events for 50 or fewer guests? Why or why not?

3. Durango Mountain Bike Company wants to open a bicycle repair shop in a suburb of a major metropolitan area. The industry association estimates that 20 percent of bicycles are repaired by similar service companies and that the average owner spends $100 per bicycle on maintenance each year. The census and local chamber of commerce data indicate that there are 10,000 bicycles in the county. Three other competitors exist within a twenty-five-mile radius of the proposed business location. Based on a consumer survey, the owners believe that they can capture 30 percent of the market in the first year of operation. Based on these data, address the following requirements:

a.  What is the potential number of bicycles likely to be commercially repaired?

b. What is the total potential bicycle repair revenue available in the market?

c. How much revenue can Durango Mountain Bike expect to generate?

A survey found that​ women's heights are normally distributed with mean 62.6 in. and standard deviation 2.6 in. The survey also found that​ men's heights are normally distributed with a mean 67.6 in. and standard deviation 2.7. Complete parts a through c below.

a. Most of the live characters at an amusement park have height requirements with a minimum of 4 ft 9 in. and a maximum of 6 ft 3 in. Find the percentage of women meeting the height requirement.

The percentage of women who meet the height requirement is__​%.

​(Round to two decimal places as​ needed.)

b. Find the percentage of men meeting the height requirement.

The percentage of men who meet the height requirement is__%.

​(Round to two decimal places as​ needed.)

c. If the height requirements are changed to exclude only the tallest​ 5% of men and the shortest​ 5% of​ women, what are the new height​ requirements?

The new height requirements are at least__in. and at most__in.

(Round to one decimal place as needed.)

A survey found that​ women's heights are normally distributed with mean 62.6 in. and standard deviation 2.2 in. The survey also found that​ men's heights are normally distributed with a mean 67.3 in. and standard deviation 2.8. Complete parts a through c below. a. Most of the live characters at an amusement park have height requirements with a minimum of 4 ft 8 in. and a maximum of 6 ft 2 in. Find the percentage of women meeting the height requirement. The percentage of women who meet the height requirement is ​%. ​(Round to two decimal places as​ needed.) b. Find the percentage of men meeting the height requirement. The percentage of men who meet the height requirement is ​%. ​(Round to two decimal places as​ needed.) c. If the height requirements are changed to exclude only the tallest​ 5% of men and the shortest​ 5% of​ women, what are the new height​ requirements? The new height requirements are at least in. and at most in. ​(Round to one decimal place as​ needed.)