The demand for rutabagas is still Q = 2,000 − 300P and the supply is still Q = −100 +100P, as in the previous question. The new Governor Pools decides that instead of imposing the $2 sales tax described in the previous question, the government will instead force stores to pay the tax directly. a. What will happen to the “sticker price” on rutabagas? b. How will the size of the consumer tax burden change? c. Howe will the size of the store's tax tax burden change?

Suppose that a company has a Monopoly in the production of keyboards. Market research shows that it faces a market demand function given by

P (q) = 100 ? (1/4)Q.

Its cost function is

C(Q) = 2000 + 2Q.

a. What would the price and quantity be in this market be if the company behaved as in perfect competition?

b. What is the consumer surplus in the case of perfect competition? Why is it higher than if it was a monopoly case? What is the social cost of monopoly?

On Jan 1, 2012, FIN307 is considering the newly issued 10-year AAA corporate bond, which is due Jan 1, 2022, with a coupon rate of 6% per year paid every 6 months. The bond is traded at par. Suppose the market interest rate declines by 100 bps (i.e., 1%), what is the duration and modified duration (before interest rate change) and the effect of the market interest decline on the bond price?

Donna runs an inn and charges $300 a night for a room, which equals her cost. Sam, Harry, and Bill are three potential customers willing to pay $500, $325, and $250, respectively. When the government levies a tax on innkeepers of $50 per night of occupancy, Donna raises her price to $350. The deadweight loss of the tax is

a. $25

b. $50

c.$100

d.$150

Please include your calculations. Thanks!

GOA Copany is analyzing its cost function according to behavior with volume of activity and planning for its next year’s operations. It’s selling price is $100, variable cost per unit of $80 and fixed costs per month of 125,000.

Required 1. Break-even point in units 2. Break-even point in sales dollars 3. Target sales in units to earn $25,000. 4. Target sales dollars to earn $35,000.

The following data are related to Copy, Paste, and Attach (CPA) Corp’s Ending Inventory (Inventory is valued as of December 31 of each year provided, which is CPA Corp’s year-end):

Using the dollar-value LIFO method, what is the value of CPA Corp’s ending inventory on December 31, 2017?

1.

If the cost of investment is $1,500. The revenue earned during the next 6 years was $100, $200, $300, $400, $500 and $600. Calculate the payback period?
(a)
5
(b)
5.5
(c)
4.5
(d)
5.01

2.

The effect of increase in volatility of price of stock on value of ‘option’ (keeping other factors constant)?
(a)
Decrease in value of option.
(b)
Indeterminate from given information.
(c)
No effect.
(d)
Increase in value of option.

A Treasury bill purchased in December 2016 has 67 days until maturity and a bank discount yield of 3.21 percent. Assume a $100 face value. a. What is the price of the bill as a percentage of face value? (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. What is the bond equivalent yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)

Suppose the market for cotton is competitive. A typical cotton farmer has a total cost function of: C = 100 + 15q – 6q^2 + q^3 . The prevailing market price is $15.

a. Find the profit-maximizing output level of this farmer. Calculate the corresponding profit at this output level. Show your steps.

b. Suppose all the fixed cost is unavoidable. Explain whether this farmer should shut down its production in the short run.

Inga consumes only Noodles (N) and Salad (S). Her preferences are of the following form: U (N,S)= N^4S^2

a.If her income is $100 and noodles cost $1 while Salad costs $5, what does she consume?

b. The price of noodles changes to $2. Find her new optimal bundle. The income increases to 200. Find the new optimal bundle.Are noodles a normal or inferior good?