Suppose the market demand is Q=100-P. You are asked to find out how this market operates under perfect competition, monopoly and oligopoly, with the same market demand and cost structure for each firm.

1. Suppose the industry is perfectly competitive. The long-run cost function of each firm is c(Q)=2Q. Calculate the market price, total quantity supplied of the market, and each firm’s profit (in the long run).
2. Suppose there is a single firm serving the whole market, i.e. it is a monopolist. The cost function of the firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and the firm’s profit. How do they compare with a)?
3. Suppose the market is under duopoly. There are two identical firms playing Cournot competition, and the cost function of each firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and each firm’s profit. How do they compare with b)?
4. Suppose there are 3 identical firms playing Cournot competition, and their cost function of each firm is c(Q)=2Q. Calculate the total quantity supplied of the market, the market price, and each firm’s profit. How do they compare with c)?

Mayberry Investment Ltd. Price History

Question 1

Kindly calculate the Price Weighted Index for Mayberry Investment Ltd. and Value Weighted Index for Mayberry Investment Ltd ( Jamaica )

Emery Pharmaceutical uses an unstable chemical compound that must be

kept in an environment where both temperature and humidity can be controlled.

Emery uses 200 pounds per month of the chemical, estimates the holding cost to be

£3.33 (because of spoilage), and estimates order costs to be £10 per order. The cost

schedules of two suppliers are as follows:

Vendor 1 Vendor 2 Quantity Price/LB (£) Quantity Price/LB (£) 1-49 35.00 1-74 34.75 50-74 34.75 75-149 34.00 75-149 33.55 150-299 32.80 150-299 32.35 300-499 31.60 300-499 31.15 500+ 30.50

500+ 30.75

Vendor 3 Vendor 4 Quantity Price/LB (£) Quantity Price/LB (£) 1-99 34.50 1-199 34.25 100-199 33.75 200-399 33.00 200-399 32.50 400+ 31.00

400+ 31.10

a) What quantity should be ordered, and which supplier should be used?

b) Discuss factor(s) should be considered besides total cost.

Please with explanations

In 2017, the Hicklien Corporation was formed. The corporate charter authorizes the issuance of 10,000,000 shares of $1 par value common stock, and 4,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock.      The following selected transactions took place in 2017:

>1,200,000 shares of common stock were issued for cash.   The market price of the stock was $10 per shares.

>25,000 shares of common stock were issued for land.   The asking price of the land was $270,000.   The fair value of the land was $239,500.

>200,000 shares of preferred stock were issued for cash. The market price of the stock was $95.

>10,000 shares of common stock were issued to attorneys in payment of their bill for $35,000 of services performed during the company’s organization.

>5,000 shares of preferred stock were issued for cash.   The market price of the stock was $100

>15,000 shares of preferred stock were issued for machinery and equipment.   The fair value of the machinery and equipment was $1,650,000.   The stock was selling in the market at $102 per share.

INSTRUCTIONS:

Prepare a stockholders’ equity section of the Hicklien Corporation balance sheet dated December 31, 2017.    Include full disclosure.

1)Two good (x and y) are complements. The cross-price elasticity of x with respect to the price of y is

a. positive.

b. negative.

c. zero.

d. None of the above.

2) For an inferior good, the income and substitution effects

a. Work together.

b. Work against each other.

c. Can work together or in opposition to each other depending upon their relative magnitudes.

d. Always exactly cancel each other.

3) Elasticity measures

a. The slope of a demand curve.

b. The inverse of the slope of a demand curve.

c. The percentage change in one variable in response to a one percentage increase in another variable.

d. The percentage change in one variable in response to a change in another variable.

4) The demand curve function is given P=100–Q. At price 40, the consumer surplus is

a. 40.

b. 60.

c. 1800.

d. 2400.

5) If the demand for a product is inelastic, then a rise in price will

a. cause total spending on the good to increase.

b. cause total spending on the good to decrease.

c. keep total spending the same, but reduce the quantity demanded.

d. keep total spending the same, but increase the quantity demanded

1. Suppose you are short 50 contracts on a 2-year 50-call option on TSLA. How much will your option position increase in value if TSLA stock price goes down by $2 (use negative number if value decreases).

2. Suppose you are long 100 contracts on a 1-year 25-put option on AMZN. How much will your option position increase in value if AMZN stock price goes up by $1 (use negative number if value decreases).

3. Suppose you are short 50 contracts on a 2-year 50-call option on TSLA and long 25 contracts on TSLA stock. How much will your option position increase in value if TSLA stock price goes down by $1 (use negative number if value decreases).

4. Suppose you are short 50 contracts on a 2-year 50-call option on TSLA and long 10 contracts on TSLA stock. How much will your option position increase in value if TSLA stock price goes down by $1 (use negative number if value decreases).

Thumb up is Guaranteed! Thank You!

The following equations describe a firm’s demand, marginal revenue, total cost, & marginal cost:

Demand: P = 1,000 – 10Q

Total Cost: TC = 500 + 10Q + Q^2

Marginal Revenue: MR = 1,000 – 20Q

Marginal Cost: MC = 10 + 2Q

a. What level of output should be produced to maximize profits?

b. What is the market price?

c. How much profit will be earned?

d. The firm sells cereal and competes with other firms selling slightly differentiated cereal products. What type of market is this firm operating in?

The following equations describe a firm’s total cost and marginal cost:

Total Cost: TC = 500 + 10Q + Q^2

Marginal Cost: MC = 10 + 2Q

e. If the firm is a price taker and other firms in the industry sell output at a price of $100, what price should the manager of this firm put on the product?

f. What level of output should be produced to maximize profits?

g. How much profit will be earned?

h. The firm sells orange juice, which is a perfect substitute, at a farmers market. What type of market is this firm operating in?

1. Calculating inflation using a simple price index

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2014, 2015, and 2016.

The cost of each item in the basket and the total cost of the basket are shown for 2014.

Perform these same calculations for 2015 and 2016, and enter the results in the following table.

Suppose the base year for this price index is 2014.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2014 and 2015, the CSPI increased by ( )% Between 2015 and 2016, the CSPI increased by ( )%.

.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

A: As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.

B: A new mobile device for personal computing became available for purchase.

C: Energy drinks became increasingly popular on college campuses between 2014 and 2016 due to significant improvements in flavor, but this quality change is hard to measure.

D: Professors required each student to buy 10 notebooks, regardless of the price.

1. Calculating inflation using a simple price index

Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019.

The cost of each item in the basket and the total cost of the basket are shown for 2017.

Perform these same calculations for 2018 and 2019, and enter the results in the following table.

Suppose the base year for this price index is 2017.

In the last row of the table, calculate and enter the value of the CSPI for the remaining years.

Between 2017 and 2018, the CSPI increased by

. Between 2018 and 2019, the CSPI increased by

.

Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply.

Professors required each student to buy eight textbooks, regardless of the price.

As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library.

The quality and design of calculators improved dramatically from 2017 to 2019. For example, calculators made in 2019 accept memory cards, whereas those made in 2017 do not, but this quality change is hard to measure.

A new, safe method of memory enhancement became available for purchase.

DP Gumby produces sleeveless sweaters. He can separate the demand function into a domestic component: QD = 32 – 0.4PD and a foreign component QF = 18 – 0.1PF His total cost function is: C = 50 + 40Q

(a) On three separate diagrams sketch the demand curve in the domestic market, the demand curve in the foreign market and the total demand curve.

(b)If Gumby must charge the same price both home and abroad, how many sweaters should he sell and what price should he charge to maximize profits? How much profit does he make?

(c) Calculate the price elasticity of demand when the market is in equilibrium.

(d)If fixed costs increase from 50 to 100 what is the effect on the profit maximizing output? How is profit affected?

(e) Suppose total costs were to change to C = 50 + 60Q. How would the equilibrium change?

(f) Imagine his costs are once again C = 50 + 40Q. If Gumby can charge a different price in each market, how many sweaters should he sell domestically? How many sweaters should he sell in the foreign market? What price does he charge in each market?

(g) What is Gumby’s total profit with price discrimination? Is price discrimination profitable for Gumby’s? Comment on your result.

(h) What is the price elasticity of demand in each market? Does these values appear sensible? Explain.

(i) Suppose Gumby can discriminate perfectly among the buyers of sleeveless sweaters. What is his profit maximizing output?

(j) What is the maximum price anyone will pay under perfect price discrimination? What is the minimum price anyone will pay? Explain your choice.