Suppose there is a RISE in the real price of capital (p_k).  Notice that capital has become relatively more costly.

a. [2 points] Use a diagram to Illustrate the the impact of a RISE in the real price of capitalon optimal Kf* (i.e. optimal future capital stock).   Label everything in your diagram.

b. [1 points] Continue with a. Is the shock causing MPKf>user costs orMPKf<user costs?  Just state.  Will the firm increase profits by increasing Kf* or decreasing Kf*?  Just state. No discussion.

c. [3 points] Given your results above, what impact does the shock have on the S-I model? Specifically, illustrate the impact on the S-I diagram. Label everything in your diagram.

d. [3 points] Continue with c. Now discuss the impact on equilibrium r, S, and I (as done in lecture).   In your discussion, elaborate on which curve you shift and why, and what leads to the change in r, S, and I. Make sure to provide COMPLETE economic reasoning/intuition of the mechanism that transmits the shock; i.e. elaborate on your answer.

e. [1 points] Now state the final impact on C and Y once the Output Market adjusts and the new equilibrium is reached. Just state (increase or decrease). No discussion.

Question:

Your client is the curator of the local museum and as such is responsible for the way the various objects are displayed. Usually, the items are displayed inside the large, clear Poly(methyl methacrylate) (PMMA)1 display cabinets which are already installed in the museum, however, your client recently received a rare collection of butterflies which are housed in their own Polyethylene terephthalate (PET) glass case and she is considering which is the best way to display this item. Does she:

(i) Leave the butter collection in its glass case and display this as is on top of a stand?

(ii) Remove the butterfly collection from its case and place the collection inside the existing large display cabinet?

(iii) Leave the display in its glass case and place this inside the existing large display cabinet, in which case visitors would be looking at the butterfly collection through two layers of glass? In order to assist your client in making this decision, you do some thinking and quick calculations.

1. PMMA is also known as acrylic or acrylic glass.

a) In relation to visitors’ ability to see the collection under the glass, what is the significance of the two different refractive indices? Explain in detail.

b) Presuming the butterfly case is placed inside the museum display cabinet (as per Option

(iii)), what is the critical angle for light passing through the two layers of glass?

c) If the situation was reversed, and the butterfly case was made of PMMA and the museum display cabinet was made of PET, what would be the critical angle for light passing through the two layers of glass? Again, assume the butterfly case is placed inside the museum display cabinet.

d) After careful exploration of the situation and based on the above considerations, which option would you recommend your client select? Explain in detail.

Take the refractive index of the PET butterfly case to be 1.5750 and the refractive index of the existing PMMA museum display cabinets to be 1.4893.

Explain what type of mechanism will be used to transport glucose from your intestine to your muscles. The relative levels of glucose are provided below.

a. Intestinal epithelium cell: high glucose to Interstitial fluid between intestinal cell and blood vessel: very low (blood vessels have “clefs” that glucose fits through to enter blood by bulk flow.)

b. Na+ is required for the transport into the intestinal epithelium cell. Why? How is the level of Na+ kept low in the intestinal cell?

Is demand in your automobile sector elastic or inelastic? Explain in your own words what the price elasticity for Toyota  means and use the principles of price sensitivity to support your choice.

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers

1.        A fall in the price of corn

2.        A fall in the price of sugar

3.        An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions

4.        The creation of wheat specific fertiliser.

5.        Explain the possible non-price determinants involved in a change

           in both the demand and supply for wheat and a substitute grain.

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers 1. A fall in the price of corn 2. A fall in the price of sugar 3. An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions 4. The creation of wheat specific fertiliser. 5. Explain the possible non-price determinants involved in a change in both the demand and supply for wheat and a substitute grain.

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers

1. A fall in the price of corn

2. A fall in the price of sugar

3. An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions

4. The creation of wheat specific fertiliser.

5. Explain the possible non-price determinants involved in a change in both the demand and supply for wheat and a substitute grain.

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers

1.        A fall in the price of corn

2.        A fall in the price of sugar

3.        An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions

4.        The creation of wheat specific fertiliser.

5.        Explain the possible non-price determinants involved in a change

           in both the demand and supply for wheat and a substitute grain.

Consider the market for wheat. For each of the cases below state with a reason whether demand and/or supply would change and what would happen to the equilibrium price and quantity of wheat as a result. Fully explain your decision including any assumptions you make. You do NOT need to draw diagrams for this question but fully explain your answers

1. A fall in the price of corn

2. A fall in the price of sugar

3. An expected lowering in the price of wheat in the future due to ongoing excellent global growing conditions

4. The creation of wheat specific fertiliser.

5. Explain the possible non-price determinants involved in a change in both the demand and supply for wheat and a substitute grain.

NPV unequal lives.

Singing Fish Fine Foods has ​$1,880,000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the​ store's deli section for additional food service. The estimated​ after-tax cash flow of this project is $560,000 per year for the next five years. Project 2 is updating the​ store's wine section. The estimated annual​ after-tax cash flow for this project is $510,000 for the next six years. If the appropriate discount rate for the deli expansion is 9.4​% and the appropriate discount rate for the wine section is 8.8​%, use the NPV to determine which project Singing Fish should choose for the store. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision​ change? If the appropriate discount rate for the deli expansion is 9.4​%, what is the NPV of the deli​ expansion? (Round to the nearest​ cent.)