1. The government is currently considering setting a maximum price (price ceiling) for basic goods to ensure that people can get access to these goods at this current time. Fully explain your answer and also use a single diagram to demonstrate the likely outcomes of this policy if the maximum price is set:

1. Below the current free market price \

2. Above the current free market price

3. At the current free market price      

2. The Australian government has implemented a number of microeconomic reforms over the past 40 years including deregulation of banking. Do you think banking deregulation has been beneficial or not? Explain your answer. Describe what you think may be the difficulties with microeconomic reform in Australia and highlight an area that you think currently requires microeconomic reform. Justify your answer.

1.

Price (rate) variance is:

a.the difference between the actual and standard unit price of an input multiplied by the standard input.

b.the difference between the actual and standard unit price of an input multiplied by the number of inputs used.

c.the difference between the actual and standard input used multiplied by the standard unit price of the input.

d.the difference between the actual and standard input used multiplied by the actual unit price of the input.

2.

Which of the following equations is used to determine standard hours allowed?

a.Standard Hours Allowed = Unit Labor Standard × Actual Output

b.Standard Hours Allowed = Unit Labor Standard × Standard Output

c.Standard Hours Allowed = Unit Labor Actual × Standard Output

d.Standard Hours Allowed = Unit Labor Actual × Actual Output

3.

Which of the following variances is the difference between actual fixed overhead and budgeted fixed overhead?

a.The fixed overhead spending variance

b.The fixed overhead efficiency variance

c.The fixed overhead volume variance

d.The fixed overhead capacity variance

4.

Material usage variance is:

a.the difference between actual and standard price multiplied by actual input.

b.the difference between actual and standard input multiplied by standard price.

c.the difference between actual and standard input multiplied by actual price.

d.the difference between actual and standard price multiplied by standard input.

5.

Gamma Inc. manufactures Product X using a single raw material. The standard quantity of input for the month of February was 3,000 units of raw material for 1,000 units of Product X. The actual output for the month of February was 1,500 units. Compute the standard quantity of raw material for actual output (SQ) of Product X.

a.1,500 units

b.1,500 units

c.4,500 units

d.3,000 units

6.

Which of the following is true of control limits?

a.Control limits identify variances that fall outside an acceptable range.

b.Control limits should be based only on past experience and intuition.

c.The lower control limit is the standard plus the allowable deviation.

d.The upper control limit is the standard minus the allowable deviation.

Suppose a stock currently trades at a price of 150. The stock price can go up 33% or down 15%.The risk free rate is 4.5%

1. use a one period binomial model to calculate the price of a put option with exercise price of 150.

2. Suppose the put price is currently 14, show how to execute an arbitrage transaxtion that will earn more than the risk free rate . use 10,000 put options.

3. Suppose the put price is currently 11, show how to execute an arbitragr transaction that will earn more than the risk free rate . use 10,000 put options

Due to convexity, when interest rates change, the bond price will ____________ the bond price predicted by duration.

Which of the following statements are true about a competitive price-searcher market?

Firms are not price takers.

Price equals average total cost in the long run.

Firms earn positive profit in the long run.

Firms are price takers.

A company current stock price at RM16.00, the exercise price at RM17.00. If government bond yield is 10%, and the company’s share prices volatile at 35% in annualised form. The company does not pay any dividend. Using the Black-Scholes option pricing model, calculate:

(i) the fair value for a RM17.00 call option with 90 days to maturity.
(ii) the fair value for a RM17.00 put option with 90 days to maturity.
(9 Marks in total)

Governments commonly uses price floors. One of the most classic examples of a price floor is a minimum wage policy in a labor market. Minimum wages laws date from 1894 in New Zealand, 1909 in the United Kingdom, and 1912 in Massachusetts. Minimum wage policies, however, often create unintended consequences. The original 1938 U.S. minimum wage law, for example, caused massive unemployment in Puerto Rico.

Suppose the following demand and supply curves describe the labor market in Puerto Rico before 1938:

Demand: P = 20 – Q              

Supply:   P = 2 + 0.5Q

where P is the wage per hour, and Q represents the number of workers hired, in thousands

(e.g. Q = 1 means that 1,000 workers have been hired).

a) Calculate the equilibrium wage and the number of workers hired before the 1938 minimum wage laws. Illustrate on a graph.

b) The 1938 U.S. minimum wage laws artificially required that all workers earned at least $10 per hour in Puerto Rico. So, how many workers would be employed under the minimum wage policy? Illustrate on a graph.

c) Using your graphs from (a), calculate the consumer surplus and producer surplus at the initial equilibrium price and quantity from part (a).          

d) Calculate the new consumer surplus and producer surplus with the minimum wage of $10 (part b).

e) How does the total consumer and producer surplus in part (c) compare to the total consumer and producer surplus in part (d)? What explains the difference in these two figures? Please explain intuitively.

PLEASE SHOW WORK; ESPECIALLY FOR QUESTION D STEP BY STEP.

Rent control is an example of a price ceiling. Price ceilings keep prices low for consumers. We can clearly see that sellers (landlords in this case) are worse off. Consider if there is an argument to be made that consumers are worse off, too. a) After watching the Seinfeld video clip, discuss how some consumers are made better off and some are not in a rent-control situation. b) What kinds of rationing mechanisms would develop to help allocate the few apartments that are available? c) In your opinion, do the benefits of rent control outweigh the costs?please type

In the article titled "Price Elasticity, Cross-Price Elasticity, and Income Elasticity in the Market for Alcoholic Beverages. The elasticities reported in the article were calculated using price data for many brands of beer. Why might price elasticity estimates for a product be less reliable if they use data for only one brand of that product? Be detailed in your answers, and reference the lesson materials when appropriate. This is in Principles of Microeconomics.