Department S had 600 units 65% completed in process at the beginning of the period; 8,700 units completed during the period; and 1,000 units 53% completed at the end of the period. What was the number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories? Assume the completion percentage applies to both direct materials and conversion cost.

a.8,100

b.8,310

c.8,840

d.9,840

15.

Department G had 3,600 units 25% completed at the beginning of the period, 11,000 units were completed during the period; 3,000 units were 20% completed at the end of the period, and the following manufacturing costs debited to the departmental work in process account during the period:

All direct materials are placed in process at the beginning of production and the first-in, first-out method of inventory costing is used. What is the total cost of 3,600 units of beginning inventory which were completed during the period (round unit cost calculations to four decimal places)?

a.$16,163

b.$62,206

c.$19,275

d.$40,000

17.

Carmelita Inc., has the following information available:

At the beginning of the period, there were 500 units in process that were 42% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 5,500 units were started and completed. Ending inventory contained 400 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The cost of completing a unit during the current period was

a.$45.37

b.$26.36

c.$30.24

d.$36.29

The debits to Work in Process—Assembly Department for May, together with data concerning production, are as follows:

19. All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for May is

a.$3.48

b.$2.20

c.$4.23

d.$2.53

25.

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000, respectively. Department 2 has transferred-in costs of $390,000 for the current period. In addition, work in process at the beginning of the period for Department 2 totaled $75,000, and work in process at the end of the period totaled $90,000. The journal entry to record the flow of costs into Department 3 during the period is

a.

Work in Process—Department 3555,000

Work in Process—Department 2555,000

b.

Work in Process—Department 3375,000

Work in Process—Department 2375,000

c.

Work in Process—Department 3490,000

Work in Process—Department 2490,000

d.

Work in Process—Department 3570,000

Work in Process—Department 2570,000

29. If a department that applies FIFO process costing starts the reporting period with 50,000 physical units that were 25% complete with respect to direct materials and 40% complete with respect to conversion, it must add 12,500 equivalent units of direct materials and 20,000 equivalent units to direct labor to complete them.

True or False

30. Carmelita Inc., has the following information available:

At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete as to direct materials costs. During the period, 4,500 units were started and completed. Ending inventory contained 340 units that were 30% complete as to conversion costs and 100% complete as to materials costs. The company uses the FIFO process cost method.

The equivalent units of production for direct materials and conversion costs, respectively, were

a.4,602 for direct materials and 4,802 for conversion costs

b.4,902 for direct materials and 4,802 for conversion costs

c.4,840 for direct materials and 4,802 for conversion costs

d.5,340 for direct materials and 4,902 for conversion costs

Answer fifteen (15) of the following true or false questions. Put a “T” or “F” at the end of the statement.

1) An increase in the interest rate would shift the consumption function upward.

2) The slope of the consumption function equals the marginal propensity to consume.

3) The marginal propensity to consume measures the change in consumption divided by the change in income.

4) A decrease in the price level decreases net wealth and increases consumption spending.

5) The only way in which government can affect aggregate demand is through changes in its own purchases.

6) If investment is autonomous, an increase in income will shift the investment function upward.

7) An increase in the interest rate, other things constant, decreases the amount of investment spending.

8) An increase in the value of the U.S. dollar in world markets, other things constant, would increase the demand for U.S. exports.

9) Consumption plus saving equals disposable income at every level of real GDP demanded.

10) The larger the MPC, the greater the multiplier effect.

11) A $200 increase in government purchases has a greater effect on the equilibrium level of real GDP than a $200 decrease in autonomous net taxes would.

12) An increase in the price level can be indicated by a downward shift of the aggregate expenditure line.

13) Movement along the aggregate demand curve may be caused by a change in autonomous investment spending.

15) One disadvantage of discretionary fiscal policy is that it can return the economy to its potential level of output but at the cost of increasing the price level.

16) A change in consumers' expectations about the future will shift both the aggregate expenditure curve and the aggregate demand curve.

17) Automatic stabilizers automatically adjust with the ups and downs of the economy to stabilize disposable income.

18) Discretionary fiscal policy works by shifting the aggregate demand curve.

19) When the real estate market in the United States crashed in 2006, it caused a significant decline in net wealth.

20) At the potential level of output, there is no seasonal unemployment.

21) If the actual price level is less than the expected price level reflected in long-term contracts, firm owners will find production more profitable than they had expected.

22) The amount by which actual output falls short of potential output is called an contractionary gap.

23) In the long run, the price level is determined by aggregate supply.

24) An increase in the federal minimum wage would shift the long-run aggregate supply curve inward (to the left).

25) Because nominal wages fall slowly, the supply-side adjustments needed to close a contractionary gap may take very long.

26) The oil price shock of the 1970’s would be an example of a negative supply shock.

27) A $100 billion increase in government purchases will have the same effect on real GDP as a $100 billion decrease in taxes.

28) If government purchases increase by $5 billion when the MPC is 0.8, then real GDP will increase by $20 billion.

29) An increase in imports increases aggregate demand.

30) A change in government spending can close an expansionary gap by shifting the short-run aggregate supply curve.

Ying-Ru is beginning her senior year of college soccer and is deciding whether or not to buy insurance in case she is injured. There is a 50% chance she will not be injured and a 50% chance she will be. If she is not injured, she will received a $400 contract to play professionally. If she is injured, she will receive a $100 contract to carry water bottles.

(b) Insurance policy A will pay Ying-Ru $300 if she gets injured, so that she will always have a total wealth of $400−p, where p is the price of the policy. What is the largest price $p that Ying-Ru would be willing to pay for this policy?

(c) Policy Boffers Ying-Ru the option of buying as many dollars of insurance as she would like, at the price of p= 2/3 for $1 of insurance. Let c_ni be Ying-Ru’s consumption when there is no injury and c₁ be her consumption when she is injured. Write Ying-Ru’s state-contingent budget constraint. (Write your answer as the equation of a line, with c_ni isolated on the left, written as a function of c_i.)

(e) If policy Bwere the the only option available, what would be the optimal amount of insurance for Ying-Ru to buy?(f) Which policy is better for Ying-Ru—policy B or policy A with   p= 160?

3) Perfectly competitive markets

# of Contraptions

Total Cost

0. 0 500

1. 1 580

2. 2 640

3. 3 690

4. 4 730

5. 5 760

6. 6 800

7. 7 850

2

8 950

9 1200 10 2000

a) Calculate the marginal cost for contraptions, given the above information, add it to your Table, and graph it.
b) Where does diminishing returns set in? Explain how you know.
c) If market price equals $100, how many units should be produced? What is revenue? What is profit? Add these columns to your Table too.

d) What is the fixed cost? Would the number of units produced change if the fixed cost went down? Why or why not?
e) Firms now exit the contraption market, and contraption price goes up to $250. Graph this result, showing market and firm graph side by side. How many units will a firm with the above cost function produce? What will profit be? (It might be helpful to show a new Table or at least add a couple of columns to the existing one).

f) At this point, will more firms exit, or will new firms start to enter the market? Explain.
g): What is the long run equilibrium price? What is profit? (Show all calculations) Why will firms not leave the market?

1. Use either a shift in demand of supply to GRAPHICALLY represent each of the following situations. Also, label the graphs correctly and indicate the changes in equilibrium in each case.

1. Beef market:  Increases in the cost of cattle feed.
2. Air travel market: Reduced number of travelers due to Covid-19 pandemic.
3. SUV market: Reduced gasoline prices.
4. Smartphone market: Technology improvements reduced the cost of manufacturing smartphones.

Four separate graphs please.

2. a) How would economic contraction brought about by Covid – 19 slowdown be represented using production possibilities curve?

b) Repeat a) for improved technology which results in increased productivity?

3. Good                Quantity           Price in 1999                Price in 2000

X                      10                    $5                                $6

Y                      20                    $10                              $10

Z                      5                      $6                                $10

1. Calculate the market basket value for each year. What is the consumer price index in 1999?
2. What is the inflation rate between 1999 and 2000?

Show all calculations for full credit.

b) In a given year, there are 10 million unemployed workers and 120 employed workers the country of Landia. Calculate the unemployment rate in Landia.

120/10,000,000 = 0.0012%

1-0.0012 = 0.9988

0.9988*100 = 99.88

Unemployment rate = 99.88%

Show all your calculations for full credit.

An investor buys three shares of XYZ at the beginning of 2002 for $100 apiece. After one year, the share price has increased to $110 and he receives a dividend per share of $4. Right after receiving the dividend, he buys two additional shares at $110. After another year, the share price has dropped to $90, but the investor still receives a dividend per share of $4. Right after receiving the dividend, he sells one share at $90. After another year, the share price has gone up to $95, the investor receives a dividend per share of $4 and sells all shares at $95 immediately after receiving dividends.

3. What are the arithmetic and geometric average time-weighted rates of return and what is the dollar-weighted rate of return of the investor in the above example (for the dollar-weighted return assume that (i) the cash flows from dividends received at the end of a given year are based on the number of shares held at the beginning of that year, and (ii) cash flows from dividends occur on the same day as the cash flows from buying and selling shares)?

4. Why is the dollar-weighted average rate of return in the above example lower than the geometric average rate of return?

Suppose a firm called, WeWorkTogether (Goal: profit maximization), has the following production function: Q = 2K ^0.4 L ^0.8.  Q: units of output, K: units of capital, L: units of labor.  If capital rents for $100 per unit per day, labor can be hired for $50 per unit per day, and the firm is minimizing costs,

a. Find the long-run total cost of producing Q= 50 units

b. Find the short-run total cost of producing Q= 50 units, when K is fixed at 10 units.

c. Explain how the short-run and long-run costs compare and why, using isoquants and isocost lines.

d. Find the algebraic expressions for the total cost (TC) (short-run and long-run) as a function of output and input prices.

e. If WeWorkTogether is operating in a perfectly competitive market, what is the minimum price below which the firm will shut down its production?  Below what price will the firm exit the market? What would be the profit maximizing output level if the market price of its output is $50/unit? What will be the profit or loss?

f. If you are the CEO of WeWokTogether, what would you be doing to avoid shut-down in the short run and to stay in the business in the long run?

Problem 1: Utility maximization

There two goods, X and Y , available in arbitrary non-negative quantities (so the consumption set is R2+). A consumer has preferences over consump- tion bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function:

u(x, y) = x + xy + y,
where x is the quantity of good X and y is the quantity of good Y .

The consumer has wealth w > 0. The price for good X is p > 0, and the price for goodY is q>0.

(A) In an appropriate diagram, illustrate the consumers map of indifference curves. Make sure you label the diagram clearly, and include as part of your answer any calculations about the slopes of the indifference curves and where the indifference curves intersect either of the axes.

(B) Formulate and solve the consumer’s utility maximization problem. Your final answer should describe the consumer’s demand for goods X and Y as a function of w, p, and q, as well as the consumer’s indi- rect utility function.

(C) Now assume that w=100 and p=10.
(i) Illustrate the consumer’s demand function for good Y in an appropriate diagram.

(ii) Illustrate the consumer’s cross-price demand function for good X in an appropriate diagram.

1.-The following data were used in a regression study.

(a)Develop an estimated regression equation for these data. (Round your numerical values to two decimal places.)

ŷ =______

2.-The following data show the brand, price ($), and the overall score for six stereo headphones that were tested by a certain magazine. The overall score is based on sound quality and effectiveness of ambient noise reduction. Scores range from 0 (lowest) to 100 (highest). The estimated regression equation for these data is

ŷ = 20.987 + 0.340x, where x = price ($) and y = overall score.

(a)Compute SST, SSR, and SSE. (Round your answers to three decimal places.)

SST=___

SSR=___

SSE=___

(b)Compute the coefficient of determination r².(Round your answer to three decimal places.)

r²=___

c)What is the value of the sample correlation coefficient? (Round your answer to three decimal places.)____