Questions
3.Consider the market for gasoline in the U.S. Suppose that the price elasticity of demand has...

3.Consider the market for gasoline in the U.S. Suppose that the price elasticity of demand has been estimated to be 0.3,while the priceelasticity of supply is estimated to be 0.6. Answer the following questions.

a)Construct a supply-and-demand diagram that illustrates the free-market equilibrium. How much do buyers pay? How much do sellers receive? Is there a difference between the price paid by buyers and the price received by sellers?

b)Suppose the federal government imposes a gasoline tax of $0.50 per gallon. Construct a supply-and-demand diagram that illustrates the effect of the tax on the market for gasoline. How does the tax impactthe price buyers pay? How about the effective price received by sellers? Is there a difference between the price paid by buyers and the price received by sellers? What happens to the number of transactions between buyers and sellers?

c)How is the gasoline tax distributed between buyers and sellers? That is, do buyers pay more or less of the $0.50 per-unit tax than sellers? Prove your answer with the pre-tax and post-tax equilibrium prices paid by buyers and received by sellers from (b) part.

d)Identify the areas of the graph that represent tax revenue and deadweight loss? Describe the intuition behind the concept of deadweight loss.

e)If the government repealed the gasoline tax, how would this change affect the price paid by buyers and the price received by sellers? What would happen to the deadweight loss?

In: Economics

The sales and finance team of a car company is evaluating a new proposed luxury model...

The sales and finance team of a car company is evaluating a new proposed luxury model of its brand that will require an investment of $1Billion in a new machine for car interior decoration. Demand for the company’s car is expected to begin at 100,000 units in year 1, with 10% annual growth thereafter. Production cost will be $40,000 per unit in the first year, and increase by a rateof either 3% or 5% per year as a result of wage increase. Selling price will start at $35,000 and increase by 5% of the production cost. The model will be phased out at the end of year 10. In addition, 0.3%, 2% and 1% of before tax profit per year will be spent on social corporate responsibility, commercial (including promotions) and recalls respectively. Assume taxes will be 30% of yearly profit and that inflation will remain at 0% per year throughout the 10 year of production. Also assume interest rate is expected to be 3% per year in the first 5 years and 5% in the last 5 years.
a. Based on present worth analysis, is the proposed investment profitable if production cost increases by a rate of 3% per year as a result of wage increase? Justify your answer.
b. Based on present worth analysis, is the proposed investment profitable if production cost increases by a rate of 5% per year as a result of wage increase? Justify your answer.

In: Civil Engineering

Assume that there are two countries in the world: Home and Foreign. Home’s demand curve for...

Assume that there are two countries in the world: Home and Foreign. Home’s demand curve for wheat is D = 125 - 25P and supply curve is S = 20 + 40P. Suppose that Foreign is a much larger country, with domestic demand D* = 1100 - 300P and supply S* = 650 + 200P.

a) What would the price of wheat be in case of no trade in Home? b) What would the price of wheat be in case of no trade in Foreign?

Now assume that Home and Foreign can trade with each other (no barriers, i.e. free trade).

c) Derive the Home import demand curve equation (no graph required) d) Derive the Foreign export supply curve equation (no graph required) e) Calculate the free trade equilibrium world price of wheat
f) Calculate the free trade equilibrium world trade volume (quantity)

Now assume that Home imposes a specific tariff of 0.3 on wheat imports.

g) Calculate the price of wheat in Foreign in case of the tariff
h) Calculate the price of wheat in Home in case of the tariff
i) Calculate the volume of trade (quantity) in case of the tariff
j) Explain why the volume of trade decreases with imposing the tariff
k) Explain (no graph or calculations required) who gains and who loses from imposing the tariff in case of each of the following groups: Home import-competing producers, Home consumers, Home government.

Answer to E-K)

In: Economics

Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government...

Problem 4

Consider the following economy:

Consumption Expenditure

446,832 million

Planned Investment Expenditure

346,877 million

Government Expenditure

446,832 million

Exports

402,443 million

Imports

388,374 million

Marginal Propensity to Save

0.3

Marginal Tax Rate

0.32

Autonomous Taxes

301,240 million

Marginal Propensity to Import (nx)

0.04

(e) Calculate the marginal leakage rate.  (0.5 mark)

(f) Assume that the natural rate of output for this economy is estimated as $1,200,000 million.

(i) Is this economy facing a recessionary or inflationary gap?  (0.5 mark)

(ii) Illustrate the gap you identified in part (i) above using both the AS-AD Model and the Aggregate Expenditure Model.  (1 mark)

(iii) Calculate the output ratio for this economy (0.5 mark)

(iv) If the government wishes to move the economy to its natural rate, will it need to increase or decrease spending? Calculate by how much it will need to change its spending.  (1 mark)

(v) Consider the policy action undertaken in part (iv) above and illustrate the impact on the money market.  (1 mark)

(vi) Given the impact on the money market determined in part (v) above, explain how this could affect the exchange rate market.  (1.5 marks)

(vii) Explain the policy action the government could undertake if it decides that it wants to move the economy to its natural rate but doesn’t want the action to affect its budget position.  


In: Economics

Hula Enterprises is considering a new project to produce solar water heaters. The finance manager wishes...

Hula Enterprises is considering a new project to produce solar water heaters. The finance manager wishes to find an appropriate risk adjusted discount rate for the project. The (equity) beta of Hot Water, a firm currently producing solar water heaters, is 1.1. Hot Water has a debt to total value ratio of 0.3. The expected return on the market is 0.13, and the riskfree rate is 0.03. Suppose the corporate tax rate is 33 percent. Assume that debt is riskless throughout this problem. (Round your answers to 2 decimal places. (e.g., 0.16))
a. The expected return on the unlevered equity (return on asset, R0) for the solar water heater project is %.
b. If Hula is an equity financed firm, the weighted average cost of capital for the project is %.
c. If Hula has a debt to equity ratio of 1, the weighted average cost of capital for the project is %.
d. The finance manager believes that the solar water heater project can support 15 cents of debt for every dollar of asset value, i.e., the debt capacity is 15 cents for every dollar of asset value. Hence she is not sure that the debt to equity ratio of 1 used in the weighted average cost of capital calculation is valid. Based on her belief, the appropriate debt ratio to use is %. The weighted average cost of capital that you will arrive at with this capital structure is %.

In: Finance

a. Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and...

a. Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow:

Proportion of Services Used by
Department Direct Costs Maintenance Cafeteria Machining Assembly
Machining $ 98,000
Assembly 74,400
Maintenance 46,000 — 0.2 0.6 0.2
Cafeteria 37,000 0.6 — 0.1 0.3

Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO 11-2)

Required:

Compute the allocation of service department costs to producing departments using the direct method. (Do not round intermediate calculations.)

b. Assume that both Machining and Assembly work on just two jobs during the month of August: CM-22 and CM-23. Costs are allocated to jobs based on machine-hours in Machining and labor-hours in Assembly. The number of labor- and machine-hours worked in each department are as follows:

Machining Assembly
Job CM-22: Machine-hours 230 60
Labor-hours 20 20
Job CM-23: Machine-hours 20 40
Labor-hours 30 100

Required:
How much of the service department costs allocated to Machining and Assembly in the direct method should be allocated to Job CM-22? How much should be allocated to Job CM-23?

In: Accounting

Pizza Hut is facing stiff competition in it pizza delivery service, and you are the owner...

Pizza Hut is facing stiff competition in it pizza delivery service, and you are the owner who is particularly concerned about being able to provide call-in customers with a guarantee as to how quickly their pizza would arrive. You have collected a month’s worth of data that included travel time (y)/ minute and delivery distance (x)/miles. You want to know if you can use delivery distance to predict travel time. You run regression on excel, and get the following output. Answer questions following the output.

1). Using the knowledge you learned from Chapter 3 to summarize Travel time and Delivery distance. What is the characteristics of this sample?

2). Determine the least-squares regression equation for travel time as a function of distance. Interpret the slope.

3). What percentage of the variation in travel time(y) is explained by the delivery distance (x)?

4). Do hypothesis testing to test the significance of slope and follow the 4-step. What does it tell you about the relationship between pizza delivery distance and travel time? (α=0.05)

5. what is the 95% confidence interval for slope? How does it tell you about the significance of the slope? Does this conclusion agree with the conclusion from 4)?

6).What would be the estimated time of travel for a pizza delivery that involved 5-miles? Interpret the result.

7). Calculate the prediction interval for the individual travel time given a pizza delivery distance is 5 miles (Show your calculation details in Excel). Interpret the results. (α=0.05)

8). Calculate the confidence interval for the mean of travel time given a pizza delivery distance is 5 miles (Show your calculation details in Excel). Interpret the results. (α=0.05)

9). Comparing results from 7) and 8), which one is wider? Why?

10). Calculate SSR, SSE and SST for this model.

Travel_Time
6.02
5.47
8.99
7.98
9.01
10.86
6.31
7.87
12.47
7.58
10.65
7.83
6.75
9.59
6.99
8.94
8.38
5.62
5.67
9.18
5.04
8.16
6.81
3.71
6.44
7.98
5.85
4.72
7
8.52
8.48
6.61
8.98
7.93
10.31
4.86
8.9
8.78
6.27
8.83
7.54
10.49
8.33
7.76
8.88
7.17
8.98
7.06
9.86
5.71
7.12
6.08
7.91
6.05
5.91
7.53
6.31
7.37
4.27
7.87
7.11
7.28
9.83
6.28
5.83
5.5
8.89
7.08
5.57
7.83
7.74
11.29
8.72
6.31
9.69
10.02
11.41
5.87
6.64
9.65
10.88
6.43
6.71
4.12
8.88
5.86
10.74
5.83
8.25
6.93
7.81
9.33
6.04
5.6
7.04
9.41
10.93
8.14
6.46
7.79
7.06
4.27
8.87
10.19
8.14
7.91
8.28
4.85
8.02
9.36
8.52
7.35
7.59
8.33
11.22
5.97
8.28
6.63
9.56
6.7
5.83
6.02
6.47
8.16
6.55
7.17
8.62
8.81
9.62
9.39
4.88
9.21
5.18
9.17
7.78
10.49
4.91
8.54
4.07
5.88
7.09
5.8
7.03
7.94
8.45
6.59
10.75
8.68
6.05
8.3
8.53
5.96
8.2
5.67
8.85
9.02
6.65
10.36
7.9
8.51
7.73
9.24
9.91
5.85
4.68
8.47
9.02
10.57
10.71
3.52
10.56
5.09
8.47
6.81
10.84
6.47
7.33
8.82
9.34
8.24
7.54
9.43
11.21
10.67
7.7
6.37
8.14
8.22
9.41
6.62
4.83
6.55
3.12
7.19
9.39
6.9
8.29
11.85
8.83
3.92
12.25
9.9
8.68
8.97
9.56
8.65
10.49
6.87
4.86
11.14
8.76
9.41
3.93
9.98
6.32
9.4
6.54
8.45
5.3
6.96
6.88
8.22
8.06
12.55
9
8.25
12.58
9.63
10.42
7.69
7.88
7.43
6.56
4.72
8.58
8.83
7.65
12.43
6.09
7.79

  

Distance
2.5
3.3
4.9
3.8
4.9
5.3
2.9
3.5
6.4
3.5
5.1
3.7
3.6
5.2
3.4
4.8
3.7
2.4
3.1
4.4
2.2
3.8
3.5
1.7
2.5
4.1
2
1.9
3.6
3.6
3.9
3.3
4.4
3.9
4.8
2.1
4.7
4.6
3.3
3.7
3.6
5.8
4.2
3.6
4
4
4.4
3.8
4.9
2.8
4
3.1
4
3.3
2.7
4.1
3.3
3.9
2.1
4.4
3.8
3.5
4.8
2.9
3
2.9
4.3
3.8
2.8
4.4
3.4
5.3
3.9
3.5
4.9
4.9
5.7
2.9
3.2
5.2
5
3.2
2.9
2.2
4.6
2.7
6.1
2.4
3.4
3.8
3.9
5
3.2
3
3.2
4.9
5.1
4.1
3.2
3.9
3.1
2.3
4.5
4.9
4.8
4.5
4.7
2.5
3.7
5.6
3.8
2.7
4
3.8
5.9
2.6
4.2
3
4.9
3.8
2.6
3
2.6
4.3
3.9
3.4
4.3
4.2
4.6
4.6
2.5
4.7
2
4.7
4.3
5.1
2.4
4.3
1.2
3.7
3.5
2.6
3.4
3.9
4
2.8
5.4
3.6
3
4.2
3.7
2.7
3.2
3.2
4.6
4.5
3.5
5.1
4.4
4.3
4.1
4.3
5.1
2.4
3.1
4.6
4.9
5.2
5.2
1.9
5.8
2.7
4.2
3.4
5.5
3.4
3.5
4.6
4.3
3.9
4.1
5.2
5.5
5.9
3.7
2.8
3.7
3.8
4
3.1
3
3.2
1.7
3.3
5
2.9
3.7
5.8
4.6
2.3
5.5
5.3
4.1
4
4.7
4.6
5.3
3
2.5
6.1
4.6
4.4
2.5
4.2
3.3
4.5
3.3
4.2
2.5
3.6
2.9
4.7
4.1
6.4
4.7
4.1
6.4
5
5
3.8
4
3.6
3.1
2.9
4.9
5.1
4
5.4
2.7
4

In: Statistics and Probability

PLEASE READ AND ANSWER CASE #3 TATA'S TIME(STRATEGIC MANAGEMENT IN ACTION SIXTH EDITION) It holds the...

PLEASE READ AND ANSWER

CASE #3 TATA'S TIME(STRATEGIC MANAGEMENT IN ACTION SIXTH EDITION)

It holds the number 6 spot on the list of the world's most admired companies in the steel industry. The Tata Group, based in Mumbai, India, is the largest conglomerate in that country. Its lat­est revenues are estimated at $67.4 billion, of which 61 percent is from business outside India. Tata has more than 100 operating companies in seven main business groups doing business in 80 countries: chemicals, information systems and communications, consumer products, energy, engineering, materials, and services. Its two largest businesses are Tata Steel and Tata Motors. Its Tata Tea, which owns the valued Tetley brand, also is one of the larg­est tea producers in the world. Ratan Tata, Tata Group's chairper­ son, has forged a strategy that encompasses the globe. In 1999, he issued a "clarion call to push outside India with acquisitions and exports." One of the company's executive directors recalled, "We didn't know what to expect, to be honest."

Today, Tata controls many businesses ranging from Eight O'clock Coffee Co. in the United Sates to the Taj Group of hotels, which took over management of the landmark Pierre Hotel on Central Park in New York City. Tata made its boldest global strategic push, however, in October 2006 when Tata Steel formally proposed buying British steelmaker Corus Group PLC for about $8 billion USD. Corus, which was formed by a merger of British Steel and Hoogovens, was three times the size of Tata Steel. The buyout offer soon turned into a bidding war when Tata Group discovered another company, Companhia Siderùrgica, Nacional of Brazil (CSN), was also preparing a bid and therefore upped its opening offer to $9.2 billion; CSN then raised the stakes by offering to pay $9.6 billion. A Tata Group spokesman said that the company's attempt to acquire Corus was "based on a compelling strategic rationale." Ratan Tata explained further by saying, "The revised terms deliver substantial additional value to Corus shareholders." The increased takeover bid did not impress investors as the company's share price fell 6 percent after the news was announced. Analysts and investors both "expressed concern that Tata is overpricing Corus, whose operating costs are among the highest of any steel maker—something that would affect its profitability and its plans to expand in India." However, Ratan Tata knew that the acquisition could catapult Tata Steel from its mid-50s ranking in the global steel list to the sixth-largest industry competitor. He said, "Analysts were taking a short-term, harsh view of the deal. Hopefully, the market will look back and say it was the right move." By the end of JanuaQi 2007, the U.K. Takeover Panel called an auction in order to end the bidding war and "presided over the contest that started on Tuesday, January 30." The "contest" continued for several hours until CSN pulled out. Tata Steel won its coveted prize for $12.2 billion—a 22 percent premium over what it had originally offered. That acquisition represented the latest consolidation in the global steel industry. The combined Tata-Corus can produce 25 million tons of steel a year. The deal also represented the largest foreign acquisition by an Indian company and made the diversified Tata Group the largest company in India.

In 2008, Tata made an even bigger global splash, at least in terms of recognized consumer brand names. It acquired the Land Rover and Jaguar brands from Ford for an estimated $2.3 billion.

Tata's leaders believe the group "can survive on the world stage only by being both too big to beat and too good to fail." In December 2012, when Chairman Ratan Tata steps down, Cyrus Mistry will take over as chairman of Tata Group and he "faces the daunting challenge of steering a giant, increasingly multinational conglomerate of more than 100 companies through economic headwinds at home and abroad."

DISCUSSION QUESTIONS

4. Do some research on the Tata Group [wvvw.tata.com]. What is its purpose? How would its core values Influence strategic choices? Does its international strategy approach seem to be working?

5. Do you think an international conglomerate would be more difficult or less difficult to strategically manage than a more focused company? Discuss.

6. What Implications does the statement about "surviving on the world stage" have for the future strategies pursued by the Tata Group?

THANK YOU!

In: Operations Management

GTA Construction Corporation constructed two buildings near the San Andreas fault line. The probability that either...

GTA Construction Corporation constructed two buildings near the San Andreas fault line. The probability that either of these buildings will experience an earthquake is 4.6 percent. However, if one building experiences an earthquake, the probability that the second building will experience an earthquake is 57 percent. What is the probability (in percent) that both buildings will experience earthquake damage?

IMB Computing creates motherboards for cellphones at their campuses in Seattle and San Diego. The company is worried about computer hackers and hired a consultant to evaluate their risk. The consultant estimated that the San Diego campus has a 12.1 percent chance of being hacked. The consultant also noted that the Seattle location has a 24.4 percent chance of digital hacking. IMB would asks the consultant, what is the probability (in percent) that both campuses will suffer hacking related crime in any given year?

Hishiba Company assembles hard drives and has plants in both the South and the North, spaced about 3,000 miles apart and connected by light rail. Hishiba is worried about local rain causing flooding at their plants. The probability that in any given year a flood will damage the North plant 5.1 percent. The probability that in any given year a flood will damage the South plant is 13 percent. What is the probability (in percent) that at least one of the plants will be damaged by flood in any given year?

In: Advanced Math

Question: Describe the various methods of solving linear systems. With which method of solving linear systems...

Question: Describe the various methods of solving linear systems. With which method of solving linear systems are you most comfortable, and why?

Hint: First, define a linear system, and give an example. Then, discuss the methods, and show the steps to solve your example. Finally, talk about advantages and drawbacks of each method.

"Real-Life" Relationship: Any relationship where we have a fixed cost and variable cost can be represented by a linear equation.

For instance, the cost of a rental car from Hertz might be $100 plus $0.70 per mile, while Enterprise might charge $80 plus $0.80 per mile. We can solve the following system to find out when the cost is the same (c = cost, m = miles driven)

c = 0.7m + 100 (Hertz)

c = 0.8m + 80 (Enterprise)

It turns out that they are equal when the mileage is m = 200.

Challenge 1: Given two lines in standard form, how can you quickly decide if they have the same slope, simply by using ratios of y and x coefficients?

Challenge 2: What is a quick way (without finding the slope or solving for y) to decide whether the following system has a solution?

2x + 3y = 4

2x + 3y = 5

In: Math