Game Theory

The neo Luddites and the pro Technologists have publicly agreed to a halt in developing weapons and have cosigned a treaty to that effect. However, they are both engaged in a covert arms race in which each group is assumed to have two possible strategies: develop a new weapon or maintain the status quo. In the vernacular of game theory, the “cooperative action” is to maintain the status quo by honoring the treaty.

This game is based on the assumption that if only one group develops a new weapon then the group with the new weapon will conquer the other. In this case, the conquering group earns a reward of 20 units and the conquered group looses 100 units. It is also assumed that the cost of developing a new weapon is 10 units.

(a)

What is the reward matrix for this problem?

(b)

Is this a “true prisoner’s dilemma game”? Why or why not?

(c)

Is there an equilibrium point for this game? If so, what is this point? If not, explain why.

(d)

Does this problem provide any insight into how maintaining the balance of power may lead to an arms race? Discuss your answer.

1. The following partial information is available for company Z:

Sales $5000

Cost of goods sold $500

Salary expense $300

Unearned revenue (customer advance ) $200

Interest income $100

Gross profit would be:

Prepare a balance sheet at May 31.

he Blossom Company opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows.

Banana Tires (BT), a U.S.-based multi-national company, has screened several acquisition targets in Malaysia. BT has identified a Malaysian company, KL Rubber, which would provide a good strategic fit for BT. The estimates for revenue for the next year are MYR 200 million. Revenues are expected to increase by 6% into the foreseeable future (in MYR).

Expenses are expected to be 65% of revenue. The tax rate on the firm's earnings is expected to be 35%. Assume that there is no depreciation.

This exchange rate is currently $.2255 per MYR. Inflation is expected to average 6.5% in Malaysia and 2.0% in the U.S. BT has estimated their cost of capital for this project to be 12.5% (in terms of USD).

What is the maximum that BT should pay for KL Rubber? (4 points)

1.  On October 1, Topper Company signs a contract to sell 1,000tie-dyed shirts for $10,000 ($10.00 each).

On October 8, 900shirts are delivered and Topper receives $9,000 cash (900 * $10)

1. Prepare the journal entry Topper Company would record to recognize revenue on October 8:

On October 15, Topper modifies the agreement to sell an additional 500 tie-dyed shitsfor $4,000 ($8.00 each * 500 shirts) which is significantly lower than Topper’s stand-alone selling price at that time.

So they still need to deliver 100from the agreement made on October 1 plus another 500for a total of 600tie-dyed flags.  

: As at January 01, 2019, Apex Ltd. had a total current assets of $124,000, fixed assets $600,000, liabilities $508,000,
and equity balance of $216,000. Following are the transaction which were entered by the business during the year
Record all the tranactions to show how these will affect the accounting equation of the business.
1 Company purchased equipment for $50,000 on account
2 Incurred rent of $2,000 to be paid in the next month
3 Bought a car for $85,000, paid $13,000 as dowpayment, and obtained loan for rest of the amount.
The company has to pay $400 on license and registration
4 Company accrued salaries of $10,800
5 Company paid $1,500 as utility expenses
6 Charged depreciation of $6,500
7 Sold old equipment for $30,000, out of which, $6,000 is yet to be received
8 Sales revenue generated during the year $200,000, and collections were only for $184,000
9 A customer, who owed company $9,500, refused to pay. The final settlement was made for $4,200
10 Company had an opening balance of $29,000 towards the suppliers. During the current period,
Company settled all of this balance
11 Company had an investment of $12,000 in common shares. During the year, the company sold these share for $14,500
12 Company had a short term debt of $24,000, which was paid off during the year along with an interest of $2,000
13 Company issued equity shares of $75,000

Classifications on Balance Sheet

The current balance sheet of J. J. Arvesen Company contains the following major sections:

1. Current assets
2. Long-term investments
3. Property, plant, and equipment
4. Intangible assets
5. Other assets
6. Current liabilities
7. Long-term liabilities
8. Contributed capital
9. Retained earnings
10. Accumulated other comprehensive income

The following is a list of accounts in random order. Using the letters A through J, indicate in which section each account would most likely be classified. If an account does not belong under one of the sections listed, select "Not under any of the choices" from the classification drop down box. For all accounts, indicate if the account is a contra account or an account that would normally be deducted on the balance sheet by selecting "yes" from the second drop down box, otherwise select "no".

The following data lists the grades of 6 students selected at random: Mathematics grade: (70, 92, 80, 74, 65, 85) English grade: (69, 88, 75, 80, 78, 90)

a). Find the regression line.

b). Compute and interpret the correlation coefficient.

A popular toothpaste brand claims that four out of five (or eighty percent) of dentists recommend their brand.

1. You randomly select 35 dentists. Calculate the probability that the sample proportion is between 74 percent and 88 percent.

2. Comment on the appropriateness of the sample size.