The stock price is currently $50. The stock price annual up-move factor is 1.15. The risk-free rate is 3.9%. What is the value of a 1-year European call option with an exercise price of $52.

13-A contribution price, one lower than the regular price is most appropriate under the following conditions except: Select one: a. where there is full capacity b. where there is idle capacity c. where operating in a distress situation d. when faced with sharp competition e. when in a competitive bidding situation

14-

Examples of outsourcing decisions include all except:

Select one:

a. whether to buy or make sub components

b. whether to process payroll in-house or outside service

c. provide processing services internally or buy them

d. manage fleets of vehicles or use outside delivery service

e. use in house selling or inside marketing

15-

Management can relax a constraint by all but:

Select one:

a. expand the capacity of a bottleneck

b. outsourcing or subcontracting

c. working overtime

d. eliminate value-added activities at the bottleneck

e. retraining employees and shifting them to the bottleneck

16-Common mistakes to avoid in decision making when identifying relevant costs and benefits include all except:

Select one:

a. ignore sunk costs

b. beware of unitized fixed costs in decision making

c. beware of out-of-pocket-costs

d. beware of allocated fixed costs; identifying the avoidable costs

e. fail to identify opportunity cost

17-

Long-term investment features include all except:

Select one:

a. large amounts of initial cash outlay

b. recurring cash in flows over the life of the investment

c. income tax factors

d. time value of money

e. segmenting profit margins

17

Question 16

1. 16) The price elasticity of supply measures:

   		a. how much supply changes when price changes
   		b. how much demand changes when supply changes
   		c. how much quantity supplied changes when price changes
   		d. how much quantity demanded changes when quantity supplied changes

3 points

Question 17

1. 17) Which factor(s) increase supply?

   		a. firms see a decrease in their costs
   		b. firms can acquire a better technology
   		c. there are more firms in the market
   		d. all of the above

3 points

Question 18

1. 18) When there is excess supply in a market engaged in perfect competition:

   		a. price goes down and quantity demanded decreases and quantity supplied decreases
   		b. price goes up and quantity demanded decreases and quantity supplied decreases
   		c.price goes up and quantity demanded increases and quantity supplied increases
   		d. price goes down and quantity demanded increases and quantity supplied decreases

3 points

Question 19

1. 19) When there is excess demand in a market engaged in perfect competition:

   		a. price goes up and quantity supplied increases and quantity demanded decreases
   		b. price goes down and quantity supplied increases and quantity demanded increases
   		c. price goes up and quantity supplied increases and quantity demanded increases
   		d. price goes down and quantity supplied decreases and quantity demanded increases

3 points

Question 20

1. 20) Prices in a market are often considered "unfair". If a price ceiling is set in a market engaged in perfect competition:

   		a. a shortage of the product develops
   		b. a surplus of the product develops
   		c. everyone who wants to buy the product at the price ceiling can purchase it
   		d. it is efficient

• quantity– the number of pints your brewery pours monthly
• price– the price you charge per pint
• population– the surrounding population of the town your brewery is in (measured in thousands)
• wine price– the price of wine sold by Adam Smith’s Invisible Hand Winery
• wine quantity– the number of bottles of wine poured at Adam Smith
• regional income– an index of regional income (measured in units, higher index means higher income)
• pretzel price– the price of the pretzels that you sell
• pretzel quantity – the number of pretzels that you sell
• TV price– the price of 60-inch TV’s

As manager, you are focused on answering the following question

1. Estimate (and report) your demand equation using a linear regression (include the coefficients, p-values for the coefficients, and the  and its p-values). Does this equation make economic sense (in other words, did the signs of these match up with your expectations from question 1)?
2. Evaluate how well this regression performed (use both statistics and your economic intuition). Do you trust your regression? (i.e. would you use it to forecast demand if you were the actual owner of this brewery?) Why or why not?
3. Using the mean of each of your explanatory variables (except for price), what is your forecasted demand as a function of price? At a price of $5 per pint, what is your forecasted revenue?

Gibson Manufacturing Company established the following standard price and cost data.

Gibson planned to produce and sell 2,800 units. Actual production and sales amounted to 3,100 units.

Required

1. Prepare the pro forma income statement in contribution format that would appear in a master budget.

2. Prepare the pro forma income statement in contribution format that would appear in a flexible budget.

Prepare the pro forma income statement in contribution format that would appear in a master budget.

Prepare the pro forma income statement in contribution format that would appear in a flexible budget.

Explain a time you encountered non-uniform pricing, or price discrimination. Identify the type of price discrimination it was. Using the criteria necessary for price discrimination, evaluate how well that good fit price discrimination. Finally, evaluate the effect such price discrimination has on you and society.

Your journal entry must be at least 200 words in length. No references or citations are necessary.

Price-Earnings Ratio; Dividend Yield

The table that follows shows the stock price, earnings per share, and dividends per share for three companies for a recent year:

PriceEarnings
per ShareDividends
per Share

Deere & Company (DE)$103.04 $4.83 $2.40

Alphabet (GOOG)792.45 20.91 0.00

The Coca-Cola Company (KO)178.85 1.51 1.40

a. Determine the price-earnings ratio and dividend yield for the three companies. Round to one decimal place. If an amount should be zero, enter in "0".

Price-Earnings RatioDividend Yield

Deere & Company%

Alphabet%

The Coca-Cola Company%

b. Explain the differences in these ratios across the three companies by completing the following:
Deere & Company has the   price-earnings ratio, and is expected to produce shareholder returns through  . Coca-Cola has a   dividend yield and   price-earnings ratio. Alphabet pays   dividend and, thus, has   dividend yield. Alphabet has a   price-earnings ratio.

1. Why is preventing resale a key to successful price discrimination?

2. Why does price discrimination improve the efficiency of the market?

ELASICITY

What is meant by the terms price elasticity, cross-price elasticity and income elasticity? Explain why demand elasticity is the basis of airline pricing and revenue maximization, and why elasticity changes at different price points.