1. Assume a consumer consumes only pumpkin pie and apple cider. Price of pie, P_p is $8 and price of cider, P_c is $5, and income of the consumer is $160.
   1. Write down this consumers Budget constraint. Draw the BC and mark the x and y coordinates. What is the slope of this BC?
   2. If the income increases to $240, show graphically how the BC changes. Mark the x and y coordinates. Write down the new BC. What is the slope of the BC?
   3. If instead the price of pie increases to $10, show graphically how the BC changes. Mark the x and y coordinates. Write down the new BC. What is the slope of the BC?

In an online viral video, a truck rolls down an incline and off a vertical cliff, falling into a valley below. The truck starts from rest and rolls down the incline, which makes an angle of 21.0° below the horizontal, with a constant acceleration of 3.37 m/s². After rolling down the incline a distance of 30.0 m, it reaches the edge of the cliff, which is 35.0 m above ground level.

How much time (in s) does it take the truck to fall from the edge of the cliff to the landing point? _____

At the point where the truck crashes into the ground, how far is it horizontally from the edge of the cliff (in m)? _____

After two quarters of increasing levels of production, the CEO of Canadian Fabrication & Design was upset to learn that, during this time of expansion, productivity of the newly hired sheet metal workers declined with each new worker hired. Believing that the new workers were either lazy or ineffectively supervised (or possibly both), the CEO instructed the shop foreman to “crack down” on the new workers to bring their productivity levels up.

1. Explain carefully in terms of production theory why it might be that no amount of “cracking down” can increase worker productivity at CF&D.

2. Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers.

After two quarters of increasing levels of production, the CEO of Canadian Fabrication & Design was upset to learn that, during this time of expansion, productivity of the newly hired sheet metal workers declined with each new worker hired. Believing that the new workers were either lazy or ineffectively supervised (or possibly both), the CEO instructed the shop foreman to “crack down” on the new workers to bring their productivity levels up.

a. Explain carefully in terms of production theory why it might be that no amount of “cracking down” can increase worker productivity at CF&D.
b. Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers.

Money is worth 1% per month to you. You're offered the following deals to buy your new Cadillac CTS.

What is the amount X that you must pay down to make Deal A and Deal B equivalent? Use compound monthly.

1. Assume that you have 0.5 lbs. of water in the cup. How many pounds per square inch are pushing down on the 3" x 5" card due to the water?
2. Which is pushing harder, the water pushing down or the air pushing up in a glass cup?
3. Why do the water and the index card not fall down?
4. How many pounds of water could theoretically be held up with a card that is the size of a sheet of paper (8.5 x 11 in.)?
5. How does the psi of air pressure compare to the pressure you have in your car tires or in bicycle tires (or in another type of tire around your house)?

Consider a two-period binomial model for the stock price with both periods of length one year. Let the initial stock price be S0 = 100. Let the up and down factors be u = 1.25 and d = 0.75, respectively and the interest rate be r = 0.05 per annum. If we are allowed to choose between call and put option after one year, depending on the up and down states (head and tail respectively), which option do you choose if you are in the up state and which option do you choose if you are in the down state. Consider the strike for this option is 100. Show all calculations.

"An oil producer is trying to decide if and when it should abandon an oil field. For simplicity, assume the producer will abandon immediately (year 0), at the end of year 1, at the end of year 2, or stay at least through the next two years. The major uncertainty is the price of oil, which can go up or down in any year. In each year, there is a 0.33 probability the oil price will go up and a 0.67 probability the oil price will go down. The oil producer decides whether or not to abandon the oil field and then observes whether the price of oil increases or decreases in the following year. The NPV includes all the relevant costs of abandoning the oil field and producing oil and the revenue gained from producing oil. It also already incorporates the producer's MARR. After the producer makes a decision at the end of year 2, we assume there is no more uncertainty. If the producer abandons the oil field at the end of a year, the price of oil in the following years does not impact the producer's NPV.
Solve a decision tree to calculate what the oil producer should do immediately, at the end of year 1, and at the end of year 2. You should assume an expected-value decision maker.
Enter the expected NPV of the best alternative. The best alternative may have a negative expected NPV.
- If the producer decides to abandon the oil field immediately, the NPV is -$43,000
- If the producer decides to abandon at the end of year 1 and the oil price goes up, the NPV is $0
- If the producer decides to abandon at the end of year 1 and the oil price goes down, the NPV is -$60,000
- If the producer decides to abandon at the end of year 2 and the oil price goes up in years 1 and 2, the NPV is $72,000
- If the producer decides to abandon at the end of year 2 and the oil price goes up in year 1 and goes down in year 2, the NPV is $37,000
- If the producer decides to abandon at the end of year 2 and the oil price goes down in year 1 and goes up in year 2, the NPV is -$4,000
- If the producer decides to abandon at the end of year 2 and the oil price goes down in years 1 and 2, the NPV is -$120,000
- If the producer decides to not abandon the oil field and the oil price goes up in years 1 and 2, the NPV is $41,000
- If the producer decides to not abandon and the oil price goes up in year 1 and goes down in year 2, the NPV is $21,000
- If the producer decides not to abandon and the oil price goes down in year 1 and goes up in year 2, the NPV is -$37,000
- If the producer decides not to abandon and the oil price goes down in years 1 and 2, the NPV is -$86,000"