Finance Answers

b. Sahar is analyzing the probability to open her own beauty salon. If she chooses to operate her own salon she would have to pay Rs. 70,000 p.m as rent and staff that would cost her Rs. 30,000 p.m and is expected to earn Rs. 150,000 p.m. While if she continues working as the head makeup artist in one of renowned salons of Karachi she would earn 120,000. Analyze the information above and find explicit and implicit cost.

You purchased 10 shares of L& T Company last year. On 5th March 2019, the
company has declared a dividend Rs 50 per share. The income is earned but not yet
collected in your account during this financial year

88. Culture Extravaganza produce ballets in Boston and New York. Monthly total revenue are given by
TRB = 1,000 QB0.5
and TRN = 2,000 QN0.5
where QB is the monthly number of Boston patrons and QN is the monthly number of New York ballet attendees. Salaries of the performers are based on attendance and the firm estimates that the marginal cost is $10 per attendee in each city.
i) If Culture Extravaganza attempts to practice third-degree price discrimination, what will be the profit-maximizing prices and rates of output in each city?
ii) Will the firm earn more profit using price discrimination than if a uniform price is set? Explain.

79. Why should goods produced in fixed proportions be regarded as a product package in developing production and pricing strategies?

70. How is the dead weight loss from monopoly affected by the slope of the demand curve?

61. Given the production function
Q = 30 K0.7 L0.5
and input prices r = 20 and w = 30, determine the expansion path.

52. The marginal product of labor function for Central Milling Inc. is given by the equation
MPL = 10 (K/L) 0. 5
Currently, the firm is using 100 units of capital and 121 units of labor. Given the very specialized nature of the capital equipment, it takes six to nine months to increase the capital stock, but the rate of labor input can be varied daily. If the price of labor is $10 per unit and the price of output is $2 per unit, is the firm operating efficiently in the short run? If not, explain why, and determine the optimal rate of labor input.

43. Assume that the budget constraint is given by the equation Q1 = 1,000 – 5Q2, where Q1 and Q2 represent quantities of two goods. Normally, indifference curves are convex to the origin, but assume in this case that they are linear with a constant slope of –2.
i) Graph the budget constraint (with Q1 on the vertical axis).
ii) Draw in a set of indifference curves and label the utility-maximizing point.
iii) Where would the utility-maximizing point have been if the indifference curves had a constant slope of –6?

34. Sailright Inc. manufactures and sells sailboards. Management believes that the price elasticity of demand is – 3.0. Currently, boards are priced at $500 and the quantity demanded is 10,000 per year.
(a) If the price is increased to $600, how many sailboards will the company be able to sell each year?
(b) How much will total revenue change as a result of the price increase?

25. What do you understand by demand function? Explain
Linear demand function
Non-linear demand function
Shift in demand curve