Other Economics Answers

. The demand for its new brand of fertilizer, Meadow Muffins, is given by the equation Q = 120 - 4P.

a. Silkwood is currently charging $10 for a pound of Meadow Muffins. At this price, what is the price elasticity of demand for Meadow Muffins?

b. At a price of $10, what is Silkwood’s marginal revenue?

c. What price should Silkwood charge if it wishes to maximize its total revenue?

d. At the total revenue maximizing price, what is the price elasticity of demand for Meadow Muffins?

Government regulation that makes it impossible to change a price higher than the specified price is called

UESTION TWO: TV is contemplating a T-shirt advertising promotion. Monthly sales data from T-shirt shops marketing the “Eye Watch KRMY-TV” design indicate that

Q = 1,500 – 200P

where Q is T-shirt sales and P is price.

A. How many T-shirts could KRMY-TV sell at $4.50 each?

B. What price would KRMY-TV have to charge to sell 900 T-shirts?

C. At what price would T-shirt sales equal zero?

D. How many T-shirts could be given away?

E. Calculate the point price elasticity of demand at a

Tata Steel Ltd has equity share capital of Rs. 50,00,000 (Face value

Rs.100) and 10% Debentures of Rs. 50,00,000.To meet the expenditure

program, the company wishes to raise Rs. 30,00,000 and is having the

following two alternative sources to raise the funds:

Plan A : To have full money from the issue of Equity shares.

Plan B: To have Rs. 15,00,000 from equity shares issued and

Rs.15,00,000 from borrowings from the financial institutions @10%

The company is having present earing’s of Rs.16,50,000 . The corporate

tax is 40%.New equity shares will be issued at Rs. 120 per share.

(i)Find out the EPS and select a suitable plan out of the above two

planes to raise the required funds.

(ii)Find out the indifference level of EBIT between Plan A and Plan B