Economics Answers

BIT Bank (in millions) Assets： Reserves $48 Loans $360 Liabilities： Deposits $340 Bank Capital $68 NAT Bank (in millions) Assets Reserves $48 Loans $360 Liabilities Deposits $400 Bank Capital $8 Assume that both BIT Bank and NAT Bank have the same net profit after tax of $8 million a. Which bank (Bank BIT or Bank NAT) is riskier in case of loan depreciation at $60 million? Explain. Show your calculations to explain your answers.
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Find an illustration of dustinction between microeconomics and macroeconomic in todays headlines

At a personal level, what kind of questions can macroeconomics help you answer

You are choosing between two goods, X and Y, and your marginal utility from each is as shown below.



Instructions: Enter your answers as whole numbers.

a. If your income is $9.00 and the prices of X and Y are $2.00 and $1.00, respectively, what quantities of each will you purchase to maximize utility? X = units. Y = units.

b. What total utility will you realize? .

c. Assume that, other things remaining unchanged, the price of X falls to $1.00. What quantities of X and Y will you now purchase? X = units. Y = units.

d. Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.

Instructions: Start with the highest price first.

Price Quantity Demanded
$

Suppose that Omar’s marginal utility for cups of coffee is constant at 5.5 utils per cup no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 11 for the first doughnut he eats, 10 for the second he eats, 9 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?

C = 100 + 0.8Yd
investment (I) = 200
govt. exp. (G) = 200
export = 1000
import function(M) = 20+0.2Y

(a) Calculate equilibrium income Y
(b) Calculate value of multiplier and equilibrium income if import function (M) = 20+0.3Y

At a personal level, what kind of questions can macroeconomic help you amswer?

Case One
Asus Company issued capital for $1,400,000 to start its new project. It issued bonds for $800,000 and acquired the remaining capital from common equity. Asus bond’s YTM is 12.5% and its common stock beta (β) is 1.5. Knowing that the risk free ( is 5% and market risk premium (MRP) is 6% and Taxes are 40%.
Questions 1→5 refers to Case One.
1. Asus weight of debt is:
A.$800,000

B.12.5%

C.57.14%

D.42.86%

2. Asus weight of common equity is:
A.11.00%

B.42.86%

C.57.14%

D.$600,000

3. The after-tax cost of debt for Asus is:
A.12.5%

B.5.0%

C.7.5%

D.6.0%

4. The cost of common equity for Asus is:
A.14.0%

B.13.5%

C.12.5%

D.11.0%

5. The Weighted Average Cost of Capital (WACC) for Asus is:
A.21.50%

B.10.29%

C.10.75%

D.100.00%

Annie runs a fitness center. On December 31, 2014, she bought an existing business with
exercise equipment and a building worth $300000. During 2015, business improved and
she bought some new equipment for $50000. At the end of 2015, her equipment and
buildings were worth $325000. Calculate Annie’s gross investment, depreciation, and net
investment during 2015.

if a monopolist sell 10 units at a price of $5 and 15 units at a price of $4 what is elasticity of demand