Economics Answers

What part of the legislation provides details of how much income tax must be paid and what does it state?

Monopolist with a constant MC of 6, sells products in 2 separate markets.
Market 1: P1 = 24 - Q1
Market 2: P2 = 12 - 0.5Q2
(a) Calculate profit-maximizing price and quantity in these 2 market.
(b) Calculate monopolist's total profit
(c) Calculate DWL in market 1

Two firms operating under oligopoly are faced with two choices, to charge a high price or a low price. If one firm charges a low price while the other a high price, the firm that charges a low price attracts customers and earns a profit of $600,000 while the firm charging a high price loses customers and earns only $100,000. If both firms charge a high price they earn $400,000 each while if both charge a low price, they earn $200,000 each.
a) What profits are the firms likely to earn in the absence of cooperation?
b) If the firms cooperated, what profits would each firm earn?

A firm is considering employing one of the two machines A and B over a period of 4 years at the end of which the salvage value of each is zero. The cost of machine A is $10, 000 while that of machine B is $11, 000. The probability distributions of the returns for each machine are given in the table below.
PROBABILTY MACHINE A($) MACHINE B($)
0.25 6000 7000
0.50 5000 5000
0.25 4000 3000
The risk free discount rate is 10% while the risk premium applied as follows.
STANDARD DEVIATION($) RISK PREMIUM
0 – 999 0%
1000 – 1999 10%
2000 – 2999 10%
3000 – 3999 20%

Which of the two machines should be installed?

The owner of a firm expects to make a profit of $100 for each of the two years and be able to sell the firm at the end of the second year at $800. The owner of the firm believes the appropriate discount rate for the firm is 15%. What is the value of the firm?

If the price declines from $400 to $300 and as a result quantity demand increases from 1100 to 1400, elasticity of demand is

As a principle of economics, there is a direct relationship between marginal cost and quantity meaning both variables move in the same direction (also called a positive relationship).

Operational staff are the people actually doing the job in each of the project centres. These people are in the best position to identify problems, constraints or issues relating to current job costing budgets and to advise financial personnel of requirements for future budgets—to help prioritise resource needs for the next project stage. They should be included in consultative processes for advising on cost information when formulating budgets.

Comment on this statement and the implications for expense in the organisation.

A firm owned by an investor who invested $500, 000 earns a profit of $150, 000 a year. The best investment alternative for the investor is a portfolio of stocks and bonds earning a return of 12%. What is the economic profit?

If an economy produces computers and pizzas and a technological innovation makes the production of computers cheaper, we would expect the economy's production of pizzas to:

-decrease.

-decrease by an amount equal to the increase in computers.

-stay the same.

-increase.