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Greg’s Hardware has determined the following demand and supply equations for nails
QD = 10,000-25P
QS = -5,000 + 50P
a. How many nails would be sold for $100?
b. At what price would nail sales be zero?
c. When P = $200, what is total revenue? What is marginal revenue?
d. What is the relationship between quantity supplied and quantity demanded at a price of $300?
QD = 10,000-25P
QS = -5,000 + 50P
a. How many nails would be sold for $100?
b. At what price would nail sales be zero?
c. When P = $200, what is total revenue? What is marginal revenue?
d. What is the relationship between quantity supplied and quantity demanded at a price of $300?
Economics
A manufacturer makes 7,900,000 memory chips per year. Each chip takes 0.4 minutes of direct labor at the rate of $8 per hour. The overhead costs are estimated at $11 per direct labor hour. A new process will reduce the unit production time by 0.01 minutes. If the overhead cost will be reduced by $5.50 for each hour by which total direct hours are reduced, what is the maximum amount you will pay for the new process? Assume that the new process must pay for itself by the end of the first year.
10. Global Insight (GI) forecasting firm predicted that the Canadian economy will bounce back by a stronger than expected 1.0% on annualized basis in the third quarter of 2012 and with a further 0.1% in the fourth quarter of 2012. The firm also expects moderate growth overall in 2013. (10 marks)
a. What evidence does GI present to support the view that Canada had entered a recovery
a. What evidence does GI present to support the view that Canada had entered a recovery
CARICOM Products Limited production function is lnQ = 0.63 + 0.43lnK + 0.56lnL. Given that price of labour (L) is $20 and the price of capital (K) is $33
(i) What is the optimal mix?
(ii) What is the firm’s output elasticity and returns to scale? Explain.
(i) What is the optimal mix?
(ii) What is the firm’s output elasticity and returns to scale? Explain.
Keynesian economic tools are not adequately effective when...
1) a trade-off exists between the rate of unemployment and the rate of inflation.
2) exports are greater than imports.
3) imports are greater than exports.
4) interest rates are high.
1) a trade-off exists between the rate of unemployment and the rate of inflation.
2) exports are greater than imports.
3) imports are greater than exports.
4) interest rates are high.
Suppose a bond's face value is $1000. Its maturity is 1 year from now. The bond's yield is currently 1.3%. How much is the price of the bond that is implied by this yield?
Question 3 (20 marks)
A firm has the following short-run production function:
Q = 50L+6L 2 −0.5L 3
where Q = Quantity of output per week
L = Labor (number of workers)
a. When does the law of diminishing returns take effect?
b. Calculate the range of values for labor over which Stages I, II, and III occur.
c. Assume each worker is paid $10 per hour and works a 40-hour week. How many workers should the firm hire if the price of the output is $10? Suppose the price of the output falls to $7.50. What do you think would be the short-run impact on the firm’s production? The long-run impact?
A firm has the following short-run production function:
Q = 50L+6L 2 −0.5L 3
where Q = Quantity of output per week
L = Labor (number of workers)
a. When does the law of diminishing returns take effect?
b. Calculate the range of values for labor over which Stages I, II, and III occur.
c. Assume each worker is paid $10 per hour and works a 40-hour week. How many workers should the firm hire if the price of the output is $10? Suppose the price of the output falls to $7.50. What do you think would be the short-run impact on the firm’s production? The long-run impact?
Fence Right is a firm that supplies and installs fence. Its output follows the production function
Q = 20L – 0.5L2; where L denotes labour hours and Q the length of the fence in feet. The firm
hires labour at a wage of $25 per hour.
Hint: MRPL = MRC
a) DD has received an offer to install 200 feet of fence for a price of $480. Should DD accept
the offer?
b) What offer would be profitable if the company desires a price of $5 per foot of fence installed
(show all workings)?
Q = 20L – 0.5L2; where L denotes labour hours and Q the length of the fence in feet. The firm
hires labour at a wage of $25 per hour.
Hint: MRPL = MRC
a) DD has received an offer to install 200 feet of fence for a price of $480. Should DD accept
the offer?
b) What offer would be profitable if the company desires a price of $5 per foot of fence installed
(show all workings)?
Low-skilled workers operate in a competitive market. The labor supply is QS = 10W (where W is the price
of labor measured by the hourly wage) and the demand for labor is QD = 240 – 20W. Q measures the
quantity of labor employed (in thousands of hours).
a. Find the equilibrium wage (W) and quantity (Q) of low-skilled labor workers in equilibrium.
b. If the government passes a minimum wage of $10 per hour, what will be the new quantity of labor (Q)
demanded? Comparing labour demand and supply at the minimum price, will there be a shortage or
surplus of labor? How large?
c. Calculate the deadweight loss of this price floor.
d. By comparing the producers’ surplus before and after the minimum wage is introduced, how much
better off are low-skilled workers in this case? How much worse off are employers?
of labor measured by the hourly wage) and the demand for labor is QD = 240 – 20W. Q measures the
quantity of labor employed (in thousands of hours).
a. Find the equilibrium wage (W) and quantity (Q) of low-skilled labor workers in equilibrium.
b. If the government passes a minimum wage of $10 per hour, what will be the new quantity of labor (Q)
demanded? Comparing labour demand and supply at the minimum price, will there be a shortage or
surplus of labor? How large?
c. Calculate the deadweight loss of this price floor.
d. By comparing the producers’ surplus before and after the minimum wage is introduced, how much
better off are low-skilled workers in this case? How much worse off are employers?
Build the projected revenue budget for the six months ending in December.
Apollo cash receipts
1.5.20XX–30.9.20XX
May
June
July
August
Sept.
Oct.
Nov.
Dec.
3,000
5,000
7,000
1,000
5,000
4,500
3,000
3,000
Note:
Cash receipts are shown. Credit revenues are twice that of cash each month. The business is closed for April. Credit terms are 50% by end of the month; 35% by end of the next month balance by end of third month.
Apollo cash receipts
1.5.20XX–30.9.20XX
May
June
July
August
Sept.
Oct.
Nov.
Dec.
3,000
5,000
7,000
1,000
5,000
4,500
3,000
3,000
Note:
Cash receipts are shown. Credit revenues are twice that of cash each month. The business is closed for April. Credit terms are 50% by end of the month; 35% by end of the next month balance by end of third month.
