Economics Answers

The May 17, 2015, price quotation for a Boring call option with a strike price of $50 due to expire in November is $20.80, while the stock price of Boring is $69.80. The premium on one Boring November 50 call contract is ?

QUESTION 1 (44 marks) SumOne Limited is a retail store with a 30 June year-end. The company recorded the following: 2021 (Rands) Sales – May 220 000 Sales – June 360 000 Refunds paid out in current year (relating to the prior year provision) 53 880 Refunds provision balance on 30 June 2020 55 850 You can assume all sales are on credit and that SumOne Limited applies a 25% markup on the cost price of all goods. The company’s refund policy states that customers can return goods within 60 days (two months) of purchase if they can provide proof of purchase. Experience shows that 8% of sales are returned in the first month following the sale, and 5% are returned in the second month. 4 REQUIRED: 1.1) Briefly discuss the general recognition and measurement principles that SumOne Limited will apply to their revenue transactions in terms of the requirements of IFRS 15. (4 marks)

Given the demand function for the two markets and total cost function that:

Q₁ = 55 – P₁; Q₂ = 70 – 2P₂ and TC=5Q + 20 where Q = Q₁ + Q₂

A.   Calculate the equilibrium price, equilibrium quantity in each market with price discrimination.

B.    Calculate the maximum profit using equilibrium price and quantity with price discrimination.

C.    Calculate the price elasticity of demand in each market using MR=P(1+1/Ɛ_p).

D.   Calculate the equilibrium price and quantity without price discrimination.

E.    Calculate the maximum profit without price discrimination.

F.     Is the Monopolist better off with or without price discrimination.

Given the demand function for the two markets and total cost function that:

Q₁ = 55 – P₁; Q₂ = 70 – 2P₂ and TC=5Q + 20 where Q = Q₁ + Q₂

A.   Calculate the equilibrium price, equilibrium quantity in each market with price discrimination.

B.    Calculate the maximum profit using equilibrium price and quantity with price discrimination.

C.    Calculate the price elasticity of demand in each market using MR=P(1+1/Ɛ_p).

D.   Calculate the equilibrium price and quantity without price discrimination.

E.    Calculate the maximum profit without price discrimination.

F.     Is the Monopolist better off with or without price discrimination.

Given the following demand function and total cost function as:

Q = 250-5P and TC = 0.5Q² + 5Q + 125 

Calculate the equilibrium price, Equilibrium Quantity and the total profit

A.        under perfectly competitive market structure.

B.         Under monopolistic competitive market. 

In the short-run production period, given the total cost of production as:                       

TC = wL + rK, where K is fixed

Prove that w/AP and SMC=w/MP 

The current Covid-19 pandemic has affected various economic sectors around the world. Choose two (2) examples of consumer goods and services in the output market that has a clear impact due to the pandemic. The examples of the goods and services could be either from the buyers’ side or the sellers’ perspective. Illustrate and explain your answers with the help of diagrams (pre-pandemic and during pandemic).

If the price of lemonade decreases due to insufficient demand, and its supply decreases at the same time, the equilibrium price will clearly rise.

Suppose a particular consumer has 8$ to be spent on two goods , A and B The unit price of good A is 2$ and the unit price of good B 1$. The marginal utility (MU) she gets from consumption of the two goods is given below.

Quantity MU_A. MU_B

1. 36. 30

2. 24. 22

3. 20. 16

4. 18. 12

5 16. 10

6. 10. 4

a. Based on the Cardinal Utility analysis,what is the combination of two goods that gives maximum utility to the consumer?

b. What is the total utility at the utility maximization level?

Suppose the price and the transacted of imported instant noodles increase which of the following is a possible reason? A. the income of the household decreases while instant noodles are inferior good. B More people are concerned about their health and reduce their consumption of imported instant noodles. C The transport cost of the import instant noodles increases. D. More local food manufacturers produce instant noodles.