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1. A firm raises capital by selling $20,000 worth of debt with flotation costs equal to 2% of its par value. If the debt matures in 10 years and has a coupon interest rate of 8%, what is the bond's YTM?
Suppose that the following information describes the economy of Wonderland: C = 300 + 0.8Yd I = 300 G = 250 X = 300 M = 150 + 0.6Yd T= 0.25Yd Wonderland’s multiplier is calculated as:
A supplier supplies 50 T-shirts when the price is R60 per t-shirt and 90 t-shirts when the price is R110 per t-shirt.
a). Determine the equation of the supply function as a function of q?
b). How many additional t-shirts are sopplied for each successive R1 increase in price?
c). How many t-shirts are sopplied when the price is R85?
d). What is the price when 120 t-shirts are sopplied?
“Individual demand depends on the demand of others”. Explain using demand supply
analysis with suitable graphs and examples.
The following table shows the potential output combinations of oranges and jars of prickly pear jelly (from the flower of the prickly pear cactus) for Florida and Arizona. a) Compute the opportunity cost of oranges in Florida in terms of jars of prickly pear jelly. Do the same for prickly pear jelly in terms of oranges. b) Compute the opportunity cost of oranges in Arizona in terms of jars of prickly pear jelly. Do the same for prickly pear jelly in terms of oranges. c) Would it make sense for Florida to specialize in producing oranges and for Arizona to specialize in producing prickly pear jelly and then trade? Why or why not? Florida Arizona Oranges Prickly Pear Jelly Oranges Prickly Pear Jelly 0 10 0 500 50 8 20 400 100 6 40 300 150 4 60 200 200 2 80 100 250 0 100 0
1. Which of the following statements is true?*
a. To an economist, demand is different from quantity demanded.
b. A demand schedule is the numerical tabulation of the law of demand.
c. A demand curve is the graphical representation of the direct relationship between price and quantity demanded.
d. a and b
e. a, b, and c
9. The table below illustrates the interaction of demand and supply in the market for gasoline.
Supply and Demand Schedule of Gasoline
Price (cents) Quantity Demanded Quantity Supplied
1.00 800 500
1.20 700 550
1.40 600 600
1.60 550 640
1.80 500 680
2.00 460 700
2.20 420 720
Suppose the price of gasoline is $1.60 per gallon.
a. Is the quantity demanded higher or lower than at the equilibrium price? ___________
b. What about the quantity supplies? ___________
c. Is there a shortage in the market? ___________
d. If so, how much? ___________
Foster’s stocks one raw material item, Drum 4, which forms the raw material content for their sole product, and the information below relates to this stock item for May 2016.
Opening stock
100 units Price $20 per unit
Receipts of stock item
2-5-19 250 units Price $25 per unit
13-5-19 300 units Price $30 per unit
21-5-19 220 units Price $35 per unit
Issues to production
6-5-19 200 units
19-5-19 300 units
30-5-19 250 units
Required:
(a) For Drum 4, calculate the value of closing stock as at 31 May 2019, and the cost of materials issued to production for the month of May, using perpetual methods of inventory valuation for:
FIFO
LIFO and AVCO
formula for maximum profit output
Suppose two firms are the sole producers of widget in West Africa, and they are faced with a market demand function given as P = 40 - 20Q While Dally Limited is located in Nigeria, Joy Manufacturing operates from Ghana. The firms' total cost function is given as TC = 12 + Q
a.) Determine the output and profit for each firm under Cournot's assumptions. [3 marks] b.) To aid Joy Manufacturing increase its output to the Stackelberg leader's output level, the Ghanaian government plans to support the firm with subsidies. In monetary terms what should be the value of the subsidy that will make Joy Manufacturing the leading firm in the market? [3 marks]
c.) Assume the fims now operates under Stackelberg' s assumptions, with Joy Manufacturing as the leader, determine output and profit for each firm. [4 marks]
