What is the value of the monetary policy multiplier with respect to income and interest rates? Answer

  1.  What is the value of the monetary policy multiplier with respect to income and interest rates?  Answer
  2. If the money supply is increased by 100, what are the new market-clearing income and interest rate levels?
  3. Calculate the equilibrium level of income and interest rates. Sketch the IS/LM equilibrium position.
  4. In this example, what is the equation for the LM schedule
  5.  derive the equation for the IS schedule.
  6. Suppose the government reduces public expenditure on goods and services by 25. Estimate the change in the equilibrium level of income. What is the new equilibrium level of income?
  7. Calculate the equilibrium level of income.

EXTERNAL ECONOMIES OF SCALE AND INTERNATIONAL LOCATION OF PRODUCTION ? Answer

  1. EXTERNAL ECONOMIES OF SCALE AND INTERNATIONAL LOCATION OF PRODUCTION  ? Answer
  2. ECONOMIES OF SCALE
  3. Economies of scale and market structure
  4. external economies of scale v/s internal economies of scale
  5. The Theory of External Economies
  6. specialized suppliers
  7. Labor Market Pooling
  8. Knowledge Spillovers
  9. External Economies and Market Equilibrium
  10. External Economies and International Trade
  11. equilibrium in the world button industry would look like the situation shown in Figure below
  12. THE DIAGRAM FOR CHINA AND US BUTTON INDUSTRY LOOK LIKE
  13. External Economies and the Pattern of Trade
  14. Trade and Welfare with External Economies
  15. External Economies and Losses from Trade

(TCO 1) Which of the these activities is a capital budgeting task Answer

(TCO 1) Which of the these activities is a capital budgeting task
Answer

1. (TCO 1) Which of the these activities is a capital budgeting task? (Points : 4)

determining the amount of cash needed on a daily basis to operate a firm
. identifying assets that produce value in excess of the cost to acquire those assets
establishing the inventory level
establishing a new credit policy

2. (TCO 1) Market value is important to the financial manager because: (Points : 4)

It reflects the value of the asset based on generally-accepted accounting principles.
Is a crucial component of the balance sheet, and can impact the financial statements.
Market values reflect the amount someone is willing to pay today for an asset.
The market value of an asset reflects its historical cost.

3. (TCO 1) Use the following tax table to answer this question:
Taxable Income Tax Rate

$0- $50,000 15%

$50,001- 75,000 25

$75,001- 100,000 34

$100,001- 335,000 39

$335,001- 10,000,000 34

Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4)

$39,535
$49,069
$51,285
$56,285
$78,535

4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4)

Regional Bank, APR
Local Bank, EAR
Regional Bank, EAR
Local Bank, APR

5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4)

a decrease in the interest rate
increasing the initial amount of your deposit
decreasing the frequency of the interest payments
extending the length of the investment period

6. (TCO 3) Thirteen years from now, you will be inheriting $30,000. What is this inheritance worth to you today, if you can earn four percent interest compounded annually? (Points : 4)

$18,017.22
$20,741.87
$23,190.98
$26,359.88
$28,846.15

7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points : 4)

$2,291.89
$2,809.10
$3,287.46
$3,412.67
$4,145.68

8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4)

effective annual rate
amortized
interest-only
annual percentage
pure discount

9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4)

$1315
$1300
$756
$1000

10. (TCO 6) Which of the following is true regarding the primary market? (Points : 4)

it is the market where the largest number of shares are traded on a daily basis.
it is the market in which the largest number of issues are listed.
it is the market with the largest number of participants.
it is the market where new securities are offered.
it is the market where shareholders trade most frequently with each other.

11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4)

Financial leverage increases profits and decreases losses.
Financial leverage has no effect on a firm’s return on equity.
Financial leverage, refers to the use of common stock.
Financial leverage magnifies both profits and losses.
Increasing financial leverage will always increase the earnings per share.

12. (TCO 3) A 10-year bond pays 11 percent interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity? (Points : 4)

9.33%
7.94%
12.66%
8.10%

13. (TCO 8) Which of the following is true regarding bonds? (Points : 4)

Most bonds do not carry default risk.
Municipal bonds are free of default risk.
Bonds are not sensitive to changes in the interest rates.
Moody’s and Standard and Poor’s provide information regarding a bond’s interest rate risk.
None of the above is true

14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4)

zero-coupon, five year
seven percent annual coupon, five year
zero-coupon, 10 year
five percent semi-annual coupon, 10 year
five percent annual coupon, 10 year

15. (TCO 6) A call provision in a bond agreement grants the issuer the right to: (Points : 4)

repurchase the bonds prior to maturity at a pre-specified price.
replace the bonds with equity securities.
repurchase the bonds after maturity at a pre-specified price.
change the coupon rate, provided the bondholders are notified in advance.
buy back the bonds on the open market prior to maturity.

You want to buy a new Computer Aided Design (CAD) system for your business Answer

5. You want to buy a new Computer Aided Design (CAD) system for your business. The cost of the system is $150,000 and you expect to save over $40,000 per year in reduced labor costs. Please calculate the net present value of the CAD if your required return is 10 percent and the life of the system is expected to be 5 years.

You are operating a firm in a perfectly competitive market. In the short run, you have fixed costs of $30 Answer

You are operating a firm in a perfectly competitive market.  In the short run, you have fixed costs of $30 Answer

You are operating a firm in a perfectly competitive market.  In the short run, you have fixed costs of $30 Answer

(12 Points)
You are operating a firm in a perfectly competitive market.  In the short run, you have fixed costs of $30.  Your variable costs are given in the following table:

Q TVC Tc MC
0 0 30  
1 70 100 70
2 120 150 50
3 150 180 30
4 190 220 40
5 270 300 80
6 360 390 90

2.

(10 Points)

A monopolist faces a demand curve given by:

P = 105 – 3Q, where P is the price of the good and Q is the quantity demanded.  The marginal cost of production is constant and is equal to $15.  There are no fixed costs of production.

3.

(6 Points)

List the three conditions that must be met in order for a firm to successfully engage in price discrimination.

4.

(12 Points)

Suppose a competitive firm can sell its output for $6 per unit.  The following table gives the firm’s short run production function.

Who in the Ethiopian society has the most difficult time dealing with scarcity Answer

Who in the Ethiopian society has the most difficult time dealing with scarcity Answer

 

  1. Who in the Ethiopian society has the most difficult time dealing with scarcity?
  2. What do they need most?
  3. How can their society provide for their wants and needs?
  4. Why are they so impoverished?
  5. What can their governments do to help, or hinder their country’s development?
  6. Could not Ethiopia become a world class producer and exporter of goods? How would Ethiopia compare with Japan? Japan is a country relatively POOR in natural resources, yet it is an economic world powerhouse. What are the differences between the two countries?

Research and discuss how the economic theory concerning decisions in the face of imperfect knowledge affects demand for products/services in the healthcare/Long-term ? Answer

  1. Research and discuss how the economic theory concerning decisions in the face of imperfect knowledge affects demand for products/services in the healthcare/Long-term.Answer
  2. You should discuss the role of at least two (2) of the following in your posting: marginal analysis, opportunity costs, diminishing utility, value of information
  3. if consumers are not aware about the substitutes of a product
  4. Companies charge premiums based on the information provided by the person
  5. The diminishing utility of the durable product

Suppose that the government subsidizes beans such that each unit of beans are half-price, up to the first 2 units (any additional units are full price? Answer

  1. Suppose that the government subsidizes beans such that each unit of beans are half-price, up to the first 2 units (any additional units are full price? Answer
  2. You have $600 to spend on beans and rice. The price of beans is $40 and the price of rice is $30.
  3. Graph your budget constraint with books on the vertical axis
  4. Consider a free market with demand equal to Q = 100 – 20P and supply equal to Q = 20P.
  5. Graph the inverse demand and supply curves with price on the vertical axis and indicate equilibrium
  6. What is the value of consumer surplus? What is the value of producer surplus?
  7. Now the government imposes a $1 per unit subsidy on the production of the good. What is the consumer surplus now? The producer surplus? The government subsidy? Why is there a deadweight loss associated with the subsidy?
  8. You have $1,000 to spend on flowers this year. The price of tulips (T) is $50 and the price of marigolds (M) is $20. Suppose that your utility function is U(T,M) = T1/5M4/5.
  9. What combination of T and M will you choose?
  10. Suppose that the price of marigolds rises to $40. How will this change your decision?
  11. What was happening to the number of traffic accidents in the years before the traffic light was installed?
  12. What is the estimate of the impact of the new traffic light in 1979 after removing the trend in accidents?