MSFA 710
USF School of Management
Spring 2016
John Gonzales
Assignment #2 Answers
1.
Price elasticity of demand =
Quantity
Pr ice
Avg.Quantity (Old & New) Avg. Pr ice(Old & New)
Point Price Quantity
A
$48
10
B
$40
26
C
$38
30
D
$34
38
E
$28
50
F
$18
70
G
MSFA 710
John Gonzales
Spring 2016
USF
Assignment #3
1.
The are two consumption goods, X and Y. Start with a utility maximizing point,
where Y is on the vertical axis and X is on the horizontal axis. In a separate graph,
show this pont on the demand curve
MSFA 710
John Gonzales
Spring 2016
USF
Assignment #3 Answers
1.
Textbook, page 146, #13.
13. Suppose you are in charge of a toll bridge that costs essentially nothing to operate.
1
The demand for bridge crossings Q is given by P = 15 Q .
2
a. Draw the dem
MSFA 710
John Gonzales
Spring 2016
USF
Assignment #4
1.
Textbook, pages 315-316, #4, #5 [skip (b)], #6 and #11 Skip calculating producer
surplus. For #11, also find the output and profit at P = $135, P = $95 and P = %55.
2.
Suppose a perfectly competitive
MSFA 710
John Gonzales
Spring 2016
USF
Assignment #4 Answers
Textbook.
4. Suppose you are the manager of a watchmaking firm operating in a competitive
2
market. Your cost of production is given by C = 200 + 2q , where q is the level of
output and C is tot
MSFA 710
John Gonzales
Spring 2016
USF
Assignment #5
1.
Start with an equilibrium situation of a firm with monopoly power. Show
graphically and explain what will happen if there is a decrease in demand.
2.
Start with an equilibrium situation of a firm wit
MSFA 710
USF School of Management
Spring 2016
John Gonzales
Assignment #5 Answers
4. Textbook, page 396, Exercises 4 (a) and 5 [(a)-(c) only].
4. A firm faces the following average revenue (demand) curve:
P = 120 0.02Q
where Q is weekly production and P i
MSFA 710
USF School of Management
Fall 2016
John Gonzales
Assignment #1
1.
Do exercises 1 and 3 on page 62 of Pindyck and Rubinfeld. For #1, plug in I to find
the demand curve.
2.
Do exercise 11 on page 63 of Pindyck and Rubinfeld. For part (a), take the
Gas Prices Hardly Affect Demand
SF Chronicle, 12/01/06
UC Davis survey says pump costs have to soar a lot before Americans change driving habits
Record high gasoline prices haven't made a serious dent in America's demand for fuel, a new UC Davis study sug
MSFA 710
USF School of Management
Spring 2016
John Gonzales
Demand Function Example
1.
Demand Function
X = 100 - 2Px + 4Py - 3Pz + .1I
where X = quantity demanded
Px = price of product X
Py = price of product Y
Pz = price of product Z
I = income
(a)
The l
MSFA 710
USF School of Management
Spring 2016
John Gonzales
Assignment #2
1.
2.
2.
For the each successive combination below, calculate the own-price elasticity of
demand. Also, graph the demand curve. Confirm (by calculating the change in TR
associated w
Review of
Financial
Statement
Basics
1
Income Statement:
Basics
Revenues earned in the period.
Less:
Direct costs associated with generating
those revenues.
The Period Costs that cant be directly
associated with revenues.
Non-Operating items: Interest
Ratios
Ratios
1
Ratios
Ratios fall into four categories:
1. Activity ratios
2. Liquidity ratios
3. Debt ratios
4. Profitability ratios
2
Ratios
Activity ratios measure a firms operating activities.
The most commonly used activity ratios measure a
companys
MSFA 710
USF School of Management
Spring 2017
John Gonzales
Assignment #2
1.
2.
2.
For the each successive combination below, calculate the own-price elasticity of
demand. Also, graph the demand curve. Confirm (by calculating the change in TR
associated w
Problem 2
The demand for X increases. The price and QD of X increase.
The increase in the QD of X leads to an increase in the demand for Y. The price and QD of
X increase.
In 1998, Americans smoked 470 billion cigarettes, or 23.5 billion packs of
cigarettes. The average retail price was $2 per pack. Statistical studies have
shown that the price elasticity of demand is -0.4, and the price elasticity of
supply is 0.5. Using t
Demand Elasticities
(1)
Price Elasticity of Demand (own-price elasticity, elasticity)
EP =
% Q Q P
=
% P Q
P
in absolute value, i.e. ignore the
signs of the changes
Total Revenue (TR) = Total Expenditure (TE) = P x Q.
EP > 1 elastic demand. Price and TR
p
q
48
40
38
34
28
18
10
TR
10
26
30
38
50
70
86
480
1040
1140
1292
1400
1260
860
As P drops, the good becomes more and more inelastic. The only outlier from theory is when price
This occurs because the % change in quantity is greater than the absolute pe
MSFA 710
USF School of Management
Fall 2016
John Gonzales
Assignment #3
1.
Do exercises 14-16 on pages 108-109.
Notes for #14: MUM = 2 and MUP = 1. Also, skip part (c).
Notes for #15: MUD = 10F and MUF = 10D.
2.
The are two consumption goods, X and Y. Sta