Suppose the demand and supply curves for good X are both linear. And, the demand price for the first unit of X is $14, and the supply price for the first unit of X is $3. If the equilibrium price for good X is $8 and the equilibrium quantity of X is 12,000 units, then total consumer surplus is $________, total producer surplus is $________, and total social surplus is $__________ a. $36,000; $30,000; $66,000b. $30,000; $36,000; $66,000c. $6; $5; $11d. $6,000; $5,000; $11,000
Answers
Answer:
a. $36,000; $30,000
Explanation:
Consumer Surplus is the difference between price paid by the consumer & maximum price he is willing to pay. Graphically it is the triangular area above the equilibrium price, below the demand curve.
Producer Surplus is the difference between price received by the seller & his minimum selling price. Graphically it is the triangular area below the equilibrium price, above the supply curve.
So : The formula = 1/2 (price differential) (quantity)
Consumer Surplus = 1/2 (14-8)(12000) = 1/2 (6) (12000) = 1/2 (72000)
= 36000
Producer Surplus = 1/2 (8-3)(12000) = 1/2 (5) (12000) = 1/2 (60000)
= 30000
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Suppose you have a choice of two equally risky annuities, each paying $1,000 per year for 20 years with similar interest rates. One is an annuity due, while the other is an ordinary annuity. Which annuity would you choose
Answers
Answer:
straight line depreciation:
depreciation expense per year, the same for every year = ($60,000 - $12,000) / 14 = $3,428.57
book value end of year 1 = $56,571.43
book value end of year 2 = $53,142.86
book value end of year 3 = $49,714.29
book value end of year 4 = $46,285.72
book value end of year 5 = $42,857.15
double declining balance:
deprecation expense year 1 = 2 x 1/14 x $60,000 = $8,571.43
book value end of year 1 = $51,428.57
deprecation expense year 2 = 2 x 1/14 x $51,428.57 = $7,346.94
book value end of year 2 = $44,081.63
deprecation expense year 3 = 2 x 1/14 x $44,081.63 = $6,297.38
book value end of year 3 = $37,784.25
deprecation expense year 4 = 2 x 1/14 x $37,784.25 = $5,397.75
book value end of year 4 = $32,386.50
deprecation expense year 5 = 2 x 1/14 x $32,386.50 = $4,626.64
book value end of year 5 = $27,759.86
sum of digits:
depreciable value = $60,000 - $12,000 = $48,000
total sum of digits = 120 years
deprecation expense year 1 = $48,000 x 15/120 = $6,000
book value end of year 1 = $54,000
deprecation expense year 2 = $48,000 x 14/120 = $5,600
book value end of year 2 = $48,400
deprecation expense year 3 = $48,000 x 13/120 = $5,200
book value end of year 3 = $43,200
deprecation expense year 4 = $48,000 x 12/120 = $4,800
book value end of year 4 = $38,400
deprecation expense year 5 = $48,000 x 11/120 = $4,400
book value end of year 5 = $34,000
Answers
Answer: The answer is as follows:
Explanation:
Price of basket in year one = $8
Price of basket in year two = $7
So, from year one to year two there is a fall in the price level which means that there is deflation in the economy at an annual rate of :
=
= -12.50%
In year one, $40 will buy = 5 Baskets
In year two, $40 will buy = 5.71 Baskets
Value of money =
Hence, this example illustrates that, as the price level falls, the value of money increases.
Answers
Answer:
$2,000,000
Explanation:
Menesuah incorporation has a projected cash flow of $100,000
FCF is expected to grow at a constant rate of 6%
The weighted average cost of capital is 11%
Therefore the value of its operation can be calculated as follows
= 100,000/(11/100-6/100)
= 100,000/0.11-0.06
= 100,000/0.05
= $2,000,000
Hence the value of its operation is $2,000,000
Answers
Answer:
The expected return for securities with maturities of two, three, and four years is as follows:
Expected Return 2 year Security=4.50 %
Expected Return 3 year security=6 %
Expected Return 4 year security=7.25 %
Explanation:
According to the expectations hypothesis theory, the expected return for the 2 year security is the average of the expected yields of two one-year T-bills, for the 3 year security is the average of the expected yields of three one-year T-bills and the 4 year security is the average of the expected yields of the four one-year T-bills.
Therefore, in order to calcuate the expected return for each year we have to use the following formula:
Expected Return 2 year Security=(4 + 5) / 2 = 4.50 %
Expected Return 3 year security=(4 + 5 + 9) / 3 = 6 %
Expected Return 4 year security=(4 + 5 +9 + 11) / 4 = 7.25 %
b) false
Answers
The given statement is False Option(b) is correct.
What are work groups?
A Working group, or working party, is a group of specialists working together to accomplish indicated objectives. The groups are space explicit and center around conversation or action around a particular branch of knowledge.
A working group's presentation is comprised of the singular consequences of all its singular individuals. A group's presentation is comprised of both individual outcomes and aggregate outcomes. In enormous associations, working groups are predominant, and the attention is dependably on individual objectives, execution and accountabilities.
Working group individuals don't get a sense of ownership with results other than their own. Then again, groups require both individual and common responsibility. There is more data sharing, more group conversations and discussions to show up at a group choice The life expectancy of a working group can endure anyplace between a couple of months and quite a long while. Such groups tend to foster a semi extremely durable presence when the relegated task is achieved consequently the need to disband or gradually eliminate the working group when it has accomplished its objective.
Therefore Option(b) is correct.
Learn more about work group here:
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Answers
Answer:
3.8%
Explanation:
3 year bonds yielding 3.2%
6 year bonds yielding 5.0
Annual pay bond 4 years
Yielding bond+[(Annual pay bond- Bonds years)/bond years]×(Yielding bond-Yeilding bonds)
Let plug in the formula
Interpolating: 3.2% + [(4 - 3) / (6 - 3)] × (5.0% - 3.2%)
=3.2%+[1/3×(1.8%)]
= 3.2%+(0.33333×1.8%)
=3.2%+0.006
=0.032+0.006
=0.038×100
=3.8%
Alternatively,
Interpolating: 3.2% + [(4 - 3) / (6 - 3)] × (5.0% - 3.2%) =3.8%
In this case the analyst should estimate a YTM for the non-traded bond that is closest to: 3.8%