C1.2 (i) There are 1,388 observations in the sample. Tabulating the variable cigs shows that 212 women have cigs > 0.

(ii) The average of cigs is about 2.09, but this includes the 1,176 women who did not smoke. Reporting just the average masks the fact that almost 85 percent of the women did not smoke. It makes more sense to say that the “typical” woman does not smoke during pregnancy; indeed, the median number of cigarettes smoked is zero.

(iii) The average of cigs over the women with cigs > 0 is about 13.7. Of course this is much higher than the average over the entire sample because we are excluding 1,176 zeros.

(iv) The average of fatheduc is about 13.2. There are 196 observations with a missing value for fatheduc, and those observations are necessarily excluded in computing the average.

(v) The average and standard deviation of faminc are about 29.027 and 18.739, respectively, but faminc is measured in thousands of dollars. So, in dollars, the average and standard deviation are $29,027 and $18,739.

C1.3 (i) The largest is 100, the smallest is 0.

(ii) 38 out of 1,823, or about 2.1 percent of the sample.

(iii) 17

(iv) The average of math4 is about 71.9 and the average of read4 is about 60.1. So, at least in 2001, the reading test was harder to pass.

(v) The sample correlation between math4 and read4 is about .843, which is a very high degree of (linear) association. Not surprisingly, schools that have high pass rates on one test have a strong tendency to have high pass rates on the other test.

(vi) The average of exppp is about $5,194.87. The standard deviation is $1,091.89, which shows rather wide variation in spending per pupil. [The minimum is $1,206.88 and the maximum is $11,957.64.]

2.4 (i) When cigs = 0, predicted birth weight is 119.77 ounces. When cigs = 20, = 109.49. This is about an 8.6% drop....

... Microeconomics (Fall 2014)
Simon Bowmaker
ProblemSet 6
Submit at lecture (Monday, November 10)
Write your answers on separate sheets of paper. Please include:
your name
your recitation teacher’s name
day and time of the recitation
NB: if your recitation takes place on Monday morning, you must submit your assignment to your teacher at the beginning of the recitation.
1. Assume a monopolist faces the following market demand: Q = 100 - 2P. The monopolist’s total cost function is TC = 5+8Q2. What is the monopolist’s profit-maximizing level of output and price?
Answer
Step 1. Derive the MR and MC functions.
Since Q = 100 - 2P, P = 50 – (Q/2)
TR=P*Q=(50-1/2Q)Q=50Q-1/2Q2
MR=dTR/dQ=50-Q
MC=dTC/dQ=16Q
Step 2. Set MR=MC and solve for P*, Q*
MR=MC
50-Q=16Q
Q*=2.94 or 3 (rounded)
P*=50-1/2Q*=50-1/2*3=48.5
2. Assume a monopolist faces a market demand curve P = 130 – 2Q, and has the short-run total cost function TC = 350 + 10Q.
(a) What is the profit-maximizing level of output and price? What are profits?
(b) Graph the marginal revenue, marginal cost, and demand curves.
(a) Step 1. Derive the MR and MC functions.
P 130 – 2Q
TR=P*Q=(130 – 2Q)Q=130Q – 2Q2
MR=dTR/dQ=130 – 4Q
MC= dTC/dQ=10
Step 2. Set MR=MC and solve for P*, Q*, and π.
MR=MC
130 – 4Q=10
4Q=120
Q*=30
P*=130 – 2Q=130 – 2*30=130-60=70
Π=TR-TC=P*Q-TC=70*30-(350 10*30)=2100-650=1450
(b) Deadweight loss is...

...FIN532M: Financial Derivatives
ProblemSet 2
DUE DATE: Feb. 12, 2015
1. How can you differentiate the forward price from the value of a forward contract?
(2 points)
2. Explain why an FRA can be viewed as an exchange of a floating rate of interest for a fixed rate of
interest payments and how you can use FRA in mitigating risks.
(4 points)
3. The standard deviation of monthly changes in the spot price of live cattle is 1.2 cents per pound. The
standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.4.
The correlation between the futures price and the spot price changes is 0.7. It is now Feb 5 and a beef
producer is committed to purchase 200,000 pounds of live cattle on April 10. The producer wants to use
the May live-cattle futures contracts to hedge its risk where each contract is for the delivery of 40,000
pounds of live cattle. Answer the following:
a. Indicate the optimal hedge ratio.
(2 points)
b. Indicate if long or short and the optimal number of May contracts to be used.
(2 points)
4. An index is 1,200. The three-month risk-free rate is 3% per annum and the dividend yield over the
next three months is 1.2% per annum. The six-month risk-free rate is 3.5% per annum and the dividend
yield over the next six months is 1% per annum. All interest rates and dividend yields are continuously
compounded. Estimate the futures price of the index for six-month contract.
(3 points)
5....

...FBE 421 Prof. Briggs ProblemSet #1
Please print out this document and clearly handwrite your answers to each of the questions below in the space provided. Show all your work accordingly.
A. Calculate LTM (a) Revenue and (b) Net Income for Costco Wholesale (COST) using their latest financial statements as of 3Q2011.
77946+60737-53821=84,862 MM Revenue 1303+984-871= 1,416 MM Net-income
B. Calculate Costco’s LTM (a) EBIT and (b) EBITDA.
2077+1677-1389=2,365 MM EBIT (2077+795)+(1677+582)-(1389+549)= 3192 MM EBITDA
Name: Student ID:
￼1.
￼C. Calculate Costco’s (a) Market Cap, (b) Total Debt and (c) Enterprise Value as of 3Q2011.
a) 437,735,000 * 85.07 = 37.238 Bn
b) 1+900+1,247=2.148 Bn
c) 37.238+2.148+.578 (minority interest)-4.082= 35.882 Bn (35,882 MM)
D. Calculate Costco’s (a) EV/Revenue and (b) EV/EBIT multiples.
a) 35,882/84,862=.42x b) 35,882/2,365=15.17x
2. Explain the differences between a firm’s (a) market value, (b) enterprise value, and (c) book value.
a) Market value, otherwise known as market capitalization, is the current value of the firm’s common equity on the open market. This is the value necessary to buy the entire firm’s equity.
b) Enterprise value is the value of all the claims on the firm’s capital structure less cash. This includes the value of equity, preferred stock, debt, and minority interest less cash. This is the value necessary to purchase the entire firm.
c) Book value is the value of a...

...ProblemSet 1 Gmt 201 Autumn, 2010 1. Consider the markets for DVD movies, TV screens, and tickets at movie theaters. a. For each pair, identify whether they are complements or substitutes:
• • • DVDs and TV screens DVDs and movie tickets TV screens and movie tickets
b. Suppose a technological advance reduces the cost of manufacturing TV screens. Draw a diagram to show what happens in the market for TV screens. c. Draw two more diagrams to show how the change in the market for TV screens affects the markets for DVDs and movie tickets.
2. What components of GDP (if any) would each of the following transactions affect? And as a result, what happens to this year’s GDP? Explain. a. A family buys a new refrigerator. b. Your aunt buys a new house. c. Hyundai sells a Sonata YF from its inventory. d. Ulsan Metropolitan City repaves North-river beltway. e. Your parents buy a bottle of French wine. f. Tata Motors, an Indian automaker, builds its factory in Songdo New Town near Incheon.
3. Karaokea is a small country in south east Asia. People there produce karaoke machines and CDs, and imports all foods from Appetitia, their neighboring country, in the following amounts: Year 2008 2009 2010 Pkaraoke $100 $100 $200 Qkaraoke 100 200 200 PCD $10 $10 $20 QCD 500 1000 1000 Pfood $1 $1.5 $2 Qfood 200 400 400
a. Compute NGDP, RGDP, and the GDP deflator for each year, using 2008 as the base year. b. Compute the NGDP and RGDP growth rates, and...

...Me1
ProblemSet #2
The US College Enrollment and the “Third Law of Demand”
A theorem proposed by Professors Alchian and Allen in their text, University Economics (1964) has had several rebirths of interest in the literature. The so-called “third law of demand,” or “relative price theorem,” holds that a fixed cost added to a good of varying quality causes the consumer to prefer the category considered of higher quality to the lower.
Recently a number of studies, keeping this theorem in mind have looked into a relationship between the ratio of public to private enrollment and unemployment in cross-sectional as well as in time series data. Part of the full cost of participating in higher education is foregone employment income. In their regression model, these studies have regressed the public/private ENROLLMENT RATIO (as an indicator of relevant demand) against UNEMPLOYMENT RATES (as an indicator of cost) as well as a number of variables designed to account for “other things” which tend to vary at the same time, such as income, financial aid and tuition ratios. Tuition ratio is typically specified as the ratio of the full cost (including forgone employment income) of public higher education (Pa) to private higher education (Pb), where Pa is less than Pb.
In Table 1, below, a cross-sectional model reveals the relationships between relative education demands by public and private university students (as measured by state level ENROLLMENT...

...Yue
Office: KRAN B024A
Office Hours: Monday 12 noon-1 pm &Tuesday 9-10 am.
Phone: 496-1458 email: kyue@purdue.edu
Course goal: We provide a broad overview of the microeconomic aspects of the international economy. We emphasize the development of analytical tools. We also show how we can apply these tools to questions with real-world relevance.
Prerequisites:
Econ 251, Econ 252 (Principles of Microeconomics, Principles of Macroeconomics)
Textbook:
1. Feenstra and Taylor, “International Trade”, 2nd Edition. We follow the textbook very closely in class and cover about 70% of its contents.
2. Yeaple, Study Guide for Feenstra and Taylor’s International Trade, 2nd Edition. We take many practice problems from the Study Guide.
5 copies of the textbook (2nd edition) and 5 copies of the Study Guide (2nd edition) are on reserve at Parrish (the management-and-econ library).
Distribution of homework and other materials:
Katalyst - https://webapps.krannert.purdue.edu/kap/
Course Grades:
Quizzes (best 5 out of 6) 30%
Homework Assignments (best 3 of 4) 25%
Extra Credit Questions 10%
Midterm (in class) 20%
Final Exam 25%
Dates for Quizzes, Homework Assignments, Review Sessions and Exams:
These dates are fixed and will not change. See the class calendar.
Course Materials:
This should be regarded as a likely (but not 100%-certain) schedule as some topics may run shorter or longer than...

...EC 109
Autumn 2011
Dr. Mani
ProblemSet 2
Due Date: Oct31, Monday – between 9 & 11 AM in room S 2.132
Please keep a copy of your assignment and show all your work clearly.
(1) Mr. J. Bond, a retired movie actor, consumes only grapes and the composite good Y (i.e. price of Y is £1). His income consists of £10000 a year from his investment fund plus the proceeds of whatever he sells of the 2000 bushels of grapes he harvests annually from his vineyard in Tuscany. Last year, grapes sold at £2 per bushel and Bond consumed all 2000 bushels of his grapes, in addition to 10,000 units of Y. This year, the price of grapes is £3 per bushel (and the price of the composite good Y is the same as before). If Bond has well-behaved preferences, will his consumption of grapes this year be greater than, less than or the same as last year’s? How about his consumption of the composite good? (Hint: Graph both years’ budget constraints and think about whether last year’s bundle is affordable to Mr. R).
(2) Suppose Carmela’s income is £100 per week, which she allocates between sandwiches and books. Sandwiches cost £2 each. Books cost £10 each if she purchases between 1 and 5 books. If she purchases more than 5 books in a week, the price falls to £5 for the 6th book and all subsequent books. Draw the budget constraint. Is it possible that Carmela might have more than...

...Energy
1. A man climbs on to a wall that is 5 m high and gains 2200 J of potential energy. What is the mass of the man?
Given: Formula:
h = 5 m m = PE/gh
PE = 2200 J
Solution:
m = 2200 J / (9.8 m/s2 x 5 m)
m = 49 kg
2. Calculate the kinetic energy of a 500 kg car travelling at 50 m/s.
Given: Formula:
m = 500 kg KE = mv2/2
v = 50 m/s
Solution:
KE = 500 kg x (50 m/s)2 / 2
KE = 625 000 J
Power
3. Riley climbs a flight of stairs in 3 minutes. If he weighs 700 N and the stairs is 20 m from the ground, how much power will she develop?
Given: Formula:
t = 3 mins = 180 s P = Wd/t
W = 700 N
d = 20 m
Solution:
P = 700 N x 20 m / 180 s
P = 77.8 J/s
4. How much power is developed by a car that runs 80 m/s when the force is equal to 50 000 N.
Given: Formula:
V = 80 m/s W = Fv
F = 50 000 N
Solution:
W = 50 000 N x 80 m/s
W = 4 000 000 J/s
Electricity
5. Charges of 6 and + 4 nC are 3 m apart. Determine the force they exert on each other, and the electric field at a point midway between them.
Given: Formula:
k = 9 x 109 Felec = k q1 q2 /r2
q1 = 6 x 109 C
q2 = 4 x 109 C
r = 3 m
Felec = (9 x 109)(6 x 109)(4 x 109)/32
Felec = 24 x 109 N
6. A 50 cm piece of nichrome wire is used in a home heating element. The cross sectional area of the wire is 0.05 mm2. What is the resistance of the heating element? If it is operated on household current (110 V),...

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