1. Because Q=12-2P
inverse demand P = -0.5Q+6
For “half price” case, P = 2.5, Q=7
consumer surplus = 7*(6-2.5)/2 = 12.25
For “buy one, get one free” case, when original P = 5, Q = 4 instead of 2, total benefit TB = (4+6)*4/2 = 20
On the other hand, payment is 2*5=10 dollars, so consumer surplus will be = 10 Thus “half price” gives more surplus.

2. cost minimizing manner, marginal product of typewriter/marginal product of word processor=rent of typewriter/rent of word processor

50/500=0.1
1/50= 0.02

(marginal product of typewriter/marginal product of word processor) does not equal to (rent of typewriter/rent of word processor). Hence Temporary Services is not utilizing the typewriters and word processors in a cost minimizing manner.

3. when in the long run cost minimizing level, MPL / w = MPK / r = MPM / m, KM/2= LM=KL/4, K=4M=2L,
Then Q =KLM= K3/8 = 1000, so K=20, M=5, L=10
Total cost = Lw+Kr+Mm=60

4. C(Q) = 50 + 25Q + 30Q2 + 5Q3
when producing 10 units of output

fixed cost = 50
variable cost= 25Q + 30Q2 + 5Q3= 8250
total cost = 50 + 25Q + 30Q2 + 5Q3= 8300
average fixed cost= FC/Q= 5
average variable cost = VC(Q)/Q = 825
average total cost = C(Q)/Q = 830
marginal cost = ΔC/ΔQ = 2125

5. a) fixed cost=5000
sunk cost=4000
b) Yes. If firm A was to refund the equipment, it will only be able to regain $1000 as opposed to the $4500 it will stand to gain if it was to sublease the equipment.

...Week 4Homework
Solutions: ProblemSet4
1. Determining Profit or Loss from an Investment. Three years ago, you purchased 150 shares of IBM stock for $88 a share. Today, you sold your IBM stock for $103 a share. For this problem, ignore commissions that would be charged to buy and sell your IBM shares.
a. What is the amount of profit you earned on each share of IBM stock? The profit on each share of IBM stock was $15. $103 priced when each share was sold, $88 priced when each share was purchased = $15.
b. What is the total amount of profit for your IBM investment? The total profit for the IBM transaction was $2,250. $15 profit per share x 150 shares = $2,250.
2. Calculating Rate of Return. Assume that at the beginning of the year, you purchase an investment for
$8,000 that pays $100 annual income. Also assume the investment’s value has decreased to $7,400 by the end of the year.
a. What is the rate of return for this investment?
Step 1 subtract the investment’s initial value from the investment’s value at the end of the year.
$7,400 – $8,000 = $600 (negative)
Step 2 add the annual income and the amounts from Step 1.
$600 (negative) + $100 = $500 (negative)
Step 3: divide the total dollar amount of return (Step 2) by the original investment
$500 (negative) ÷ $8,000 = .0625 (negative) = 6.25% (negative)...

...FIN 350
Prof. Porter
ProblemSet4
1. Describe what happens to the total risk of a portfolio as the number of securities is increased. Differentiate between systematic risk and unsystematic risk and explain how total risk and systematic risk are measured.
As the number of securities increases, the total risk of the portfolio decreases. This decrease occurs due to the benefits of diversification which is the process of acquiring a portfolio of securities that have dissimilar risk-return characteristics in order to reduce overall portfolio risk. The total risk of a security or a portfolio is measured with the variance or standard deviations of returns (std dev. ^2 = variance). The larger the standard deviation, the greater the total risk and the more likely it is that you will have a large price move.
Unsystematic risk is the unique or security specific risks that tend to partially offset one another in a portfolio. /this could happen when the price of one stock in the portfolio goes down, the price of another tends to go up, which partially offsets the loss. As long as the returns of two securities are not perfectly, positively correlated, one can reduce total risk by combining securities in a portfolio. By adding securities to a portfolio, it is possible to eliminate unsystematic risk.
Systematic risk is also known as market risk or nondiversifiable risk. The risk tends to affect the entire market in a similar...

...OPIM Assignment 4
1. Cu = 24-11 = $13
Co = 11-7 = $4
Critical ratio = 13/(13+4) = 0.7647
μ = 30,000
σ = 10,000
Using normal distribution function (=norminv(0.7647,30000,10000)), the optimum order quantity is 37,216 jerseys to maximize profit.
2. Quantity = 32,000
First, we normalize the order quantity to find the z-statistic
z=Q-μσ=32,000-25,00010,000=0.7
We then look up the standard normal loss function. The expected lost sale is given by.
Lz=0.1429
Therefore, the expected lost sales = 10,000 * 0.1429 ≈ 1,429
Expected sales = 30,000 – 1,429 = 30,571 jerseys
3. First, we normalize the order quantity to find its z-statistic
z=Q-μσ=28,000-20,00010,000=0.8
In-stock probability = normdist(0.8, 0, 1, 1) = 0.788145
Therefore, the probability of filling all demand is 0.788145
4. Quantity = 8,000
First, we normalize the order quantity to find the z-statistic
z=Q-μσ=8,000-15,00010,000=-0.7
We then look up the standard normal loss function. The expected lost sale is given by.
Lz=0.8429
Therefore, the expected lost sales = 10,000 * 0.8429 = 8,429
Expected sales = 15,000 – 8,429 = 6,571 jerseys
Expected leftover = 8000 – 6,571 = 1429 jerseys
Therefore, Nike has to sell 1,429 on discount
5. Cu = 16-11 = $5
Co = 9-7 = $2
Critical ratio = 5/(5+2) = 0.7143
μ = 40,000
σ = 10,000
Using normal distribution (=norminv(0.7143,40000,10000)), the optimum order quantity is 45660 jerseys...

...PROBLEMSET4
1) Consider the following utility functions, where W is wealth:
(a) U (W ) = W 2
1
(b) U (W ) =
W
(c) U (W ) = −W
(d) U (W ) = W
(e) U (W ) = ln(W )
(f) U (W ) =
W 1−γ
, with γ = 2
1−γ
How likely are each of these functions to represent actual investor preferences? Why?
2) Suppose investors have preference described by the following utility function
with A > 0:
U = E(r) − 1 Aσ 2
2
Each investor has to choose between three portfolios with the following characteristics:
E(rA ) = 20%
σA = 20%
E(rB ) = 12%
σB = 22%
E(rC ) = 15%
σC = 28%
(a) Which portfolio would every investor pick and why?
(b) What utility would an investor with a risk aversion parameter, A, of 1
get from the three portfolios?
(c) What must be the risk aversion of an investor that is indiﬀerent between
picking portfolio B and portfolio C?
1
3) Consider an investment universe consisting of three assets with the following
characteristics:
E(r1 ) = 12%
E(r2 ) = 17%
E(r3 ) = 7%
σ1 = 25%
ρ1,2 = 0.5
σ2 = 30%
ρ1,3 = 0.25
ρ2,3 = 0.35
σ3 = 20%
(a) What is the expected return and standard deviation of an equally weighted
portfolio investing in all three assets?
(b) What would the diversiﬁcation beneﬁt be for an investor that shifted
her investment to the equally weighted portfolio from an investment
consisting only of asset 1?
(c) If choosing between investing all her capital...

...systems developme nt is super complex, DFDs and flowcharts ar! e tools that are used to fix order from sanatorium and complexity.Â (Ch 3, p. 50)| | | Â | Points Received:| 4 of 5| Â | Comments:| First, data flow diagrams and flowcharts are the two most frequently used development and documentation tools used today. Second, since systems development is extremely complex, DFDs and flowcharts are tools that are used to create order from chaos and complexity.| |
TCO 1) Name two reasons why it is important to have a working knowledge of DFDs and flowcharting. (Points TCO 1) Name two reasons why it is important to have a working knowledge of DFDs and flowcharting. (Points
The flow diagram and the flowcharts are the two more common systems use. Also when it comes to the system development they can get very complex meaning that the DFD and the flowchart are tools that can be used to create order form chaos and complexity.
TCO 1) What is the purpose behind the five primary activities in the value chain?
First, info flow diagrams and flowcharts argon the two most much utilize development and musical accompaniment tools employ today. Second, since systems developme nt is super complex, DFDs and flowcharts ar! e tools that are used to fix order from sanatorium and complexity.Â (Ch 3, p. 50)| | | Â | Points Received:| 4 of 5| Â | Comments:| First, data flow diagrams and flowcharts are the two most frequently used development and documentation tools...

...Unit 4ProblemSet 1: Normal Probability Distributions
4/27/2014
MA3110
Statistics
Otis Jackson
Unit 4problemset 1: Normal Probability Distributions
Page.285 Ex 6,8,10,12
6. x = 80, z=80-10015 = -1.33 z= 0.0918 1-0.0918 = 0.9082
8. x = 110, z=110-10015 = 0.67 z= 0.7486
z= 75-10015 = -1.67 z= 0.0475 0.7486-0.0475= 0.7011 (shaded area)
10. z= 0.84 (shaded) z= -0.84 x= 100+(-0.84∙15) = 87 (rounded)
12. . z= 2.33 x= 100+(2.33∙15) = 135 (rounded)
Page 288 Ex 34
34.Appendix B Data Set: Duration of Shuttle Flights
a. Find the mean and standard deviation, and verify that the data have a distribution that is roughly normal. Mean= 25317115 = 220.15 Standard Deviation=115253172-(25317)2115(115-1) = 86 (rounded)
The normal distribution is 115
b. Treat the statistics from part (a) as if they are population parameters and assume a normal distribution to find the values of the quartiles 1,2 and 3. Mean= 220.15 Standard Deviation= 86
Q1 = 220.5 + (-0.67 ∙ 86)= 162.53 Q2= 220.5 + (0.00 ∙ 86) = 220.5 Q3=220.5 + (0.67 ∙ 86) = 277.77
Page.300 Ex 20
Quality Control: Sampling Distribution of Proportion after constructing a new manufacturing machine. 5 prototype integrated circuit chips are produced and it is found that 2 are defective (D) and 3 are acceptable (A). Assume that two if the chips are randomly selected with replacement from this population
a. After identifying the 25...

...CLICK TO DOWNLOAD
MAT 540 Week 4Homework
Chapter 15 problems
2. The manager of the Carpet City outlet needs to make an accurate forecast of the demand for SoftShag carpet (its biggest seller).If the manager does not order enough carpet from the carpet mill,customers will buy their carpet from one of Carpet City’s many competitors. The manager has collected the following demand data for the past 8 months:
Month Demand for Soft Shag Carpet (1,000 yd.)
1 8
2 12
3 7
4 9
5 15
6 11
7 10
8 12
a. Compute a 3-month moving average forecast for months 4 through 9.
b. Compute a weighted 3-month moving average forecast for months 4 through 9. Assign weights of 0.55,0.33,and 0.12 to the months in sequence, starting with the most recent month.
c. Compare the two forecasts by using MAD. Which forecast appears to be more accurate?
6. The manager of the Petroco Service Station wants to forecast the demand for unleaded gasoline nextmonth so that the proper number ofgallons can be ordered from the distributor.The owner has accumulated the following data on demand for unleaded gasoline from sales during the past 10 months:
Month Gasoline Demanded (gal.)
October 800
November 725
December 630
January 500
February 645
March 690
April 730
May 810
June 1,200
July 980
a. Compute an exponentially...

...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...

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