Reference no: EM13130869
Exercise 1: Quantity Quota
A new chemical cleaning solution is introduced to the market. Initially, demand is QD =1000 ± 2p and supply is QS= 100 + p. Determine the equilibrium price and quantity.
The government then decides that no more than 300 units of this product should be sold per period, and imposes a quota at that level. How does this quota affect the equilibrium price and quantity? Show the solution using a graph and calculate the numerical answer.
Exercise 2: First-Time Homebuyers Credit
In 2009 and 2010 the US government instituted a program where all first-time homebuyers received an $8,000 tax credit upon the purchase of a new house. In April 2010, just prior to the credit's expiration, sales rose 7.6% and the median US home price rose 4% to from $167,000 to $174.000. Assume that all buyers received the $8,000 subsidy.
(a) Show the effects of the subsidy on a graph.
(b) Assuming that all buyers received the credit, estimate the own price elasticity of demand and own price elasticity of supply
(c) Who gained more from the subsidy, buyers or sellers?
Exercise 3: Wine production
In wine production, raw materials (grapes) are the single biggest cost. The cost of the grapes may be as much as 60% of total production costs but varies greatly from lower-quality inexpensive wines to the highest quality wines. The second-highest cost for many vintners is the barrels used to ferment the wine. French oak barrels cost as much as $700 apiece and last only a few years. The other major production cost, other than the actual physical plant where the winemaking occurs, is time.
Quality wines spend 2±2 ½ years aging in barrels and then an additional 8 months in bottles before being ready for sale.
(a) How much substitutability do you suppose exists between inputs in winemaking? How might this factor affect efforts to cut costs?
(b) If a firm were to find a new technology that cut the required aging time in half, how would it affect the demand for other inputs?
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Description of ratio and proportion
: According to a professor from the University of Minnesota, your maximum ideal waist size is directly proportional to your hip size. For a woman with 40 inch hips, the max ideal waist size is 32 inches.
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Would the adoption of ifrs increase transparency
: As the U.S considers the adoption of IFRS, changes exist between presentation and disclosure in current U.S GAAP and IFRS. Based on your research, what are some of the similarities and differences between U.S. GAAP and IFRS?
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Company bulletin board system
: A new sales representative, Mark Yount, has just received this copy of the month-end fincnail reports. He is puzzled by the term "unearned revenue." He left the following email message for you on the company's bulletin board system: What is this?
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Determining market risk premium
: What is the market risk premium if the risk free rate is 5% and the expected market return is given as follows
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Show the effects of the subsidy on a graph
: How much substitutability do you suppose exists between inputs in winemaking? How might this factor affect efforts to cut costs?
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Find the risk preference of people who play lottery
: How much net revenue does the state expect, on average from each ticket? What is the risk preference of people who play this lottery?
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Determining tax effect of transaction
: A firm is selling an existing asset for $5000. The asset when purchased cost $10,000, was depreciated under MACRS using a five-year recovery period and has been depreciated for four full years.
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Journalize the treasury stock transactions
: Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.
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Strategies for testing internal controls
: Briefly describe three strategies for testing internal controls when information technology is used for significant accounting processing.
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