How the tax credit will affect price and quantity , Managerial Accounting

1. In order to boost the housing market throughout 2009 and into 2010, the federal government offered a tax credit to first-time home buyers and some repeat buyers. 

a.  Show graphically how the tax credit will affect price and quantity over the period prior to May 1, 2010 when the tax credit is in effect. 

b.  Show graphically how the tax credit will affect price and quantity after the May 1, 2010 expiration of the tax credit.

2.  As the manager of a local hotel chain, you have hired an econometrician to estimate the demand for one of your hotels (H). The estimation has resulted in the following demand

function:  QH =2,000-PH -1.5 Pc -2.25PSE +0.8PCH +.01M , where  PH is the price of a room at your hotel,  PC is the price of concerts in your area,  PSE  is the price of sporting events in your area,  PCH is the average room price at other hotels in your area, and  M is the average income in the United States. What would be the impact on your firm of

a. A $500 increase in income?

b. A $10 reduction in the price charged by other hotels?

c. A $7 increase in the price of tickets to local sporting events?

d. A $5 increase in the price of concert tickets, accompanied by an $8 increase in income? (2.5 points)

3. You have been hired to replace the manager of a firm that used only two inputs, capital and labor, to produce output. The firm can hire as much labor as it wants at a wage of $5 per hour and can rent as much capital as it wants at a price of $50 per hour. After you look at the company books, you learn that the company has been using capital and labor in amounts that imply a marginal product of labor of 50 and a marginal product of capital of 100. Do you know why the firm hired you? Explain.

Posted Date: 2/19/2013 12:38:51 AM | Location : United States







Related Discussions:- How the tax credit will affect price and quantity , Assignment Help, Ask Question on How the tax credit will affect price and quantity , Get Answer, Expert's Help, How the tax credit will affect price and quantity Discussions

Write discussion on How the tax credit will affect price and quantity
Your posts are moderated
Related Questions
A purchased product, sold in a retail store, has a normally distributed daily demand, with a mean of 8 units/day and a variance of 4 (units) 2 . Its supply lead time is 6 days and

Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,730 and two jobs in process: Job No. 429 $2,150, and Job No. 430

First Cut Analysis of Costs The allocation of costs and assets will produce a value chain that illustrates graphically the distribution of a firm's costs. It can prove reveali


Funds produced from operations, throughout an accounting period, raise working capital by an equivalent amount. The two major components of funds generated from operations are depr

Prepare an estimation of working capital needs from the subsequent information of a trading relates with: (a) Projected Annual Sales 1,00,000

How much was Topaz’s operating income (income before taxes) last year?

What is the objective of performance budgeting The objectives of performance budgets is to provide a closer linkage between planning and action and also to provide a common bas

Disadvantages of incremental budgeting a) Incremental budgeting suppose activities and method of working will continue in the same way b) No incentive for developing their d

What are the Advantages of cost accounting: 1. Cost accounting as an aid to management: cost accounting helps the management in carrying out of its functions, planning, organ