Reference no: EM13962597

1)  A firm in Perfect Competition has a Total Cost Function: TC = 6Q^2 - 8Q + 12 with a current P=$6

a.) What is the current Quantity and Profit or Loss?

b.) Will firms enter or leave the industry?

c.) What will be the long run Price and Quantity?

 

	Toyota Camry	Honda Accord	Ford Fusion
Initial cost	$ 22,055	$22,280	$ 22,975
O&M cost	$ 3,716	$ 3,504.40	$ 3,963.38
Salvage value	$11,271	$12,280	$16,106
Benefit	$8,000	$8,000	$8,000
Useful life in Years	5	5	5

 

 

 

 

 

 

 

 

 

 

 

2. The MARR is 10% Find the NPW and compare?

3) Initial capital is $ 5.2 million, Life of Project is  7 years, Interest rate is 15%, Fixed cost  is $ 1 million per year,  Variable cost is  $ 50 per unit (most probable),Demand is 50,000 units annual (most probable) and Price per unit is  $ 100. Find the Total annual cost,  Total annual Revenue and Net present Value for the firm?

4) Using the II - XX framework, shown in the figure that fiscal policies by themselves cannot bring the economy to both internal and external balances. If we start from the point 2, the fiscal policy can move the points only in the horizontal direction and the devaluation of currency can move in the vertical direction.  So that the economy can reach either point 3 is on II curve, that is internal balance or point 4 is on XX curve, that is external balance, but we cannot attain both internal (point 3) and external balances (point 4) at the same time.  From the figure the equilibrium can attain only through the horizontal and vertical movements or internal and external balances. So that through the devaluation of currency along with an increase in fiscal ease, like increasing government expenditures or decreasing taxes will move the economy to both internal and external balances at point 1 in the figure

5) Consider a small open economy in the short run where the government imposes trade tariffs on corn.(a) Given a floating exchange rate sketch a graph of the impact of the tariffs on IS-LM.

b) With a floating exchange rate how does the trade tariffs impact the sale of domestic corn? Other export goods?(c) Given a fixed exchange rate sketch a graph of the impact of the tariffs on IS-LM.(d) With a fixed exchange rate how does the trade tariffs impact the sale of domestic corn? Other export goods?(e) Under which regime (floating or fixed exchange), are the tariffs more effective in increasing output?(f) Under which regime does the money supply increase by more or less, why?

6) Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, each firm is creating 4 units of pollution in the area, for a total of 12 pollution units. If the government wants to reduce total pollution in the area to 6 units, it can choose between the following two methods:In this case, you can conclude that eliminating pollution is less/more costly to society when the government distributes tradable permits than when it regulates each firm to eliminate a certain amount of pollution.