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Whitepunk [10]
3 years ago
15

Suppose that the United States and Canada each produce only two products, televisions and food. The United States can produce 10

0 televisions a day, 150 pounds of food a day, or any combination in between. (For example, it could choose 100 televisions and no food, 50 televisions and 75 pounds of food, or 150 pounds of food and no televisions.) Canada can produce 300 televisions a day, 330 pounds of food a day, or any combination in between. Which of these trades could make both the United States and Canada better off?
The United States could trade Canada 20 pounds of food for 17 televisions.

The United States could trade Canada 60 pounds of food for 75 televisions.

The United States could trade Canada 100 pounds of food for 98 televisions.
Business
1 answer:
n200080 [17]3 years ago
3 0

Answer:

The United States could trade Canada 20 pounds of food for 17 televisions.

The US receives TV at a rate of 17/20 = 0.85 which is higher than their opportunity cost therefore, making a gain

While Canada receive TV at a rate lower than their economy can produce them (0.85<0.9090) thus, also making a gain

Explanation:

US

100 television or 150 pounds of food

Opportunity cost: of TV 1.5 pounds of food

Opportunity cost of food: 2/3 of a TV

CANADA

300 televisions or 330 food

Opportunity cost: of TV 1.1 pounds of food

Opportunity cost of food: 90/99 of a TV

It is cheaper for canada to produce TV and cheaper for the US to produce food.

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$18,000 gain

Explanation:

Calculation for the amount of foreign currency gain or loss that should be recognized in income on December 31, year 2

Since Forward rate was given as:

December 18, year 2 $1.25

December 31, year 2 $1.31

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Now let calculate

Forward rate December 18, year 2 $1.25

Less Forward rate December 31, year 2 $1.31

=$0.06 gain per Euro

Now let calculate for the amount of foreign currency gain that should be recognized in income on December 31, year 2

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Forward rate purchased amount 300,000 Euro ×$0.06 gain per Euro

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6 0
3 years ago
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year
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18.49%

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The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

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Cash flow in year 1 = $12,500

Cash flow in year 2 = 15,500

Cash flow for year 3 = $11,500

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To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

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2 years ago
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Dayna’s Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is C  100  5Q  Q2, and demand is P  55  2Q.
Sauron [17]

Answer:

Explanation:

Given the following data about Dayna's Doorstep Inc(DD) :

Cost given by; C = 100 - 5Q + Q^2

Demand ; P = 55 - 2Q

A.) Set price to maximize output;

Marginal revenue (MR) = marginal cost (MC)

MR = taking first derivative of total revenue with respect to Q; (55 - 2Q^2)

MC = taking first derivative of total cost with respect to Q; (-5Q + Q^2)

MR = 55 - 4Q ; MC = 2Q - 5

55 - 4Q = 2Q - 5

60 = 6Q ; Q = 10

From

P = 55 - 2Q ;

P = 55 - 2(10) = $35

Output

35(10) - [100-5(10)+10^2]

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Consumer surplus:

0.5Q(55-35)

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B.) Here,

Marginal cost = Price

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P= 55 - 2(15) = $25

Totally revenue - total cost:

(25)(15) - [100-(5)(15)+15^2] = $125

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C.) Dead Weight loss between Q=10 and Q=15, which is the area below the demand curve and above the marginal cost curve

=0.5×(35-15) ×(15-10)

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D.) If P=$27

27 = 55 - 2Q

2Q = 55 - 27

Q = 14

CS = 0.5×14×(55 - 27) = $196

DWL = 0.5(1)(4) = $2

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