A monopolist faces:

Bob consumes food and housing. Suppose his marginal utility from an additional unit of food is 20 and his marginal utility from

lozanna [386]

Answer:

Option (E) is correct.

Explanation:

For utility maximization,

Bob's consumption of Housing and food should be such that:

$\frac{Marginal\ utility\ of\ housing}{Price\ of\ housing}=\frac{Marginal\ utility\ of\ food}{Price\ of\ food}$

Here,

$\frac{Marginal\ utility\ of\ housing}{Price\ of\ housing}=\frac{100}{2}$

= 50

$\frac{Marginal\ utility\ of\ food}{Price\ of\ food}=\frac{20}{1}$

=20

Bob is not maximizing utility, as these two terms are not equal(50 > 20).

Since the marginal utility per rupee spent on housing is greater than that on food.

Hence, Bob can increase his utility just by consuming more of housing and less of food.

7 0

3 years ago

Of the following examples of fraud, which will be the most difficult to prevent and detect? Assume the company enforces adequate

daser333 [38]

Answer:

D. A credit manager issues credit cards to himself and a staff accountant in the accounting office, and when the credit card balances are just under $1,000, the staff accountant writes off the accounts as bad debt. The credit manager then issues new cards.

5 0

4 years ago

Read 2 more answers

Terry's Trees has reached its break-even point and has a contribution margin ratio of 70%. For each $1 increase in sales ______.

Mnenie [13.5K]

Answer:

- total contribution margin will increase by $0.70

- net operating income will increase by $0.70

Explanation:

4 0

3 years ago

Willow's team has split up the contributions for its group writing project equally, with individual team members committing vari

miskamm [114]

Answer:

Wyatt's team who have divided up the contributions and time commitments equally

Explanation:

After reading all the different group approaches to the project, I believe the best approach is Wyatt's team who have divided up the contributions and time commitments equally. This basically allows every single member to have a voice and put in the same work as everyone else involved. Groups in which both contributions and time commitments are not divided equally usually run into problems with individuals putting in very little work while 1-2 group members finish the majority of the project. The same happens when time alone is chosen by the members themselves.

6 0

3 years ago

Yield to Call and Realized Rates of Return Six years ago, Goodwynn & Wolf Incorporated (G&W) sold a 17-year bond issue w

Sonbull [250]

Answer:

YTC = IRR = 12.844% (exact using excle of financial calculator)

using approximation formula: 12.72%

Explanation:

The call premium means it were called at 107 of the face value

1,000 x 107/100 = 1,070

The investment was for 1,000

The bond yield a six years annuity of 120

and then called at 1,070

We need to know teh YTC:

$YTC = \frac{C + \frac{P-F}{n }}{\frac{P+F}{2}}$

Coupon payment =1,000 x 12% = 120

Call Price: 1070

Face Value: 1000

n: 6 years

$YTC = \frac{120 + \frac{1,070-1,000}{6}}{\frac{1,070+1,000}{2}}$

YTC = 12.7214171%

This method is an aproximation to the YTC

To solve for the YTC we can use excel IRR funtion

we write

-1,000 (investment)

120

+1,070+120 = 1,190 (total cashflow at year 6 call price and coupon)

and we calculate IRR selecting this values:

which give us 12.844%

Which is close to our approximation.

8 0

4 years ago