Activity 1

Table shows the production of smart phones and hybrid cars for Japan and South Korea without international trade.

Country Smart phones (units) Hybrid cars (units)

Japan 90 130

South Korea 60 80

A variable-rate mortgage of $140,000 is amortized over 20 years by equal monthly payments. After 12 months the original interest rate of 8% compounded semi-annually was raised to 8.8% compounded semi-annually. Three years after the mortgage was taken out, it was renewed at the request of the mortgagor at a fixed rate of 8.6% compounded semi-annually for a four-year term.

(a) Calculate the mortgage balance after 12 months.

(b) Compute the size of the new monthly payment at the 8.8% rate of interest.

(c) Determine the mortgage balance at the end of the four-year term.

Activity 2

Firm's total cost function is of the form of TC=2Q + 14 (i.e., a firm's fixed costs are 14 and the variable costs are 2 per unit). The corresponding profit function is of the form = AQ2 + Q + F . The firm makes a loss of 6 when Q=1 and a profit of 4 when Q=6. a)

(10 p.) Find A, and F.

b) (10 p.) Find the break-even points and hence find the maximum profit.

c) (10 p.) Find an expression for total revenue and deduce the demand function