Explain the following
Topic 6 The following is an accounts receivable aging schedule for Caulfield Lid on 30 June 2019. Customer Total Number of days past due 1-30 31-60 61-90 Over 90 Bela 18,000 11,000 7,000 Tom 22,000 22,000 Jason 35,000 15,000 12,000 8,000 Lee 41,000 41,000 Estimated percentage uncollectable 5% 10% 25% 50% At 30 June 2019, the unadjusted balance in allowance for doubtful debts is a credit of $8,000. At 31 March 2020, a debtor named Alan declared bankrupt and unable to pay $500 owing to Caulfield Lid. At 15 May 2020, a cheque for $500 is received from Alan whose account was written-off as uncollectable on 31 March. At 30 June 2020, the unadjusted balance in allowance for doubtful debts is a debit of $500 and the ageing schedule indicates that total estimated bad debts will be $25,000. Required: a) Show the general journal entry to record the adjusting entry at balance day 30 June 2019. b) Show the general journal entry record the events and transactions related to Alan in 2020. c) Show the general journal entry to record the adjusting entry at balance day 30 June 2020.IS-LM Model (Based on Mankiw Ch. 12 #3). Use the information about the following economy to build the IS-LM model. a. The consumption function is given by C = 300 + 0.6(Y - ). The investment function is / = 700 - 80r. Government spending and taxes are both 500. Graph the IS curve for this economy. Be sure to label the x- and y-axes. b. The money demand function is (M/p) = Y - 200r. The money supply M is 3,000 and the price level P is 3. On the same graph as in part a.), graph the LM curve. c. Find the equilibrium interest rate r and the equilibrium level of income Y. Label the equilibrium values on your graph. d. Suppose that government spending is increased from 500 to 700. How does the IS curve shift? What are the new equilibrium interest rate and level of income? Show the shift and the new equilibrium on your graph. e. Suppose instead that the money supply is increased from 3,000 to 4,500. How does the LM curve shift? What are the new equilibrium and level of income? On a new graph, show the original IS and LM curves and then show the shift and the new equilibrium. f. With the initial values for monetary and fiscal policy, suppose that the price level rises from 3 to 5. What happens? What are the new equilibrium interest rate and level of income? On a new graph, show the original IS and LM curves and then show the shift and the new equilibrium. g. . For the initial values of monetary and fiscal policy, derive and graph an equation for the aggregate demand curve (Hint: Solve the IS and LM curves in terms of r. Then combine them and solve for Y in terms of P.). What happens to this aggregate demand curve if fiscal or monetary policy changes, as in parts d.) and e.) (simply state which direction the aggregate demand curve shifts in each case)?(12 points} Consider the payoff matrix below. The players make their choices simultaneously and without communication between them. The game will be played only once. Each player is aware of the whole payoff matrix. B Firm B A Raise P Hold P Cut P Raise P 20 30 40 Firm A 2D SCI 20 Hold P 4E! 30 5E] 3D 40 40 Cut P '10 2E! 30 2D SCI 10 a. If Firm A decides to raise its price and Firm B decides to cut its price, what is Firm B's payoff? b. Does Firm A have a dominant strategy? If so, what is it? c. Does Firm B have a dominant strategy? If so, what is it? d. Which option raise, hold, cut should Firm A choose? e. Which option should firm B choose? f. Is there a Nash equilibrium in this game? If so, which outcome is it? (Describe the outcome by giving A's option and B's option.) (4 points} How many Nash equilibria could there be, at most, in a game with a 3 x 5 payoff matrix? (El points} Consider the payoff matrix below. Two firms are thinking about offering a new model of their product. There is not enough demand for both firms to have good sales if they both offer the new model. a. What is a value of X that will make this game a prisoner's dilemma prob em? b. As a prisoner's dilemma problem, which outcome is the dominant strategy equilibrium? c. As a prisoner's dilemma problem, which outcome would the firms choose if they could collude? (Assume that the two firms can talk to each other, but they cannot exchange funds for each other's cooperation.) 42. In class, we've discussed the fact that the baseline models we've constructed can be extended to incorporate more advanced techniques. Let's look at a specic extension that incorporates the concept of price discrimination. In particular, assume that a rm with constant marginal cost of $2 (and no xed cost) has two types of customers The rst type has a market demand of 01 (p) = 30 p. The second type is more price sensitive and has a market demand of D2 (p) = 30 2p. A. Assume the rm can only set a single price. For instance, when an individual shows up to purchase a good, the rm cannot determine which type of consumer she is. What is the maximal prot the rm can achieve. HINT: This is pretty much a standard market power model where you need to solve for the market demand, prot maximize, then determine if the rm would sell to each customer. B. Now, assume the rm can set a different price in each market. For instance, the rm can offer senior citizen discounts. If the rm prot maximizes in market 1 and also market 2, what prices will be set in each market? C. How much extra prot will the rm receive by price discriminating (i.e., setting a different price in each market)
