Part I

1.Question 1 (Perfect Competition) The local market for wheat is perfectly competitive. There are many potential firms (wheat farmers), each firm has a cost function

C(q)=600+6q+4q for q>0, and C(0)=0.

a.Find the supply of each individual competitive firm.

b.Assume the market demand is Q= 1048-2P. The market is in a long run equilibrium with free entry and exit.

i.What is the equilibrium market price be?

ii.What quantity does each active firm produce?

iii.What is the total market quantity

iv.How many firms are active in this market?

c.Suppose that there is a decline in the demand for wheat. The new demand is Q=A -2P where 0

i.Will the market price be higher, equal or lower than in part b?

ii.Will each active firm produce more, the same quantity or less than in part b?

iii.Will the total market quantity be higher, equal or lower than that in part b?

iv.Will there be more active firms, the same number of active firms or fewer active firms compared with part b?

2.Consider the cost function C(q)=20q+F if q>0 and C(0)=0. Where F>0.

a.Find the marginal cost of production.

b.Find the average cost of production.

c.Are there economies or dis-economies of scale with this production function?

d.Explain why if technology is such that this is the cost of production, we would not expect the market to be perfectly competitive.

e.Suppose demand is p=100-2Q. A social planner, could choose any price, quantity and number of firms for this market. The planner is guided by two principles: 1. Choose total quantity Q that results in efficiently allocation.2. Minimize the total cost of producing Q. What quantity should the planner choose for this market? How many firms would you choose to produce this total quantity?

3.(Monopoly) Consider a monopoly market. Demand is given by p=100-2Q, the monopoly has a cost function C(Q)=20Q+F if Q>0 and C(0)=0. Where F>0. [Note, in class we solved a similar problem with F=0, now we assume a fixed cost].

a.Formally write the monopoly profit maximization problem.

Assume in parts b-e that the monopoly optimally produces a positive quantity.

b. Derive the first order.

c.Find the monopoly quantity.

d. Find the monopoly price.

e.Find the monopoly profit.

f.We assumed so far that the firm produces Q>0, however, if the fixed cost is higher, the monopoly might be better off not producing. For what values of F is this profit non-negative?

g. What quantity should monopolist produce if F=850?

h. What quantity should monopolist produce if F=100?

4.Suppose there is one firm in a market with linear demand function. The firm has a constant marginal cost of $9. The firm is currently charging $15 per unit, where the elasticity of demand is 3. The new CEO of this firm suspects that the current pricing strategy of this firm might not be profit maximizing. He hires you as an economic consultant to offer advice to this firm. Base on the information given, is the firm currently maximizing profits (choosing a monopoly price and quantity)? If not, should the firm raise its price or lower its price? Explain. [Hint, use the inverse elasticity rule. You do not need to find the new price, just say if higher or lower than $15].

Which statement about an adjusted trial balance is true? 10 points O An adjusted trial balance is completed after completing the income statement. The purpose of an adjusted trial balance is to ensure that all adjusting entries have O been recorded. O If the adjusted trial balance does not balance, then an error has been made. If an adjusting entry was omitted, the adjusted trial balance would not balance.d. Building Use the adjusted trial balance for Stockton Company to answer the questions that follow. Stockton Company Adjusted Trial Balance December 31 Cash 6,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Bob Steely, Capital 12,940 Bob Steely, Withdrawals 790 Fees Earned 9.250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense Totals 29,490 29,490 19. Determine the owner's equity ending balance. a. $12,150irements Journalize the transactions. Explanations are not required. How much paid-in capital did these transactions generate for Stanley Systems? . 11: Received equipment with a market value of $75,000 in exchange for 11,000 shares of the $3 par value common sto Date Accounts Debit Credit un. 11 Requirement 2. How much paid-in capital did these transactions generate for Stanley Systems? Total paid-in capital generated from these transactions amounts to $ Choose from any list or enter any number in the input fields and then continue to the next question.The polycentric staffing policy has the drawback of 0 failing to promote local talent @ avoiding women's rights costing too much O Isolating subsidiaries Question 13 (0.5 points) Which one of the following payment mechanisms would you use as an exporter if you are dealing w importer in a country with high political risk and unreliable banks? cash In advance document collection letter of credit open account Question 14 (0.5 points) Which of the following international staffing policy would have to be used if qualified people a home country? O ethnocentric policy O eccentric policy O geocentric policy O polycentric policyThis Question: 1 pt 8 of 20 (4 complete) Pixel Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable. What will the trial balance show for this error? O A. Expenses are overstated O B. Cash is overstated O C. The trial balance will not balance O D. Liabilities are overstated Click to select your answer e to search O C