Problem 1

prepare of the budget for Rakon Limited Company. The company is headquartered in Auckland. the budget includes Sales budget and a schedule of expected cash collections, Production Budget,Direct material and labour budget, Manufacturing overhead budget, An ending finished goods inventory budget, Selling and administration expense budget, Budgeted cash budget, income statement and balance sheet. Analyse the previous factors which may impact the budget of Rakon Limited Company and recommend that how you will achieve the desired budget. How you will monitor the business performance against the budget. Prepare a Notes to financial statements to support your computations.

Problem 2.

Suppose there are n identical firms in a market with a market demand given by

P=990- 10Q. Each firm has FC=100 and the same production function: Q = L.25K.25 with w=2, r=2.

a) What is the firm's total cost function?

b) What is the firm's marginal cost function?

c) ( How much output will a firm produce in long-run equilibrium?

d) What is the break-even price?

e) What will be the market price in long-run equilibrium?

f) How many firms will there be in long-run equilibrium?

g) What is the price elasticity of demand for the market demand curve at the market price found above?

Problem 3.

?Alexx's monopoly currently sells its product at a single price. What conditions must be met so that he can profitably price?discriminate? The firm must? have:

A.

the ability to set? price, consumers with different price?elasticities, and the ability to prevent or limit resales.

B.

the ability to set? price, consumers with different price?elasticities, the ability to identify the different types of?consumers, and the ability to prevent or limit resales.

C.

the ability to set price and the ability to identify each?consumer's willingness to pay.

D.

consumers with different price? elasticities, the ability to identify the different types of? consumers, and the ability to prevent or limit resales.

Problem 4.

1. Complete the table below where the cells are blank. (10 pts) Output Saving Export Import Net Arg Upplad Output GDP=DI Exports Exp Invent & Employment 250 260 10 8 3 270 0 10 10 10 10 12 7 295 310 15 10 15 10 330 310 17 2. What number is unplanned inventories at output of $270 million? Explain what the unplanned inventories number means at that output level? (2 pts) 3. At $330 million of output what must happen in this open economy to reach equilibrium? (2 pts) 4. Equilibrium is achieved at what level of output? What is happening in the economy at that level?3. Suppose that a monopoly rm's longrun cost function is C(y) = B. Market demand function is D(p) = 12 p. Answer the following questions. (20 points) (a) What are constant, decreasing, or increasing returns to scale technolo gies? Which one does f belong to? b Does the monOpolist has a supply curve? Does it make prot by taki ng price as given? Explain. (c) Calculate monopolist's prot maximizing output level. Show that it earns a positive prot. 2. (50 points) Suppose a monopolist faces the following demand curve: P =314-7Q. If the long run marginal cost of production is constant and equal to $20. A) (10 points) What is the monopolist's profit maximizing level of output? B) (10 points) What price will the profit maximizing monopolist produce? C) (10 points) How much profit will the monopolist make if she maximizes her profit? D) (10 points) What would be the value of consumer surplus if the market were perfectly competitive? E) (10 points) What is the value of the deadweight loss when the market is a monopoly?2. (50 points) Suppose a monopolist faces the following demand curve: P =314-7Q. If the long run marginal cost of production is constant and equal to $20. A) (10 points) What is the monopolist's profit maximizing level of output? B) (10 points) What price will the profit maximizing monopolist produce? C) (10 points) How much profit will the monopolist make if she maximizes her profit? D) (10 points) What would be the value of consumer surplus if the market were perfectly competitive? E) (10 points) What is the value of the deadweight loss when the market is a monopoly