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17. A firm is currently experiencing troublesome times. the last dividend paid was $4.00, and is expected to decline at a rate of 5% per year into the foreseeable future. If investors require a 10% return, what will the stock price be in 3 years (P3)? a. $17.05 b. $19.50 C. $21.72 d. $23.50 e. $25.05 18. To encourage your interest in finance, your parents give you some money to invest in the stock market. Return on the risk free asset is 5% and return on the market is 13% Company Number of shares Market Price B Golf-All-Day 200 shares $12 per share 1.0 Moonlight Snorkel 500 shares $5 per share 1.5 Cramp Specialist 400 shares $18 per share 2.5 What is the expected return of your portfolio? a. 13% b. 17% C. 19% d. 21% e. 25%PART 2-ESSAYS (7 points each)-ANSWER ALL! 1) Outline & explain the stages of the marketing planning process that could be adopted by marketing managers in the cell phone industry. 2) What is meant by corporate social responsibilities? In your answer you should touch upon ethical behavior & its importance in business decisions. 3) How is business marketing different from consumer marketing? Who are the B2B customers? What types of business products are marketed? 3 -9-16 4) Why are marketers very interested in consumer behavior? What are some of the cultural factors shaping buying decisions? How do different types of groups influence a consumer's buying decision? 5) What is globalization? What are the pros & cons of globalization? What are the different options facing a firm when it wants to go international? How does the global marketing differ from that of the domestic marketing mix? 6) When IKEA entered the Chinese market, it dropped the prices on its products significantly-but only in that market. Prices in Europe, the U.S., & other Asian countries stayed the same. Is this justifiable? What do you expect to be the impact on customers in other countries? 7) Can marketers ever truly overcome a negative attitude toward a product? 8) Why is internet marketing especially important in business marketing? 9) Is it possible to achieve a sustainable competitive advantage or is sustainable competitive advantage theoretical only? Use specific examples in your answer. 10) There is a saying "people don't know what they want-they only want what they know." To what extent does marketing shape consumer wants? In your answer include a specific example.3. Using the same framework and notation for the Flicardian model as discussed in Chapter 2, suppose that each worker in the country \"Home\" can produce lDD cars per year or 20D T'v's. Assume that Home has five workers. a] Gra ph the production possibilities frontier for Home, with cars on the vertical axis and T'v's on the horizontal axis. b] What is the no-trade relative price of W5 in Home? 4. Suppose that each worker in the courrtnyr \"Foreign\" can produce EDD cars per year or EDD T'v's. Assume that Foreign also has five workers. a',I Graph the production possibilities frontier for Foreign, also with cars vertical and T'v's horizontal. b} What is the notrade relative price of T'v's in Foreign? c} Using the information provided in problem 3 regarding Home, in the production of which good does Foreign have a comparative advantage, and why? 5. Suppose that in the absence of trade, Horne consumes EDD cars and EDD T'v's, while Foreign consumes 3DU cars and 1,?513 T'v's. On the graphs drawn for problems 3 and 4, label the no-trade equilibrium consumption and production for each country and add an indifference curve [U1} corresponding to that equilibrium to each graph. 5. Now suppose that the world relative price of T'v's is F'TVF'CzDAE. a] Given the information in problems 3 5, in what good will each country specialize? Briefly explain why. b} Once again draw the production possibilities frontiers for both countries, and now add the new wo dd price line for each country {dashed] and label the production equilibrium for each country, given that they specialize as you indicated in {a}. (Hint: the world price line will be flatter than the PF'F for Home and steeper than the PPF for Foreign} c} The consumption equilibrium for Home, given trade, is 200 cars and ?14 T'v's. The consumption equilibrium for Foreign, given trade, is 30:] cars and 1,136 T'v's. Label each equilibrium point on the world price line of the appropriate graph, and draw a new indifference curve {UR} corresponding to that equilibrium on each graph. d) Label the exports and imports for each country. How does the amount of Home exports compare with Foreign imports? e] Does each country gain from trade? Briefly explain why or why not? There are two types of car, distinguished by how fuel efficient they are. Type 2. For the second setting, imagine that there is only a single monopolist that 0 is the less fuel efficient type, and type 1 is the more fuel efficient. The inverse sells both types of car. That is, the same firm chooses both ( and Q1- demand curves for the two types of car are: (a) Write down the monopolist's profits. It should contain separate terms Po = 250 - Qo - Q1/2, A = 120 -Q1 - Qo/2. (1) relating to the two types of car. For questions 2 4, leave general terms o and 7) in your expression as in question 1(d), rather than imposing Cost functions are 78 = 20, n = -20 as in questions 1(a)-1(c). Co(Qo) - 50Qu, G1(Q1) = 20Q, (2) b) Take first-order conditions for the single monopolist. e) What would the tax rates To, 7) have to be equal to, in order for the respectively. equilibrium quantities to be Qo = Q1 = 60 as in question 1(d)? d) Compare these tax rates with the rates that were assumed in questions 1. Until question 5, we consider a "feebate" or "Clean Car Discount". That 1(a) (c). What is the intuition? generally means there would be a subsidy on the purchase of some cars, and a tax on others, but in the following analysis it will be possible to have taxes 3. In our third setup, there are four firms. Two firms who are identical with each other produce type 0 cars. Two other firms that are identical with each other on both or subsidies on both. In the current question, assume that there are "but not with the first two) produce type 1 cars. Each firm maximises profits two monopolies, one for type ( cars and one for type 1 cars. Mathematically; given the output levels of the other three firms. The originally specified this is equivalent to a Cournot duopoly with differentiated goods demand functions, (1), still apply to each type of car, and the originally specified cost functions, (2), still apply to individual firms. For example, if (A) Let type 0 cars be taxed at To = 20 per car sold, and type 1 cars be firms A and B produce type 0 cars, and firms C and D provide type 1, then subsidised at 20 per car. To keep the notation consistent between the 20 = 44 + 48 and Q1 = de + 90 and the cost functions are two types, this subsidy will be represented as a negative tax: 71 = -20. CA(qA) = 50gA, Ca(48) = 50qs; Ce(qc) = 20gc, Co(4D) = 20qp- The profits of the monopolist for type 0 cars are (250 - 50 -20 -Qo - Q1/2)20- (a) Write down a profit expression for a representative firm providing type Write down an expression for profits of the monopolist selling type 1 0 cars, and the profit expression for a representative firm providng type cars. b) Take first-order conditions (b) Take first-order conditions for the two monopolists. (c) What would the tax rates ro, ") have to equal, in order for the equi- (c) Simultaneously solve your first-order conditions to find the equilibrium librium quantities Qo, Q, to be the same as the values you found in quantities sold of the two types of car. question 1(d)? Feel free to assume that two identical firms producing a type of car, will provide the same amount as each other. (d) What would 7 and 7, have to be set to, for the equilibrium quantitites to d) How does your answer to 3(c) compare with your answer to 1(d)? What be Qo = 60, Q1 = 60? Note that while this is a bit different conceptually is the intuition for this? from what you have done before, it is simpler mathematically. Instead of having to simullanlaneously solve the two conditions, you should be 1. In the fourth setup there are only two firms, but both of them provide both types of car. You might think of this as the two firms competing against each able to solve them one-by-one. Remember to replace -20 with -To in other in two markets. Each firm chooses two quantities to provide, given the the expression for profits from type 0, and +20 with -71 in the profits two quantities chosen by the other firm. The two firms are identical. Demand for type 1. functions for the total quantity of type 0 cars, and for the total quantity of type 1 cars are unchanged. The cost functions for producing the two types of car are also unchanged. (a) Write down an expression for a representative firm (You might need to introduce some new notation). (b) Take two first-order conditions for that firm. (c) What would the tax rates To, ") have to equal, in order for the equi- librium quantities Q, Q: to be the same as the values you found in question 1(d)? (d) What is the intuition for your answer to question 4(c)? 5. Fifth and finally, we return to the framework of question 2 (with a single firm providing both types of car) to consider Clean car standards instead of a Clean car discount. Assume that To - 0, n - 0. That is, a firm does not have to pay any taxes, but it must keep average CO, emissions per kilometre travelled of the cars it sells down to some required level, i. Let CO, per kilometre of the two types of car be fixed (per vehicle) at 120 for type 0 cars and 80 for type 1 cars. This means that the only way a firm can reduce its average is to sell a higher proportion of the more fuel efficient type. The regulation requires a firm to choose Qo. Q, to satisfy the following constraint: 120Q0 + 8001
