Question 1 There are 10,000 identical individuals in the market for commodity X, each with a demand function given by Qodx = 12 - 2Px, and 1000 identical producers of commodity X, each with a function given by Qsx = 20 Px. where Qox is an individual's quantity demanded, Qsx is a single producer's quantity supplied, and Px is the price of the commodity. (a) Find the market demand function (QDx) and the market supply function (QSx) for commodity X (b) Determine the market demand schedule and the market supply schedule of commodity X (for whole dollar prices) and from them find the equilibrium price and the equilibrium quantity. (c) Plot, on one set of axes, the market demand curve and the market supply curve for commodity X and show the equilibrium point (d) Obtain the equilibrium price and the equilibrium quantity mathematically. (e) Explain why the equilibrium condition is considered stable. (f) Determine the elasticity of demand for commodity X at the equilibrium point. Question 2 Suppose that from the condition of equilibrium in Question 1, there is an increase in consumers' incomes (ceteris paribus) so that a new market demand curve is given by QDx = 140,000 - 20,000Px. (a) Derive the new market demand schedule (b) Show the new market demand curve on the graph used in Question 1(c) (c) State the new equilibrium price and equilibrium quantity for commodity X (d) Determine the Income Elasticity at the original equilibrium price and at the new equilibrium price. (Assume that the increase in income is 106). (e) In the light of your answer to 2 (d), comment on the nature of commodity X.R.PI, Inc. Income Statement For the Year Endal 1231/2019 Question 5 (20 marks) Sales fall credit 5740.030 Los: Cost of goods cold RPI, Inc. is a manufacturer and retailer of high-quality sports clothing and gear. The firm was Gross profits started several years ago by a group of serious outdoor enthusiasts who fell there was a need Less: Operating and intered expenses for a firm that could provide quality products at reasonable prices, The result was RPI. Inc. General and administrative Since its inception, the firm has been profitable with sales that last year totaled $700,000 and Depreciation assets in excess of 5400,000. The firm now finds its growing sales outstrip its ability to Total finance its inventory needs. The firm now estimates that it will need a line of credit of Profit before Interest and taxes (EBIT) $100,000 during the coming year. To finance this funding requirement, the management Lew: Inand plans to seek a line of credit with its bank. Profit before taxes $110,100 Lew: Taxes 27.100 The firm's most recent financial statements were provided to its bank as support for the Net income available firm's loan request. Joanne Peebie, a loan analyst traince for the Morristown Bank and Trust, to common stockholders 5:2 900 has been assigned the task of analyzing the firm's loan request. Lew: Cash dividenda RPI, Inc. Balance Sheets Change in retained earnings $51,100 for 12/31/18 and 12/31/19 JO18 2019 Cash $16.030 $17,000 Marketable securities 7.00.0 7,200 Accounts receivable 42,000 38,000 Inventory 50.000 93.000 Prepaid rent 1.20:0 L.LOO Total current assets $116.200 $156 300 Net plant and equipment 286.000 290.0.00 Total assets $402 20 0 Limbifities ood Stockholders Equity Accounts payable $48.000 $55.000 Notes payable 16.000 13,000 Accruals 6.004 5.000 Total current liabilities $70.00-0 $73.0100 Long-term debt $160.000 $1502000 Common stockholders* equity $ 172. 20.0 $221300 Total liabilities and equity 5402.200 $463mYou may need to use the appropriate appendix table or technology to answer this question. Suppose In 2018, RAND Corporation researchers found that 77% of all individuals ages 66 to 65 are adequately prepared financially for retirement, Many financial planners have expressed concern that a smaller percentage of those in this age group who did not complete high school are adequately prepared financially for retirement. (a) Develop appropriate hypotheses such that rejection of N, will support the conclusion that the proportion of those who are adequately prepared financially for retirement is smaller for people in the 66-69 age group who did not complete high school than it is for the population of the 66-69 year old. (Enter In for a as needed.} (b) In a random sample of 300 people from the 65-69 age group who did not complete high school, 159 were not prepared financially for retirement. What is the p- value for your hypothesis test? Find the value of the test statistic. (Round your answer to two decimal places.) Find the p-value. (Round your answer to four decimal places.) p-value = (c] At a = 0.01, what is your conclusion? Do not reject He. We conclude that the percentage of 66- to 69-year-old individuals who are adequately prepared financially for retirement is smaller for those who did not complete high school. Reject Ho. We conclude that the percentage of 66- to 69-year-old individuals who are adequately prepared financially for retirement is smaller for those who did not complete high school. Reject Ho. We cannot conclude that the percentage of 66- to 69-year-old individuals who are adequately prepared financially for retirement is smaller for those who did not complete high school. Do not reject H,. We cannot conclude that the percentage of 66- to 69-vear-old individuals who are adequately pranarad financially far vaticanProblem 2 (30 pts) Explain your answers! The market demand function for computer games is qD (p) = BOOSp and the market supply function is qs(p) = 4}). (a) Find the equations of (express price in terms of quantity) and plot the demand and supply curves corresponding to the given market demand and supply functions. Find the market equilibrium price and quantity p* and if". (b) Find the producer's surplus and consumer's surplus at the equilibrium. (c) What is the price elasticity of demand at the equilibrium point? ((1) Derive the equation of the marginal revenue curve and compute the marginal revenue at the equilibrium point in (a). (e) Given the demand function, at what price would total revenue be maximized? (f) Suppose a quantity tax of $5 per game is imposed on the computer game suppliers. What is the new equilibrium price paid by the consumers? What is the new equilibrium price received by producers? How much is the tax revenue? How much is the deadweight loss of the tax? Use a graph to explain your answers. Problem 3 (15 pts) Explain your answers! Suppose the production function of a rm is given by f (K ,L) = SK 1/4111\vi payments accounts, still PLEsuit IsOnly foreign currency traded with the Canadian dollar. 7. For each of the following situations, outline the effect on the price of the Canadian dollar in terms of US dollars and draw a demand and supply graph that illustrates the changes that occur in the foreign exchange market for the Canadian dollar. . A contractionary monetary policy initiated by the Bank of Canada raises Canadian interest rates. b. Canada's real output rises at a time when real output in the United States is falling. c. Americans (but not Canadians) find Canada a more attractive place to make financial investments. d. Given Canada's aging population, more Canadian "snowbirds" travel to the United States each winter. e. Due to a credit crisis that affects US financial institutions more than it does Canadian ones, Canada's attractiveness as a destination for direct and portfolio investment increases. f. The Bank of Canada initiates an expansionary monetary policy that reduces Canadian interest rates