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.Ill T-Mobile Wi-Fi 7:40 PM A Problems-Options 1. What is the difference between time value and intrinsic value? 2. What is the intrinsic value and time value of the following 3-month stock options? Assume the stock price is $45. 40 strike call option with a price of 7 45 strike call option with a price of 4 47 strike call option with a price of 2 40 strike put option with a price of 1 45 strike put option with a price of 3 47 strike put option with a price of 4 3. You own a stock currently at $50. You buy a 6-month put option with a 45 strike for a price of 4. You sell a 6-month call option with a 60 strike for a price of 3. Fill in the net profit table for the following stock prices at the end of 6 months. Stock price in 6 months Net value 65 60 55 50 45 40 4. You can buy or sell calls and puts. Which option has unlimited upside? Which option has unlimited downside? Which option has a limited upside? Which option has a limited downside? 5. You need to buy oil in 3 months. How can you create an option position using puts and calls to limit your exposure to a change in oil prices? 6 You need to call your Gosale clock in f manthe How can A X CA restaurant faces very high demand for its signature mousse desserts in the evening but is less busy during the day. Its manager estimates that inverse demand functions are pe = 30 - Qe in the evening and pd = 16 -Qd during the day, where e and d denote evening and daytime. The marginal cost of producing its dessert evening, MCe, is $8. The marginal cost of producing its dessert daytime, MCd, is $4. There is no fixed cost of producing dessert. Create a spreadsheet with the column headings Qe, Pe, TRe, MRe, TCe, MCe, ne, Qd, Pd, TRd, MRd, TCd, MCd, and nd. (note: ne is profit evening and nd indicates profit daytime) a. What are the optimal prices for the dessert that the restaurant should charge during the evening hours? b. What is the optimal quantity for the dessert that the restaurant should produce during the evening hours? c. What is the total cost of producing the optimal quantity for the dessert during the evening hours? d. What is the maximum profit for the dessert that the restaurant should produce during the evening hours? e. What are the optimal prices for the dessert that the restaurant should charge during the daytime hours? f. What is the optimal quantity for the dessert that the restaurant should produce during the daytime hours? I g. What is the total cost of producing the optimal quantity for the dessert during the daytime hours? h. What is the maximum profit for the dessert that the restaurant should produce during the daytime hours
