t homework

Question 9 - Ripple Rock Fish Farms, a small family fish farm in

Ohio, and The Fishing Company, a large corporate supplier, are both producers of tilapia. The marginal cost is 2.25 per pound.

If the market price is $2.25 pound of tilapia, how many pounds of tilapia would Ripple Rock supply?

What about The Fishing Company? How many total pounds would they collectively supply? Is this allocation the most productively efficient way to produce this quantity of tilapia?

Question 10

Janet and her friend Olivia are both volunteers at a cat rescue. The shelter supervisor asks the two of them to clean out kennels and haul bags of cat food from the donation area to storage. Janet knows from her last time volunteering that she can clean out 10 kennels in an hour or move 5 bags of cat food. Olivia can clean out 6 kennels in an hour or move 6 bags of cat food. Olivia suggests that Janet split the tasks equally.

Who has an absolute advantage in doing each task? What are Olivia's opportunity costs of doing each task? c. What are Janet opportunity costs of doing each task?

d. Who has a comparative advantage in doing each task?

e. Who should do each task to minimize the amount of time they both spend?

g. Was Olivia's suggestion the best possible way to allocate Janet time?

Question 11

Suppose that it takes John two hours to complete his economics homework and four hours to complete his philosophy homework.

What is John opportunity cost of completing his economics homework.?

Question 12

Suppose that it takes Pat 15 minutes to shampoo hair and 60 minutes to cut hair. Suppose that it takes Alex 10 minutes to shampoo hair and 50 minutes to cut hair.

Who cuts the hair?

Question 13

In 2016, the United States was importing approximately 8 million barrels of crude oil per day at an average price of $43 per barrel. The domestic demand and supply of crude oil in the United States is $50 per barrel.

How many barrels for items 1-5 per day (without trade and with trade)?

Without trade With trade 1.Quantity supplied domestically 2. Quantity demanded domestically 3. Quantity imported 4.Area of consumer surplus 5.Area of producer surplus

In an arbitrage-free market, call options and put options are issued for shares in the life science company A. The put option is traded at SEK 7.7 and the current share price is SEK 112.8. Both options have an exercise price of SEK 118.1 and the risk-free interest rate is 2% on an annual basis. What should a call option cost if the options have a remaining term of 3 years? You can assume that no dividend will be distributed during the term.

In a market, 1-year call options are traded on the companies Glassigt AB and Helt Ordin Glas AB, both with an exercise price of SEK 179. Glassigt AB is developing a new recipe for glass with secret experimental ingredients. The secret ingredients contain substances that are not normally used in food and Glassigt AB must apply for a permit from the National Food Administration to be allowed to sell the glasses. The company's share price is affected by the outcome of the work on the new recipe as it may affect glass sales in the future. If the glasses are not approved, the company will not be able to sell the glasses and therefore not make any money on the product. If the ice cream is approved and is as divine god as one hopes it will be a success and one will be able to sell large quantities at a high price. If the ice cream is approved but is not tastier than any other ice cream, the company will admittedly be able to sell the ice cream but will have to sell it at a much lower price. Ordinary glass AB's share prices are of course also affected by the outcome as it is a competing company operating in the same glass market.

Stock prices in 1 year
result	Probability
Approved divinely good	0,3	224	135
Approved mediocre	0,4	178	182
Not approved	0,3	156	205

The table contains probabilities for the different outcomes and the share prices the different outcomes result in. Calculate the expected payoff for a long position in the option whose payoff has the highest volatility (standard deviation)