Suppose demand and supply are given by Qd = 60 - P and Qs = 1.0P - 20.
a. What are the equilibrium quantity and price in this market? Equilibrium quantity: Equilibrium price:
b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market. Quantity demanded: Quantity supplied: Surplus:
c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $29 is imposed in the market. Also, determine the full economic price paid by consumers. Quantity demanded:

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

Six years ago, an 80-kw diesel electric set cost $160,000. the cost index for this class of equipment six years ago was 187 and is now 194. the cost-capacity factor is 0.6. the plant engineering staff is considering a 120-kw unit of the same general design to power a small isolated plant. assume we want to add a precompressor, which (when isolated and estimated separately) currently costs $13291. determine the total cost of the 120-kw unit. (hint: skip $ and comma symbols)

As a general rule, when accountants calculate profit they account for explicit costs but usually ignorea. certain outlays of money by the firm. b. implicit costs. c. operating costs. d. fixed costs.