Exercise 1: Consider the perfectly competitive market for gasoline. The aggregate demand for gasoline is Q = 100 – p, while the aggregate supply is Q = 3p 1. Calculate the equilibrium price and quantity. At this equilibrium, compute the consumer surplus, producer surplus and total surplus.

2. Suppose now that the government is concerned because many gas stations are going out of business, so it decides to set a minimum price of p = 30 to help them. What will be the new equilibrium price and quantity with this intervention? Compute the consumer surplus and producer surplus; who gains and loses from this regulation? How is the total surplus affected? Briefly explain the intuition.

3. Suppose now that instead of regulating prices, the government decides it is better to help gas stations by setting quantity regulations. In particular, the government sets a quota of q = 70 (this means that aggregate quantity supplied can’t exceed 70 units). What will be the new equilib

Paar corporation bought 100 percent of kimmel, inc., on january 1, 2012. on that date, paar’s equipment (10-year life) has a book value of $420,000 but a fair value of $520,000. kimmel has equipment (10-year life) with a book value of $272,000 but a fair value of $400,000. paar uses the equity method to record its investment in kimmel. on december 31, 2014, paar has equipment with a book value of $294,000 but a fair value of $445,200. kimmel has equipment with a book value of $190,400 but a fair value of $357,000. the consolidated balance for the equipment account as of december 31, 2014 is $574,000. what would be the impact on consolidated balance for the equipment account as of december 31, 2014 if the parent had applied the initial value method rather than the equity method? the balance in the consolidated equipment account cannot be determined for the initial value method using the information given. the consolidated equipment account would have a higher reported balance. the consolidated equipment account would have a lower reported balance. no effect: the method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.

You are head of the schwartz family endowment for the arts. you have decided to fund an arts school in the san francisco bay area in perpetuity. every 5 years, you will give the school $ 1 comma 000 comma 000. the first payment will occur 5 years from today. if the interest rate is 5.9 % per year, what is the present value of your gift?

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