EBK INTERMEDIATE MICROECONOMICS AND ITS
EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 4.3, Problem 2MQ
To determine

The reason behind choosing single feed lines at banks rather than lines for tellers considering the diversification of risk involved.

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Suppose that there is a 45 percent change that George's coffee shop will make $10000 in profits in January and a 45 percent chance it will make 0 profits and a 10 percent chance that it will make -$1000 in profits (i.e., it will lose $1000). Calculate the coffee shop's expected profits
D7 You run an oil company that wants to extract an oil reserve. The total stock of oil in the reserve is 600 barrels. You must sell all of the oil in two time periods, so the quantity extracted will be q1 +q2 = 600. The price per barrel you can sell the oil for is pt = 710 − 1 2 qt in each period. The cost of extracting a single barrel is not constant, but increases as more oil is extracted in a period, c(qt) = 1 2 qt. If the interest rate is 5%, how much oil will you extract in periods 1 and 2 if you wanted to maximize profits.
The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400.     b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate?
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