Managerial Economics

FINAL EXAM – Managerial Economics
Name: BORLONGAN, JIANNE JAYCEE G.

Course and Section: BS in ACCOUNTANCY – 2B
Instruction: Input your answers in the same file (show your complete computation) and
attach it in the google classroom to upload. Do not forget to click the “turn in” after
attaching your file.
Problem Solving:
1. ABC Firm plans to engage in an investment A that will cost the firm Php.
750,000.00 and would earn them revenues for the next five years. But, if the
money was used to invest in other ventures, it would gain a 5% interest rate. Should
the firm spend Php. 750,000.00 or just leave the money in the bank? The table
below shows the amount that will be earned by the firm using the new machine for
the next five years:
Amount
Year Present Value
in Php
0 -750,000.00
1 80,000 76,190.48
2 90,000 81,632.65
3 100,000 86,383.76
4 200,000 164,540.50
5 250,000 195,881.54
NPV = -145,371.07
Computation:
YEAR 1:
NPV = [CF/(1+r)^t] Since the NPV is in a negative figure, ABC Firm should
NPV = 80,000 / (1+0.05)^1 just invest their Php750,000 to other ventures rather than
NPV = 76,190.47619 investing in investment A. In that way, they would gain
NPV = 76,190.48 more income in the next five years.
YEAR 2:
NPV = [CF/(1+r)^t]
NPV = 90,000 / (1+0.05)^2
NPV = 81,632.65306
NPV = 81,632.65
YEAR 3:
NPV = [CF/(1+r)^t]
NPV = 100,000 / (1+0.05)^3
NPV = 86,383.75985
NPV = 86,383.76
YEAR 4:
NPV = [CF/(1+r)^t]
NPV = 200,000 / (1+0.05)^4
NPV = 164,540.495
NPV = 164,540.50
YEAR 5:
NPV = [CF/(1+r)^t]
NPV = 250,000 / (1+0.05)^5
NPV = 195,881.5416
NPV = 195,881.54
2. Compute for the demand, supply, and equilibrium of each demand and supply
function. Input your answers for the demand and supply on the table given below
(no need for computation). While for the answers on the equilibrium computation,
type in your complete computation below (like what we discussed).
PRICE Qd Qs
A B C D E A B C D E
575 -3382 -3274 -12456 -650 -1665 5783 7231 122984 1805 2390
750 -4432 -4324 -16396 -1000 -2190 7533 9331 160259 2330 3090
1045 -6202 -6094 -22886 -1590 -3075 10483 12871 223094 3215 4270
150 -832 -724 -3196 200 -390 1533 2131 32459 530 690
345 -2002 -1894 -7486 -190 -975 3483 4471 73994 1115 1470
698 -4120 -4012 -15252 -896 -2034 7013 8707 149183 2174 2882
253 -1450 -1342 -5462 -6 -699 2563 3367 54398 839 1102
2.1 Solve for Qd and Qs using the following schedule:
A. Qs = 33+10P E. Qs = 90+4P
Qd = 68-6P Qd = 60-3P
B. Qs = 331+12P
Qd = 176-6P
C. Qs = 509+213P
Qd=104-22P
D. Qs = 80 + 3P
Qd = 500 – 2P
2.2 Solve for the Equilibrium Price, Demand Function, and Supply Function
A. Qs = 33+10P; Qd = 68-6P
Equilibrium Price:
Qd = Qs
68 – 6P = 33 + 10P
10P + 6P = 68 – 33
16P = 35
P = 2.1875
P = 2.18
Supply Function:
Qs = 33 + 10P
Qs = 33 + 10(2.1875)
Qs = 54.87
Demand Function:
Qd = 68 – 6P
Qd= = 68 – 6(2.1875)
Qd = 54.97
B. Qs = 331+12P; Qd = 176-6P
Qd = Qs
176 – 6P = 331 + 12P
12P + 6P = 176 – 331
18P = -155
P = -8.61111
P = -8.61
Supply Function:
Qs = 331 + 12P
Qs = 331 + 12(-8.6111)
Qs = 227.66
Demand Function:
Qd = 176 – 6P
Qd = 176 – 6(-8.6111)
Qd = 227.66
C. Qs = 509+213P; Qd=104-22P
Qd = Qs
104 – 22P = 509 + 213P
213P + 22P = 104 – 509
235P = -405
P = 1.7234
P = -1.72
Supply Function:
Qs = 509 + 213P
Qs = 509 + 213(-1.7234)
Qs = 141.91
Demand Function:
Qd = 104 – 22P
Qd = 104 – 22(-1.7234)
Qd = 141.91
D. Qs = 80 + 3P; Qd = 500 – 2P
Qd = Qs
500 – 2P = 80 + 3P
3P + 2P = 500 – 80
5P = 420
P = 84
Supply Function:
Qs = 80 + 3P
Qs = 80 + 3(84)
Qs = 332
Demand Function:
Qd = 500 -2P
Qd = 500 – 2(84)
QD = 332
E. Qs = 90+4P; Qd = 60-3P
Qd = Qs
60 – 3P = 90 + 4P
4P + 3P = 60 – 90
7P = -30
P = -4.2857
P = -4.28
Supply Function:
Qs = 90 + 4P
Qs = 90 + 4(-4.2857)
Qs = 72.85
Demand Function:
Qd = 60 – 3P
Qd = 60 – 3(-4.2857)
Qd = 72.85
3. Given the demand equation of Qd = 70 – 2Px + 7Py – 4M + 1A, determine the price,
cross-price, income, and advertising elasticity given the following: Px = 10, Py = 5,
M = 15, and A = 20.
Qd = 70 – 2Px + 7Py – 4M + 1A
= 70 – 2(10) + 7(5) -4(15) +1(20)
= 70 – 20 + 35 – 60 + 20
Qd = 45
Price Elasticity: Cross-Price: Income: Advertising:

PED = b(P/Qd) CPE = b(P/Qd) IE = b(P/Qd) AE = b(P/Qd)
= -2 (10/45) = 7(5/45) = -4 (15/45) = 1(20/45)
= -0.44 = 0.77 = -1.33 = 0.44
Inelastic Inelastic Elastic Inelastic

Demand Demand Demand Demand
4. Given the demand equation of Qd = 100 – 4Px + 4Py – 2M + 15A, determine the
price, cross-price, income, and advertising elasticity given the following: Px = 4, Py
= 30, M = 50, and A = 1.
Qd = 100 – 4Px + 4Py – 2M + 15A

= 100 – 4(4) + 4(30) – 2(50) + 15(1)
= 100 – 16 + 120 – 100 +15
Qd = 119
Price Elasticity: Cross-Price: Income: Advertising:

PED = b(P/Qd) CPE = b(P/Qd) IE = b(P/Qd) AE = b(P/Qd)
= -4(4/119) = 4(30/119) = -2(50/119) = 15(1/119)
= -0.1344 = 1.0084 = -0.8403 = 0.1260
= -0.13 = 1.00 = -0.84 = 0.12
Inelastic Unitary Inelastic Inelastic

Demand Demand Demand Demand

Managerial Economics

Uploaded by

Copyright:

Available Formats

Managerial Economics

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Managerial Economics

Uploaded by

Copyright:

Available Formats

FINAL EXAM – Managerial Economics

Name: BORLONGAN, JIANNE JAYCEE G.

2.1 Solve for Qd and Qs using the following schedule:

Price Elasticity: Cross-Price: Income: Advertising:

Inelastic Inelastic Elastic Inelastic

Qd = 100 – 4Px + 4Py – 2M + 15A

Price Elasticity: Cross-Price: Income: Advertising:

Inelastic Unitary Inelastic Inelastic

You might also like