Chapter 2Output and Prices in the Short Run
货币金融学chapter 2英文习题
Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 2 An Overview of the Financial System2.1 Function of Financial Markets1) Every financial market has the following characteristic.A) It determines the level of interest rates.B) It allows common stock to be traded.C) It allows loans to be made.D) It channels funds from lenders-savers to borrowers-spenders.Answer: DAACSB: Reflective Thinking2) Financial markets have the basic function ofA) getting people with funds to lend together with people who want to borrow funds.B) assuring that the swings in the business cycle are less pronounced.C) assuring that governments need never resort to printing money.D) providing a risk-free repository of spending power.Answer: AAACSB: Reflective Thinking3) Financial markets improve economic welfare becauseA) they channel funds from investors to savers.B) they allow consumers to time their purchase better.C) they weed out inefficient firms.D) they eliminate the need for indirect finance.Answer: BAACSB: Reflective Thinking4) Well-functioning financial marketsA) cause inflation.B) eliminate the need for indirect finance.C) cause financial crises.D) allow the economy to operate more efficiently.Answer: DAACSB: Reflective Thinking5) A breakdown of financial markets can result inA) financial stability.B) rapid economic growth.C) political instability.D) stable prices.Answer: CAACSB: Reflective Thinking6) The principal lender-savers areA) governments.B) businesses.C) households.D) foreigners.Answer: CAACSB: Application of Knowledge7) Which of the following can be described as direct finance?A) You take out a mortgage from your local bank.B) You borrow $2500 from a friend.C) You buy shares of common stock in the secondary market.D) You buy shares in a mutual fund.Answer: BAACSB: Analytical Thinking8) Assume that you borrow $2000 at 10% annual interest to finance a new business project. For this loan to be profitable, the minimum amount this project must generate in annual earnings isA) $400.B) $201.C) $200.D) $199.Answer: BAACSB: Analytical Thinking9) You can borrow $5000 to finance a new business venture. This new venture will generate annual earnings of $251. The maximum interest rate that you would pay on the borrowed funds and still increase your income isA) 25%.B) 12.5%.C) 10%.D) 5%.Answer: DAACSB: Analytical Thinking10) Which of the following can be described as involving direct finance?A) A corporation issues new shares of stock.B) People buy shares in a mutual fund.C) A pension fund manager buys a short-term corporate security in the secondary market.D) An insurance company buys shares of common stock in the over-the-counter markets. Answer: AAACSB: Analytical Thinking11) Which of the following can be described as involving direct finance?A) A corporation takes out loans from a bank.B) People buy shares in a mutual fund.C) A corporation buys a short-term corporate security in a secondary market.D) People buy shares of common stock in the primary markets.Answer: DAACSB: Analytical Thinking12) Which of the following can be described as involving indirect finance?A) You make a loan to your neighbor.B) A corporation buys a share of common stock issued by another corporation in the primary market.C) You buy a U.S. Treasury bill from the U.S. Treasury at .D) You make a deposit at a bank.Answer: DAACSB: Analytical Thinking13) Which of the following can be described as involving indirect finance?A) You make a loan to your neighbor.B) You buy shares in a mutual fund.C) You buy a U.S. Treasury bill from the U.S. Treasury at Treasury .D) You purchase shares in an initial public offering by a corporation in the primary market. Answer: BAACSB: Analytical Thinking14) Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.A) assets; liabilitiesB) liabilities; assetsC) negotiable; nonnegotiableD) nonnegotiable; negotiableAnswer: AAACSB: Reflective Thinking15) With ________ finance, borrowers obtain funds from lenders by selling them securities in the financial markets.A) activeB) determinedC) indirectD) directAnswer: DAACSB: Application of Knowledge16) With direct finance, funds are channeled through the financial market from the ________ directly to the ________.A) savers, spendersB) spenders, investorsC) borrowers, saversD) investors, saversAnswer: AAACSB: Reflective Thinking17) Distinguish between direct finance and indirect finance. Which of these is the most important source of funds for corporations in the United States?Answer: With direct finance, funds flow directly from the lender/saver to the borrower. With indirect finance, funds flow from the lender/saver to a financial intermediary who then channels the funds to the borrower/investor. Financial intermediaries (indirect finance) are the major source of funds for corporations in the U.S.AACSB: Reflective Thinking2.2 Structure of Financial Markets1) Which of the following statements about the characteristics of debt and equity is FALSE?A) They can both be long-term financial instruments.B) They can both be short-term financial instruments.C) They both involve a claim on the issuer's income.D) They both enable a corporation to raise funds.Answer: BAACSB: Reflective Thinking2) Which of the following statements about the characteristics of debt and equities is TRUE?A) They can both be long-term financial instruments.B) Bond holders are residual claimants.C) The income from bonds is typically more variable than that from equities.D) Bonds pay dividends.Answer: AAACSB: Reflective Thinking3) Which of the following statements about financial markets and securities is TRUE?A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.B) A debt instrument is intermediate term if its maturity is less than one year.C) A debt instrument is intermediate term if its maturity is ten years or longer.D) The maturity of a debt instrument is the number of years (term) to that instrument's expiration date.Answer: DAACSB: Reflective Thinking4) Which of the following is an example of an intermediate-term debt?A) a fifteen-year mortgageB) a sixty-month car loanC) a six-month loan from a finance companyD) a thirty-year U.S. Treasury bondAnswer: BAACSB: Analytical Thinking5) If the maturity of a debt instrument is less than one year, the debt is calledA) short-term.B) intermediate-term.C) long-term.D) prima-term.Answer: AAACSB: Application of Knowledge6) Long-term debt has a maturity that isA) between one and ten years.B) less than a year.C) between five and ten years.D) ten years or longer.Answer: DAACSB: Application of Knowledge7) When I purchase ________, I own a portion of a firm and have the right to vote on issues important to the firm and to elect its directors.A) bondsB) billsC) notesD) stockAnswer: DAACSB: Application of Knowledge8) Equity holders are a corporation's ________. That means the corporation must pay all of its debt holders before it pays its equity holders.A) debtorsB) brokersC) residual claimantsD) underwritersAnswer: CAACSB: Reflective Thinking9) Which of the following benefits directly from any increase in the corporation's profitability?A) a bond holderB) a commercial paper holderC) a shareholderD) a T-bill holderAnswer: CAACSB: Reflective Thinking10) A financial market in which previously issued securities can be resold is called a ________ market.A) primaryB) secondaryC) tertiaryD) used securitiesAnswer: BAACSB: Application of Knowledge11) An important financial institution that assists in the initial sale of securities in the primary market is theA) investment bank.B) commercial bank.C) stock exchange.D) brokerage house.Answer: AAACSB: Application of Knowledge12) When an investment bank ________ securities, it guarantees a price for a corporation's securities and then sells them to the public.A) underwritesB) undertakesC) overwritesD) overtakesAnswer: AAACSB: Application of Knowledge13) Which of the following is NOT a secondary market?A) foreign exchange marketB) futures marketC) options marketD) IPO marketAnswer: DAACSB: Reflective Thinking14) ________ work in the secondary markets matching buyers with sellers of securities.A) DealersB) UnderwritersC) BrokersD) ClaimantsAnswer: CAACSB: Application of Knowledge15) A corporation acquires new funds only when its securities are sold in theA) primary market by an investment bank.B) primary market by a stock exchange broker.C) secondary market by a securities dealer.D) secondary market by a commercial bank.Answer: AAACSB: Reflective Thinking16) A corporation acquires new funds only when its securities are sold in theA) secondary market by an investment bank.B) primary market by an investment bank.C) secondary market by a stock exchange broker.D) secondary market by a commercial bank.Answer: BAACSB: Reflective Thinking17) An important function of secondary markets is toA) make it easier to sell financial instruments to raise funds.B) raise funds for corporations through the sale of securities.C) make it easier for governments to raise taxes.D) create a market for newly constructed houses.Answer: AAACSB: Reflective Thinking18) Secondary markets make financial instruments moreA) solid.B) vapid.C) liquid.D) risky.Answer: CAACSB: Reflective Thinking19) A liquid asset isA) an asset that can easily and quickly be sold to raise cash.B) a share of an ocean resort.C) difficult to resell.D) always sold in an over-the-counter market.Answer: AAACSB: Reflective Thinking20) The higher a security's price in the secondary market the ________ funds a firm can raise by selling securities in the ________ market.A) more; primaryB) more; secondaryC) less; primaryD) less; secondaryAnswer: AAACSB: Reflective Thinking21) When secondary market buyers and sellers of securities meet in one central location to conduct trades the market is called a(n)A) exchange.B) over-the-counter market.C) common market.D) barter market.Answer: AAACSB: Application of Knowledge22) In a(n) ________ market, dealers in different locations buy and sell securities to anyone who comes to them and is willing to accept their prices.A) exchangeB) over-the-counterC) commonD) barterAnswer: BAACSB: Application of Knowledge23) Forty or so dealers establish a "market" in these securities by standing ready to buy and sell them.A) secondary stocksB) surplus stocksC) U.S. government bondsD) common stocksAnswer: CAACSB: Application of Knowledge24) Which of the following statements about financial markets and securities is TRUE?A) Many common stocks are traded over-the-counter, although the largest corporations usually have their shares traded at organized stock exchanges such as the New York Stock Exchange. B) As a corporation gets a share of the broker's commission, a corporation acquires new funds whenever its securities are sold.C) Capital market securities are usually more widely traded than shorter-term securities and so tend to be more liquid.D) Prices of capital market securities are usually more stable than prices of money market securities, and so are often used to hold temporary surplus funds of corporations.Answer: AAACSB: Reflective Thinking25) A financial market in which only short-term debt instruments are traded is called the________ market.A) bondB) moneyC) capitalD) stockAnswer: BAACSB: Analytical Thinking26) Equity instruments are traded in the ________ market.A) moneyB) bondC) capitalD) commoditiesAnswer: CAACSB: Analytical Thinking27) Because these securities are more liquid and generally have smaller price fluctuations, corporations and banks use the ________ securities to earn interest on temporary surplus funds.A) money marketB) capital marketC) bond marketD) stock marketAnswer: AAACSB: Reflective Thinking28) Corporations receive funds when their stock is sold in the primary market. Why do corporations pay attention to what is happening to their stock in the secondary market? Answer: The existence of the secondary market makes their stock more liquid and the price in the secondary market sets the price that the corporation would receive if they choose to sell more stock in the primary market.AACSB: Reflective Thinking29) Describe the two methods of organizing a secondary market.Answer: A secondary market can be organized as an exchange where buyers and sellers meet in one central location to conduct trades. An example of an exchange is the New York Stock Exchange. A secondary market can also be organized as an over-the-counter market. In this type of market, dealers in different locations buy and sell securities to anyone who comes to them and is willing to accept their prices. An example of an over-the-counter market is the federal funds market.AACSB: Reflective Thinking2.3 Financial Market Instruments1) Prices of money market instruments undergo the least price fluctuations because ofA) the short terms to maturity for the securities.B) the heavy regulations in the industry.C) the price ceiling imposed by government regulators.D) the lack of competition in the market.Answer: AAACSB: Reflective Thinking2) U.S. Treasury bills pay no interest but are sold at a ________. That is, you will pay a lower purchase price than the amount you receive at maturity.A) premiumB) collateralC) defaultD) discountAnswer: DAACSB: Analytical Thinking3) U.S. Treasury bills are considered the safest of all money market instruments because there isa low probability ofA) defeat.B) default.C) desertion.D) demarcation.Answer: BAACSB: Analytical Thinking4) A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase price is calledA) commercial paper.B) a certificate of deposit.C) a municipal bond.D) federal funds.Answer: BAACSB: Analytical Thinking5) A short-term debt instrument issued by well-known corporations is calledA) commercial paper.B) corporate bonds.C) municipal bonds.D) commercial mortgages.Answer: AAACSB: Analytical Thinking6) ________ are short-term loans in which Treasury bills serve as collateral.A) Repurchase agreementsB) Negotiable certificates of depositC) Federal fundsD) U.S. government agency securitiesAnswer: AAACSB: Analytical Thinking7) Collateral is ________ the lender receives if the borrower does not pay back the loan.A) a liabilityB) an assetC) a presentD) an offeringAnswer: BAACSB: Analytical Thinking8) Federal funds areA) funds raised by the federal government in the bond market.B) loans made by the Federal Reserve System to banks.C) loans made by banks to the Federal Reserve System.D) loans made by banks to each other.Answer: DAACSB: Analytical Thinking9) An important source of short-term funds for commercial banks are ________ which can be resold on the secondary market.A) negotiable CDsB) commercial paperC) mortgage-backed securitiesD) municipal bondsAnswer: AAACSB: Application of Knowledge10) Which of the following are short-term financial instruments?A) a repurchase agreementB) a share of Walt Disney Corporation stockC) a Treasury note with a maturity of four yearsD) a residential mortgageAnswer: AAACSB: Analytical Thinking11) Which of the following instruments are traded in a money market?A) state and local government bondsB) U.S. Treasury billsC) corporate bondsD) U.S. government agency securitiesAnswer: BAACSB: Analytical Thinking12) Which of the following instruments are traded in a money market?A) bank commercial loansB) commercial paperC) state and local government bondsD) residential mortgagesAnswer: BAACSB: Analytical Thinking13) Which of the following instruments is NOT traded in a money market?A) residential mortgagesB) U.S. Treasury BillsC) negotiable bank certificates of depositD) commercial paperAnswer: AAACSB: Analytical Thinking14) Bonds issued by state and local governments are called ________ bonds.A) corporateB) TreasuryC) municipalD) commercialAnswer: CAACSB: Application of Knowledge15) Equity and debt instruments with maturities greater than one year are called ________ market instruments.A) capitalB) moneyC) federalD) benchmarkAnswer: AAACSB: Application of Knowledge16) Which of the following is a long-term financial instrument?A) a negotiable certificate of depositB) a repurchase agreementC) a U.S. Treasury bondD) a U.S. Treasury billAnswer: CAACSB: Analytical Thinking17) Which of the following instruments are traded in a capital market?A) U.S. Government agency securitiesB) negotiable bank CDsC) repurchase agreementsD) U.S. Treasury billsAnswer: AAACSB: Analytical Thinking18) Which of the following instruments are traded in a capital market?A) corporate bondsB) U.S. Treasury billsC) negotiable bank CDsD) repurchase agreementsAnswer: AAACSB: Analytical Thinking19) Which of the following are NOT traded in a capital market?A) U.S. government agency securitiesB) state and local government bondsC) repurchase agreementsD) corporate bondsAnswer: CAACSB: Analytical Thinking20) The most liquid securities traded in the capital market areA) corporate bonds.B) municipal bonds.C) U.S. Treasury bonds.D) mortgage-backed securities.Answer: CAACSB: Reflective Thinking21) Mortgage-backed securities are similar to ________ but the interest and principal payments are backed by the individual mortgages within the security.A) bondsB) stockC) repurchase agreementsD) negotiable CDsAnswer: AAACSB: Application of Knowledge2.4 Internationalization of Financial Markets1) Equity of U.S. companies can be purchased byA) U.S. citizens only.B) foreign citizens only.C) U.S. citizens and foreign citizens.D) U.S. mutual funds only.Answer: CAACSB: Diverse and multicultural work environments2) One reason for the extraordinary growth of foreign financial markets isA) decreased trade.B) increases in the pool of savings in foreign countries.C) the recent introduction of the foreign bond.D) slower technological innovation in foreign markets.Answer: BAACSB: Diverse and multicultural work environments3) Bonds that are sold in a foreign country and are denominated in the country's currency in which they are sold are known asA) foreign bonds.B) Eurobonds.C) equity bonds.D) country bonds.Answer: AAACSB: Application of Knowledge4) Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which it is sold are known asA) foreign bonds.B) Eurobonds.C) equity bonds.D) country bonds.Answer: BAACSB: Application of Knowledge5) If Microsoft sells a bond in London and it is denominated in dollars, the bond is aA) Eurobond.B) foreign bond.C) British bond.D) currency bond.Answer: AAACSB: Reflective Thinking6) U.S. dollar deposits in foreign banks outside the U.S. or in foreign branches of U.S. banks are calledA) Atlantic dollars.B) Eurodollars.C) foreign dollars.D) outside dollars.Answer: BAACSB: Application of Knowledge7) If Toyota sells a $1000 bond in the United States, the bond is aA) foreign bond.B) Eurobond.C) Tokyo bond.D) currency bond.Answer: AAACSB: Application of Knowledge8) Distinguish between a foreign bond and a Eurobond.Answer: A foreign bond is sold in a foreign country and priced in that country's currency. A Eurobond is sold in a foreign country and priced in a currency that is not that country's currency. AACSB: Reflective Thinking2.5 Function of Financial Intermediaries: Indirect Finance1) The process of indirect finance using financial intermediaries is calledA) direct lending.B) financial intermediation.C) resource allocation.D) financial liquidation.Answer: BAACSB: Reflective Thinking2) In the United States, loans from ________ are far ________ important for corporate finance than are securities markets.A) government agencies; moreB) government agencies; lessC) financial intermediaries; moreD) financial intermediaries; lessAnswer: CAACSB: Reflective Thinking3) The time and money spent in carrying out financial transactions are calledA) economies of scale.B) financial intermediation.C) liquidity services.D) transaction costs.Answer: DAACSB: Application of Knowledge4) Economies of scale enable financial institutions toA) reduce transactions costs.B) avoid the asymmetric information problem.C) avoid adverse selection problems.D) reduce moral hazard.Answer: AAACSB: Reflective Thinking5) An example of economies of scale in the provision of financial services isA) investing in a diversified collection of assets.B) providing depositors with a variety of savings certificates.C) hiring more support staff so that customers don't have to wait so long for assistance.D) spreading the cost of writing a standardized contract over many borrowers.Answer: DAACSB: Reflective Thinking6) Financial intermediaries provide customers with liquidity services. Liquidity servicesA) make it easier for customers to conduct transactions.B) allow customers to have a cup of coffee while waiting in the lobby.C) are a result of the asymmetric information problem.D) are another term for asset transformation.Answer: AAACSB: Reflective Thinking7) The process where financial intermediaries create and sell low-risk assets and use the proceeds to purchase riskier assets is known asA) risk sharing.B) risk aversion.C) risk neutrality.D) risk selling.Answer: AAACSB: Analytical Thinking8) The process of asset transformation refers to the conversion ofA) safer assets into risky assets.B) safer assets into safer liabilities.C) risky assets into safer assets.D) risky assets into risky liabilities.Answer: CAACSB: Analytical Thinking9) Reducing risk through the purchase of assets whose returns do not always move together isA) diversification.B) intermediation.C) intervention.D) discounting.Answer: AAACSB: Analytical Thinking10) The concept of diversification is captured by the statementA) don't look a gift horse in the mouth.B) don't put all your eggs in one basket.C) it never rains, but it pours.D) make hay while the sun shines.Answer: BAACSB: Reflective Thinking11) Risk sharing is profitable for financial institutions due toA) low transactions costs.B) asymmetric information.C) adverse selection.D) moral hazard.Answer: AAACSB: Reflective Thinking12) Typically, borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is calledA) moral selection.B) risk sharing.C) asymmetric information.D) adverse hazard.Answer: CAACSB: Analytical Thinking13) If bad credit risks are the ones who most actively seek loans and, therefore, receive them from financial intermediaries, then financial intermediaries face the problem ofA) moral hazard.B) adverse selection.C) free-riding.D) costly state verification.Answer: BAACSB: Reflective Thinking14) The problem created by asymmetric information before the transaction occurs is called________, while the problem created after the transaction occurs is called ________.A) adverse selection; moral hazardB) moral hazard; adverse selectionC) costly state verification; free-ridingD) free-riding; costly state verificationAnswer: AAACSB: Application of Knowledge15) Adverse selection is a problem associated with equity and debt contracts arising fromA) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities.B) the lender's inability to legally require sufficient collateral to cover a 100% loss if the borrower defaults.C) the borrower's lack of incentive to seek a loan for highly risky investments.D) the borrower's lack of good options for obtaining funds.Answer: AAACSB: Reflective Thinking16) An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.A) adverse selectionB) moral hazardC) risk sharingD) credit riskAnswer: BAACSB: Ethical understanding and reasoning abilities17) Banks can lower the cost of information production by applying one information resource to many different services. This process is calledA) economies of scale.B) asset transformation.C) economies of scope.D) asymmetric information.Answer: CAACSB: Application of Knowledge18) Conflicts of interest are a type of ________ problem that can happen when an institution provides multiple services.A) adverse selectionB) free-ridingC) discountingD) moral hazardAnswer: DAACSB: Ethical understanding and reasoning abilities19) Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds fromA) government agencies.B) equities markets.C) financial intermediaries.D) bond markets.Answer: CAACSB: Application of Knowledge20) The countries that have made the least use of securities markets are ________ and ________; in these two countries finance from financial intermediaries has been almost ten times greater than that from securities markets.A) Germany; JapanB) Germany; Great BritainC) Great Britain; CanadaD) Canada; JapanAnswer: AAACSB: Application of Knowledge21) Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.A) financial intermediaries; securities marketsB) financial intermediaries; government agenciesC) government agencies; financial intermediariesD) government agencies; securities marketsAnswer: AAACSB: Reflective Thinking22) Because there is an imbalance of information in a lending situation, we must deal with the problems of adverse selection and moral hazard. Define these terms and explain how financial intermediaries can reduce these problems.Answer: Adverse selection is the asymmetric information problem that exists before the transaction occurs. For lenders, it is the difficulty in judging a good credit risk from a bad credit risk. Moral hazard is the asymmetric information problem that exists after the transaction occurs. For lenders, it is the difficulty in making sure the borrower uses the funds appropriately. Financial intermediaries can reduce adverse selection through intensive screening and can reduce moral hazard by monitoring the borrower.AACSB: Reflective Thinking2.6 Types of Financial Intermediaries1) Financial institutions that accept deposits and make loans are called ________ institutions.A) investmentB) contractual savingsC) depositoryD) underwritingAnswer: CAACSB: Application of Knowledge2) Thrift institutions includeA) banks, mutual funds, and insurance companies.B) savings and loan associations, mutual savings banks, and credit unions.C) finance companies, mutual funds, and money market funds.D) pension funds, mutual funds, and banks.Answer: BAACSB: Analytical Thinking3) Which of the following is a depository institution?A) a life insurance companyB) a credit unionC) a pension fundD) a mutual fundAnswer: BAACSB: Analytical Thinking。
Chap18劳动市场经济学经济学原理曼昆中英文双语
The Value of the Marginal Product of Labor and the Demand for Labor
u The value of the marginal product is the marginal product of the input multiplied by the market price of the output.
Wage of Apple
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图1. 供给与需求的多样化
苹果的 价格
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n Diminishing Marginal Product of Labor
ä As the number of workers increases, the marginal product of labor declines.
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u To maximize profit, the competitive, profit-maximizing firm hires workers up to the point where the value of marginal product of labor equals the wage.
《国际商务函电双语教程》chapter 2
BACKGROUND INFORMATION
Simultaneously, we also need to remember following writing principles: Short content, no more than one page; Polite language with courteous and sincere attitude; Show your intention in the first paragraph and express cooperating desire in the letter; Say something high about your company, if allowed, list some of the famous companies you have corporated.
BACKGROUND INFORMATION
Channels for Obtaining Information About a New Firm
Exhibitions and trade fairs; Market investigations; Enquires received from foreign merchants; Self-introduction or introduction from his business
connections; A branch office or representative abroad; The internet; The introduction from your partners; Other sources.
BACKGROUND INFORMATION
Above sources, chambers of commerce both at home and abroad, commercial counselor’s office and the introduction from your partners are usually the most reliable.
经济学原理曼昆Chapter 02
Chapter 2 Thinking Like an EconomistMULTIPLE CHOICEFigure 2-1AB 211. Refer to Figure 2-1.Which shape refers to the markets for goods and services? aa. oval Ab. oval Bc. rectangle 1d. rectangle 22. Refer to Figure 2-1.What is flowing from rectangle 1 to oval A? ba. revenueb. goods and services soldc. factors of productiond. labor, land, and capital3. Refer to Figure 2-1.Which of the following is an activity undertaken by the actors in rectangle 2? ca. produce and sell goods and servicesb. hire and use factors of productionc. own and sell factors of productiond. exchange goods and services between firms and householdsFigure 2-212345678910Consider the production possibilities curve for a country that can produce cars, corn (in bushels), or a combination of the two. 4. Refer to Figure 2-2. If this economy devotes all of its available resources to producing corn, then itwill produce da. 0 bushels of corn and 10 cars.b. 135 bushels of corn and 3 carsc. 160 bushels of corn and 10 cars.d. 160 bushels of corn and 0 cars.5. Refer to Figure 2-2. Which combination of points show production possibilities only achievablewith improvements in technology or increases in resources? da. A, D, and Eb. B and Gc. C and Fd. None of the above is correct.6. Refer to Figure 2-2. If this society moves from point D to point E, da. it gives up 25 bushels of corn to get 3 cars.b. it gives up 135 bushels of corn to get 3 cars.c. it gives up 3 cars to get 135 bushels of corn.d. it gives up 3 cars to get 25 bushels of corn.7. Refer to Figure 2-2. If this society is producing at point C, da. there is unemployment.b. production is efficient.c. growth can only be achieved through an advancement in technology.d. the opportunity cost of producing one more car is approximately 10 bushels of corn.8. Which of the following is a positive, as opposed to a normative, statement? ba. The US Department of Justice should allow a merger between AT&T and T-Mobilebecause it would have little effect on consumers.b. Antitrust laws should be used to prevent further concentration in the wireless telephoneservice market.c. The US Department of Justice sued AT&T to block its merger with T-Mobile.d. The wireless telephone service market is too highly concentrated.9. Which of the following famous people did not major in economics in college? ba. Donald Trumpb. Natalie Portmanc. John Elwayd. Mick Jagger10. Which of the following statements is correct about environmental economists? da. They view economics as a framework for natural resource allocation.b. They work at government agencies as well as universities and advocacy groups.c. They use economic arguments and systems to persuade companies to clean up pollutionand conserve natural resources.d. All of the above are correct.11. In the ordered pair (20, 100), 20 is the aa. x-coordinate.b. y-coordinate.c. scatterplot.d. slope.12. Between the two ordered pairs (20, 100) and (30, 80), the slope is ba. 1/2.b. -1/2.c. 2.d. -2.Figure 2-4snowblowers solds n o w s t o r ms 1020304050607080901234567891013. Refer to Figure 2-4. According to the graph, snowstorms aa. and snowblowers sold are positively correlated.b. and snowblowers sold are negatively correlatedc. and snowblowers sold are uncorrelated.d. are caused by more snowblowers being sold.14. Refer to Figure 2-4.Your friend John created the graph above to illustrate that snowstorms arecaused by more snowblowers being sold. You inform him that his interpretation is incorrect due to aa. omitted variable bias.b. reverse causality.c. slope mismatch.d. shifting versus moving along a curve.15. Refer to Figure 2-4.Which of the following could be an omitted variable in the graph? da. the price of snowblowersb. a change in consumers’ incomesc. a change in the seasonsd. All of the above are correct.PROBLEMFigure 2-1AB 211. Refer to Figure 2-1. What is the name of the model depicted in the figure?The Circular Flow2. Refer to Figure 2-1. What do the ovals represent in the figure?A: Markets for goods and service B: Markets for factors of production 3. Refer to Figure 2-1. What do the rectangles represent in the figure?1:Firms 2:Households4. Refer to Figure 2-1. What do the outer arrows represent in the figure?A to 1:revenue 1 toB :wages,rent, and profit B to 2 income 2 to A :spending 5.Refer to Figure 2-1. What do the inner arrows represent in the figure? A to 2:goods and services bought 2 to B:Labor,land,and capital B to1:Factors of production 1 to A: goods and services sold6. Refer to Figure 2-1. What does the arrow going from oval A to rectangle 2 represent in the figure? A to 2:goods and services bough7. Refer to Figure 2-1. What does the arrow going from oval B to rectangle 2 represent in the figure? B to 2 income 8.Refer to Figure 2-1. What are two elements not included in this figure that could be included in a more complex model? 9. The three main factors of production, or categories of inputs, used by firms to produce goods andservices areFigure 2-212345678910Consider the production possibilities curve for a country that can produce cars, corn (in bushels), or a combination of the two. 10.Refer to Figure 2-2. The bowed outward shape of the production possibilities curve indicates that opportunity cost of corn in terms of cars is 11.Refer to Figure 2-2. Which point(s) on the graph is(are) efficient production possibilities? 12.Refer to Figure 2-2. Which point(s) on the graph show unemployment of resources? 13. Refer to Figure 2-2. Which point(s) on the graph is(are) unattainable given current resources andtechnology?14.Who would be more likely to study the effects of government spending on the unemployment rate, a macroeconomist or a microeconomist? 15.Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist? 16.Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist? 17.Who would be more likely to study the inflation rate in the United States, a macroeconomist or a microeconomist? 18.Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages. 19.Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target. 20.Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance. 21. Is the following a positive or normative statement? The unemployment rate in Nevada is higher thanthe unemployment rate in New York.10203040506070801234567891022. Refer to Figure 2-3. What are the coordinates of point C?23. Refer to Figure 2-3. How are price and quantity related in this graph?24. Refer to Figure 2-3.What is the slope of the line?25. Refer to Figure 2-3.Is a move from point A to point B considered a shift of the curve or amovement along the curve?。
CFA经济学垄断竞争
In this case, P < ATC.
Price and Output in Monopolistic Competition
Long Run: Zero Economic Profit In the long run, economic profit induces entry.
13A CHAPTER
Monopolistic Competition
After studying this chapter you will be able to
Define and identify monopolistic competition Explain how output and price are determined in a monopolistically competitive industry Explain why advertising costs are high in a monopolistically competitive industry
The decrease in demand decreases the quantity at which MR = MC and lowers the maximum price that the firm can charge to sell this quantity.
Price and quantity fall with firm entry until P = ATC and firms earn zero economic profit.
Dell, Hewlett-Packard, Lenovo, Acer, and Toshiba accounted for one half of the global market of $60 million PCs in 2006.
Chap公共部门经济学经济学原理曼昆中英文双语实用
Immunizations 免疫Restored historic buildings 修复历史古迹Research into new technologies新技术研究开发
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Negative Externalities
负外部性
Internalizing an externality involves altering incentives so that people take into account the external effects of their actions. 外部性的内在化——通过改变激励，使人们考虑他们自己行为的外部效应。
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Positive Externalities 正外部性
When an externality benefits the bystanders, a positive externality exists.当外部性有利于旁观者时，就存在正外部性。The social value of the good exceeds the private value. 物品的社会价值大于私人价值。
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Figure 3 Education and thntity of
Education
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Price of
Education
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图3. 教育与社会最优
教育的数量
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教育的价格
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Positive Externalities
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The Market for Aluminum and Welfare Economics
铝市场和福利经济学
外经贸英语函电 英译汉
Letter 41.We are interested in your Mickey Mouse stationery .Please send us a quotation CIF Dalian ,China . 我公司意欲购买贵方的“米老鼠”牌文具。
请报中国大连的保险费加运费价格。
2 . We shall be pleased to receive more information on this matter .我们愿得到有关此事的更多信息3 . Under separate cover , we have sent you our samples ,our catalogue and price list .另函附寄样品，目录和价格表4. We run a retail business of high quality goods for which we obtain high prices . 我们从事优质优价的高档商品的零售服务5 . We use the best quality material and the high standard of workmanship will appeal to the selective customer .我们用料讲究，上乘的工艺更能吸引高品位的顾客6 . We heard that you are able to supply larger quantities at more competitive prices so that we prefer to buy from you .听说贵公司能够大量供货，且价格较低，我公司打算在贵处购买7 . At present supply exceeds demand on building material market at our end .目前我方建材市场供过于求8. Please inform us how much coal you require annually .请告知我们你方对煤的年需求量是多少9 . We have been in the toy trade for nearly 20 years .我们从事玩具贸易已经将近20 年了10 . Enclosed please find a copy of our latest price list .随信附寄一份我方的最新价目表，请查收第五章1 . For your information , our offers usually remain open for a week请注意，我们的报价有效期通常为一周。
博迪 投资学第八版 英文笔记CHAPTER2
2 - 12
Municipal Bonds
• Issued by s t a t e and l o c a l governments • Types • General obligation bonds • Revenue bonds • I n d u s t r i a l revenue bonds • Maturities – range up t o 30 years
60
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Percentage change in index2--25
Standard &P o o r ’ s Indexes
• Broadly based index of 500 firms • Market-value-weighted index • Index funds • Exchange Traded Funds (ETFs)
2 - 28
Foreign and International Stock Market Indexes
• Nikkei (Japan) • FTSE ( F i n a n c i a l Times of London) • Dax (Germany) • MSCI (Morgan Stanley Capital
2-8
The Bond Market
• Treasury Notes and Bonds • I n f l a t i o n - Protected Treasury Bonds • Federal Agency Debt • I n t e r n a t i o n a l Bonds • Municipal Bonds • Corporate Bonds • Mortgages and Mortgage-Backed
微观经济学第八版课后习题答案第二章
Chapter 2The Basics of Supply and DemandQuestions for Review1. Suppose that unusually hot weather causes the demand curve for ice cream to shift to the right.Why will the price of ice cream rise to a new market-clearing level?Suppose the supply of ice cream is completely inelastic in the short run, so the supply curve isvertical as shown below. The initial equilibrium is at price P1. The unusually hot weather causes the demand curve for ice cream to shift from D1 to D2, creating short-run excess demand (i.e., a temporary shortage) at the current price. Consumers will bid against each other for the ice cream, puttingupward pressure on the price, and ice cream sellers will react by raising price. The price of ice cream will rise until the quantity demanded and the quantity supplied are equal, which occurs at price P2.Chapter 2 The Basics of Supply and Demand9 2. Use supply and demand curves to illustrate how each of the following events would affect theprice of butter and the quantity of butter bought and sold:a. An increase in the price of margarine.Butter and margarine are substitute goods for most people. Therefore, an increase in the price of margarine will cause people to increase their consumption of butter, thereby shifting the demand curve for butter out from D1 to D2 in Figure 2.2.a. This shift in demand causes the equilibriumprice of butter to rise from P1 to P2 and the equilibrium quantity to increase from Q1 to Q2.Figure 2.2.ab. An increase in the price of milk.Milk is the main ingredient in butter. An increase in the price of milk increases the cost ofproducing butter, which reduces the supply of butter. The supply curve for butter shifts fromS1 to S2 in Figure 2.2.b, resulting in a higher equilibrium price, P2 and a lower equilibriumquantity, Q2, for butter.Figure 2.2.b10 Pindyck/Rubinfeld, Microeconomics, Eighth EditionNote : Butter is in fact made from the fat that is skimmed from milk; thus butter and milk are joint products, and this complicates things. If you take account of this relationship, your answer might change, but it depends on why the price of milk increased. If the increase were caused by anincrease in the demand for milk, the equilibrium quantity of milk supplied would increase. Withmore milk being produced, there would be more milk fat available to make butter, and the priceof milk fat would fall. This would shift the supply curve for butter to the right, resulting in a drop in the price of butter and an increase in the quantity of butter supplied.c. A decrease in average income levels.Assuming that butter is a normal good, a decrease in average income will cause the demandcurve for butter to decrease (i.e., shift from D 1 to D 2). This will result in a decline in theequilibrium price from P 1 to P 2, and a decline in the equilibrium quantity from Q 1 to Q 2. See Figure 2.2.c.Figure 2.2.c3. If a 3% increase in the price of corn flakes causes a 6% decline in the quantity demanded, whatis the elasticity of demand?The elasticity of demand is the percentage change in the quantity demanded divided by the percentage change in the price. The elasticity of demand for corn flakes is therefore%6 2.%3D P QE P ∆-===-∆+ 4. Explain the difference between a shift in the supply curve and a movement along the supplycurve.A movement along the supply curve occurs when the price of the good changes. A shift of the supply curve is caused by a change in something other than the good’s price that results in a change in the quantity supplied at the current price. Some examples are a change in the price of an input, a change in technology that reduces the cost of production, and an increase in the number of firms supplying the product.Chapter 2 The Basics of Supply and Demand11 5. Explain why for many goods, the long-run price elasticity of supply is larger than the short-runelasticity.The price elasticity of supply is the percentage change in the quantity supplied divided by thepercentage change in price. In the short run, an increase in price induces firms to produce more by using their facilities more hours per week, paying workers to work overtime and hiring new workers.Nevertheless, there is a limit to how much firms can produce because they face capacity constraints in the short run. In the long run, however, firms can expand capacity by building new plants and hiring new permanent workers. Also, new firms can enter the market and add their output to total supply. Hence a greater change in quantity supplied is possible in the long run, and thus the price elasticity of supply is larger in the long run than in the short run.6. Why do long-run elasticities of demand differ from short-run elasticities? Consider two goods:paper towels and televisions. Which is a durable good? Would you expect the price elasticity of demand for paper towels to be larger in the short run or in the long run? Why? What about the price elasticity of demand for televisions?Long-run and short-run elasticities differ based on how rapidly consumers respond to price changes and how many substitutes are available. If the price of paper towels, a non-durable good, were to increase, consumers might react only minimally in the short run because it takes time for people to change their consumption habits. In the long run, however, consumers might learn to use otherproducts such as sponges or kitchen towels instead of paper towels. Thus, the price elasticity would be larger in the long run than in the short run. In contrast, the quantity demanded of durable goods, such as televisions, might change dramatically in the short run. For example, the initial result of a price increase for televisions would cause consumers to delay purchases because they could keep on using their current TVs longer. Eventually consumers would replace their televisions as they wore out or became obsolete. Therefore, we expect the demand for durables to be more elastic in the short run than in the long run.7. Are the following statements true or false? Explain your answers.a. The elasticity of demand is the same as the slope of the demand curve.False. Elasticity of demand is the percentage change in quantity demanded divided by thepercentage change in the price of the product. In contrast, the slope of the demand curve is thechange in quantity demanded (in units) divided by the change in price (typically in dollars).The difference is that elasticity uses percentage changes while the slope is based on changesin the number of units and number of dollars.b. The cross-price elasticity will always be positive.False. The cross-price elasticity measures the percentage change in the quantity demanded ofone good due to a 1% change in the price of another good. This elasticity will be positive forsubstitutes (an increase in the price of hot dogs is likely to cause an increase in the quantitydemanded of hamburgers) and negative for complements (an increase in the price of hot dogs is likely to cause a decrease in the quantity demanded of hot dog buns).c. The supply of apartments is more inelastic in the short run than the long run.True. In the short run it is difficult to change the supply of apartments in response to a change in price. Increasing the supply requires constructing new apartment buildings, which can take a year or more. Therefore, the elasticity of supply is more inelastic in the short run than in the long run.12Pindyck/Rubinfeld, Microeconomics,Eighth Edition8. Suppose the government regulates the prices of beef and chicken and sets them below theirmarket-clearing levels. Explain why shortages of these goods will develop and what factors will determine the sizes of the shortages. What will happen to the price of pork? Explain briefly.If the price of a commodity is set below its market-clearing level, the quantity that firms are willing to supply is less than the quantity that consumers wish to purchase. The extent of the resulting shortage depends on the elasticities of demand and supply as well as the amount by which the regulated price is set below the market-clearing price. For instance, if both supply and demand are elastic, the shortage is larger than if both are inelastic, and if the regulated price is substantially below the market-clearing price, the shortage is larger than if the regulated price is only slightly below the market-clearing price.Factors such as the willingness of consumers to eat less meat and the ability of farmers to reduce the size of their herds/flocks will determine the relevant elasticities. Customers whose demands forbeef and chicken are not met because of the shortages will want to purchase substitutes like pork.This increases the demand for pork (i.e., shifts demand to the right), which results in a higher price for pork.9. The city council of a small college town decides to regulate rents in order to reduce studentliving expenses. Suppose the average annual market-clearing rent for a two-bedroom apartment had been $700 per month and that rents were expected to increase to $900 within a year. The city council limits rents to their current $700-per-month level.a. Draw a supply and demand graph to illustrate what will happen to the rental price of anapartment after the imposition of rent controls.Initially demand is D1 and supply is S, so the equilibrium rent is $700 and Q1 apartments arerented. Without regulation, demand was expected to increase to D2, which would have raisedrent to $900 and resulted in Q2 apartment rentals. Under the city council regulation, however,the rental price stays at the old equilibrium level of $700 per month. After demand increases toD2, only Q1 apartments will be supplied while Q3 will be demanded. There will be a shortage ofQ3 Q1 apartments.a. Do you think this policy will benefit all students? Why or why not?No. It will benefit those students who get an apartment, although these students may find that the cost of searching for an apartment is higher given the shortage of apartments. Those students who do not get an apartment may face higher costs as a result of having to live outside the collegetown. Their rent may be higher and their transportation costs will be higher, so they will be worse off as a result of the policy.Chapter 2 The Basics of Supply and Demand 1310. In a discussion of tuition rates, a university official argues that the demand for admission iscompletely price inelastic. As evidence, she notes that while the university has doubled itstuition (in real terms) over the past 15 years, neither the number nor quality of studentsapplying has decreased. Would you accept this argument? Explain briefly. (Hint : The official makes an assertion about the demand for admission, but does she actually observe a demand curve? What else could be going on?)I would not accept this argument. The university official assumes that demand has remained stable (i.e., the demand curve has not shifted) over the 15-year period. This seems very unlikely. Demand for college educations has increased over the years for many reasons —real incomes have increased, population has increased, the perceived value of a college degree has increased, etc. What hasprobably happened is that tuition doubled from T 1 to T 2, but demand also increased from D 1 to D 2 over the 15 years, and the two effects have offset each other. The result is that the quantity (andquality) of applications has remained steady at A . The demand curve is not perfectly inelastic asthe official asserts.11. Suppose the demand curve for a product is given by Q = 10 - 2P + P S , where P is the price ofthe product and P S is the price of a substitute good. The price of the substitute good is $2.00. a. Suppose P = $1.00. What is the price elasticity of demand? What is the cross-price elasticityof demand?Find quantity demanded when P = $1.00 and P S = $2.00. Q = 10 - 2(1) + 2 = 10.Price elasticity of demand = 12(2)0.2.1010P Q Q P ∆=-=-=-∆ Cross-price elasticity of demand = 2(1)0.2.10s s P Q Q P ∆==∆ b. Suppose the price of the good, P , goes to $2.00. Now what is the price elasticity of demand?What is the cross-price elasticity of demand?When P = $2.00, Q = 10 - 2(2) + 2 = 8.Price elasticity of demand = 24(2)0.5.88P Q Q P ∆=-=-=-∆ Cross-price elasticity of demand = 2(1)0.25.8s s P Q Q P ∆==∆14Pindyck/Rubinfeld, Microeconomics,Eighth Edition12. Suppose that rather than the declining demand assumed in Example 2.8, a decrease in the costof copper production causes the supply curve to shift to the right by 40%. How will the price of copper change?If the supply curve shifts to the right by 40% then the new quantity supplied will be 140% of the old quantity supplied at every price. The new supply curve is therefore the old supply curve multiplied by 1.4.Q S' = 1.4 (-9 + 9P) =-12.6 + 12.6P. To find the new equilibrium price of copper, set the new supply equal to demand. Thus, –12.6 + 12.6P= 27 - 3P. Solving for price results in P= $2.54 per pound for the new equilibrium price. The price decreased by 46 cents per pound, from $3.00 to $2.54, a drop of about 15.3%.13. Suppose the demand for natural gas is perfectly inelastic. What would be the effect, if any, ofnatural gas price controls?If the demand for natural gas is perfectly inelastic, the demand curve is vertical. Consumers willdemand the same quantity regardless of price. In this case, price controls will have no effect on the quantity demanded, but they will still cause a shortage if the supply curve is upward sloping and the regulated price is set below the market-clearing price, because suppliers will produce less natural gas than consumers wish to purchase.Exercises1. Suppose the demand curve for a product is given by Q= 300 - 2P+ 4I, where I is averageincome measured in thousands of dollars. The supply curve is Q= 3P- 50.a. If I= 25, find the market-clearing price and quantity for the product.Given I= 25, the demand curve becomes Q= 300 − 2P+ 4(25), or Q= 400 − 2P. Set demandequal to supply and solve for P and then Q:400 - 2P= 3P- 50P= 90Q= 400 - 2(90) = 220.b. If I= 50, find the market-clearing price and quantity for the product.Given I= 50, the demand curve becomes Q = 300 - 2P+ 4(50), or Q = 500 - 2P. Setting demand equal to supply, solve for P and then Q:500 - 2P= 3P- 50P= 110Q= 500 - 2(110) = 280.c. Draw a graph to illustrate your answers.It is easier to draw the demand and supply curves if you first solve for the inverse demand andsupply functions, i.e., solve the functions for P. Demand in part a is P = 200 - 0.5Q and supplyis P = 16.67 + 0.333Q. These are shown on the graph as D a and S. Equilibrium price and quantity are found at the intersection of these demand and supply curves. When the income level increasesChapter 2 The Basics of Supply and Demand 15in part b, the demand curve shifts up and to the right. Inverse demand is P = 250 - 0.5Q and islabeled D b . The intersection of the new demand curve and original supply curve is the newequilibrium point.2. Consider a competitive market for which the quantities demanded and supplied (per year) atvarious prices are given as follows:Price (Dollars)Demand (Millions) Supply (Millions) 6022 14 8020 16 10018 18 120 16 20a. Calculate the price elasticity of demand when the price is $80 and when the price is $100..DD D D D Q Q Q PE P Q PP∆∆==∆∆ With each price increase of $20, the quantity demanded decreases by 2 million. Therefore,20.1.20D Q P ∆-⎛⎫==- ⎪∆⎝⎭ At P = 80, quantity demanded is 20 million and thus80(0.1)0.40.20D E ⎛⎫=-=- ⎪⎝⎭Similarly, at P = 100, quantity demanded equals 18 million and100(0.1)0.56.18D E ⎛⎫=-=- ⎪⎝⎭16 Pindyck/Rubinfeld, Microeconomics, Eighth Editionb. Calculate the price elasticity of supply when the price is $80 and when the price is $100..SS S S S Q Q Q P E P Q PP∆∆==∆∆ With each price increase of $20, quantity supplied increases by 2 million. Therefore,20.1.20S Q P ∆⎛⎫== ⎪∆⎝⎭At P = 80, quantity supplied is 16 million and80(0.1)0.5.16S E ⎛⎫== ⎪⎝⎭Similarly, at P = 100, quantity supplied equals 18 million and100(0.1)0.56.18S E ⎛⎫= ⎪⎝⎭c. What are the equilibrium price and quantity?The equilibrium price is the price at which the quantity supplied equals the quantity demanded.Using the table, the equilibrium price is P * = $100 and the equilibrium quantity is Q * = 18 million. d. Suppose the government sets a price ceiling of $80. Will there be a shortage, and if so, howlarge will it be?With a price ceiling of $80, price cannot be above $80, so the market cannot reach its equilibrium price of $100. At $80, consumers would like to buy 20 million, but producers will supply only16 million. This will result in a shortage of 4 million units.3. Refer to Example 2.5 (page 37) on the market for wheat. In 1998, the total demand for U.S.wheat was Q = 3244 - 283P and the domestic supply was Q S = 1944 + 207P . At the end of 1998, both Brazil and Indonesia opened their wheat markets to U.S. farmers. Suppose that these new markets add 200 million bushels to U.S. wheat demand. What will be the free-market price of wheat and what quantity will be produced and sold by U.S. farmers?If Brazil and Indonesia add 200 million bushels of wheat to U.S. wheat demand, the new demand curve will be Q + 200, orQ D = (3244 - 283P ) + 200 = 3444 - 283P .Equate supply and the new demand to find the new equilibrium price.1944 + 207P = 3444 - 283P , or490P = 1500, and thus P = $3.06 per bushel.To find the equilibrium quantity, substitute the price into either the supply or demand equation.Using demand,Q D = 3444 - 283(3.06) = 2578 million bushels.Chapter 2 The Basics of Supply and Demand 174. A vegetable fiber is traded in a competitive world market, and the world price is $9 per pound.Unlimited quantities are available for import into the United States at this price. The U.S.domestic supply and demand for various price levels are shown as follows:PriceU.S. Supply (Million Lbs.) U.S. Demand (Million Lbs.) 32 34 64 28 96 22 128 16 1510 10 18 12 4a. What is the equation for demand? What is the equation for supply?The equation for demand is of the form Q = a - bP . First find the slope, which is 62.3Q b P ∆-==-=-∆ You can figure this out by noticing that every time price increases by 3, quantity demanded falls by 6 million pounds. Demand is now Q = a - 2P . To find a , plug in any of the price and quantity demanded points from the table. For example: Q = 34 = a - 2(3) so that a = 40 and demand is therefore Q = 40 - 2P .The equation for supply is of the form Q = c + dP . First find the slope, which is2.3Q d P ∆==∆ You can figure this out by noticing that every time price increases by 3, quantity supplied increases by 2 million pounds. Supply is now 2.3Q c P =+ To find c , plug in any of the price and quantity supplied points from the table. For example: 22(3)3Q c ==+ so that c = 0 and supply is 2.3Q P = b. At a price of $9, what is the price elasticity of demand? What is it at a price of $12?Elasticity of demand at P = 9 is 918(2)0.82.2222P Q Q P ∆-=-==-∆ Elasticity of demand at P = 12 is1224(2) 1.5.1616P Q Q P ∆-=-==-∆ c. What is the price elasticity of supply at $9? At $12?Elasticity of supply at P = 9 is 9218 1.0.6318P Q Q P ∆⎛⎫=== ⎪∆⎝⎭ Elasticity of supply at P = 12 is12224 1.0.8324P Q Q P ∆⎛⎫=== ⎪∆⎝⎭d. In a free market, what will be the U.S. price and level of fiber imports?With no restrictions on trade, the price in the United States will be the same as the world price, so P = $9. At this price, the domestic supply is 6 million lbs., while the domestic demand is22 million lbs. Imports make up the difference and are 16 million lbs.5. Much of the demand for U.S. agricultural output has come from other countries. In 1998, thetotal demand for wheat was Q= 3244 - 283P. Of this, total domestic demand was Q D= 1700 -107P, and domestic supply was Q S= 1944 + 207P. Suppose the export demand for wheat falls by 40%.a. U.S. farmers are concerned about this drop in export demand. What happens to the free-market price of wheat in the United States? Do farmers have much reason to worry?Before the drop in export demand, the market equilibrium price is found by setting total demand equal to domestic supply:3244 - 283P= 1944 + 207P, orP= $2.65.Export demand is the difference between total demand and domestic demand: Q= 3244 - 283P minus Q D= 1700 - 107P. So export demand is originally Q e= 1544 - 176P. After the 40% drop, export demand is only 60% of the original export demand. The new export demand is therefore, Q′e= 0.6Q e = 0.6(1544 - 176P) = 926.4 - 105.6P. Graphically, export demand has pivotedinward as illustrated in the figure below.The new total demand becomesQ′= Q D+Q′e= (1700 - 107P) + (926.4 - 105.6P) = 2626.4 - 212.6P.Equating total supply and the new total demand,1944 + 207P= 2626.4 - 212.6P, orP= $1.63,which is a significant drop from the original market-clearing price of $2.65 per bushel. At thisprice, the market-clearing quantity is about Q = 2281 million bushels. Total revenue hasdecreased from about $6609 million to $3718 million, so farmers have a lot to worry about.b. Now suppose the U.S. government wants to buy enough wheat to raise the price to $3.50 perbushel. With the drop in export demand, how much wheat would the government have tobuy? How much would this cost the government?With a price of $3.50, the market is not in equilibrium. Quantity demanded and supplied areQ′= 2626.4 - 212.6(3.50) = 1882.3, andQ S= 1944 + 207(3.50) = 2668.5.Excess supply is therefore 2668.5 - 1882.3 = 786.2 million bushels. The government mustpurchase this amount to support a price of $3.50, and will have to spend $3.50(786.2 million) =$2751.7 million.6. The rent control agency of New York City has found that aggregate demand is Q D= 160 - 8P.Quantity is measured in tens of thousands of apartments. Price, the average monthly rental rate, is measured in hundreds of dollars. The agency also noted that the increase in Q at lower P results from more three-person families coming into the city from Long Island and demanding apartments. The city’s board of realtors acknowledges that this is a good demand estimate and has shown that supply is Q S= 70 + 7P.a. If both the agency and the board are right about demand and supply, what is the free-market price? What is the change in city population if the agency sets a maximum average monthly rent of $300 and all those who cannot find an apartment leave the city?Set supply equal to demand to find the free-market price for apartments:160 - 8P= 70 + 7P, or P= 6,which means the rental price is $600 since price is measured in hundreds of dollars. Substituting the equilibrium price into either the demand or supply equation to determine the equilibriumquantity:Q D= 160 - 8(6) = 112andQ S= 70 + 7(6) = 112.The quantity of apartments rented is 1,120,000 since Q is measured in tens of thousands ofapartments. If the rent control agency sets the rental rate at $300, the quantity supplied wouldbe 910,000 (Q S= 70 + 7(3) = 91), a decrease of 210,000 apartments from the free-marketequilibrium. Assuming three people per family per apartment, this would imply a loss in citypopulation of 630,000 people. Note: At the $300 rental rate, the demand for apartments is1,360,000 units, and the resulting shortage is 450,000 units (1,360,000 - 910,000). However,excess demand (the shortage) and lower quantity demanded are not the same concept. Theshortage of 450,000 units is the difference between the number of apartments demanded at thenew lower price (including the number demanded by new people who would have moved intothe city), and the number supplied at the lower price. But these new people will not actuallymove into the city because the apartments are not available. Therefore, the city population willfall by 630,000, which is due to the drop in the number of apartments available from 1,120,000(the old equilibrium value) to 910,000.b. Suppose the agency bows to the wishes of the board and sets a rental of $900 per month onall apartments to allow landlords a “fair” rate of return. If 50% of any long-run increases in apartment offerings come from new construction, how many apartments are constructed? At a rental rate of $900, the demand for apartments would be 160 - 8(9) = 88, or 880,000 units, which is 240,000 fewer apartments than the original free-market equilibrium number of1,120,000. Therefore, no new apartments would be constructed.7. In 2010, Americans smoked 315 billion cigarettes, or 15.75 billion packs of cigarettes. Theaverage retail price (including taxes) was about $5.00 per pack. Statistical studies have shown that the price elasticity of demand is -0.4, and the price elasticity of supply is 0.5.a. Using this information, derive linear demand and supply curves for the cigarette market.Let the demand curve be of the form Q = a - bP and the supply curve be of the form Q = c + dP , where a , b , c , and d are positive constants. To begin, recall the formula for the price elasticity of demand.D P P Q E Q P∆=∆ We know the demand elasticity is –0.4, P = 5, and Q = 15.75, which means we can solve for the slope, −b , which is ∆Q /∆P in the above formula.50.415.7515.750.4 1.26.5QP Q b P ∆-=∆∆⎛⎫=-=-=- ⎪∆⎝⎭To find the constant a , substitute for Q , P , and b in the demand function to get 15.75 = a - 1.26(5), so a = 22.05. The equation for demand is therefore Q = 22.05 - 1.26P . To find the supply curve, recall the formula for the elasticity of supply and follow the same method as above:50.515.7515.750.5 1.575.5S P P QE Q PQ PQ d P ∆=∆∆=∆∆⎛⎫=== ⎪∆⎝⎭ To find the constant c , substitute for Q , P , and d in the supply function to get 15.75 = c + 1.575(5) and c = 7.875. The equation for supply is therefore Q = 7.875 + 1.575P .b. In 1998, Americans smoked 23.5 billion packs cigarettes, and the retail price was about$2.00 per pack. The decline in cigarette consumption from 1998 to 2010 was due in part to greater public awareness of the health hazards from smoking, but was also due in part tothe increase in price. Suppose that the entire decline was due to the increase in price. What could you deduce from that about the price elasticity of demand?Calculate the arc elasticity of demand since we have a range of prices rather than a single price. The arc elasticity formula isP Q P E P Q∆=∆where P and Q are average price and quantity, respectively. The change in quantity was15.75 -23.5 = -7.75, and the change in price was 5 - 2 = 3. The average price was (2 + 5)/2 =3.50, and the average quantity was (23.5 + 15.75)/2 = 19.625. Therefore, the price elasticity ofdemand, assuming that the entire decline in quantity was due solely to the price increase, was∆-===-∆7.75 3.500.46.319.625P Q P E P Q 8. In Example 2.8 we examined the effect of a 20% decline in copper demand on the price ofcopper, using the linear supply and demand curves developed in Section 2.6. Suppose the long-run price elasticity of copper demand were -0.75 instead of -0.5.a. Assuming, as before, that the equilibrium price and quantity are P * = $3 per pound andQ * = 18 million metric tons per year, derive the linear demand curve consistent with thesmaller elasticity.Following the method outlined in Section 2.6, solve for a and b in the demand equationQ D = a - bP . Because -b is the slope, we can use -b rather than ∆Q /∆P in the elasticity formula. Therefore, *.*D P E b Q ⎛⎫=- ⎪⎝⎭Here E D = -0.75 (the long-run price elasticity), P * = 3 and Q * = 18. Solving for b ,30.75,18b ⎛⎫-=- ⎪⎝⎭or b = 0.75(6) = 4.5. To find the intercept, we substitute for b , Q D (= Q *), and P (= P *) in the demand equation:18 = a - 4.5(3), or a = 31.5.The linear demand equation is thereforeQ D = 31.5 - 4.5P .b. Using this demand curve, recalculate the effect of a 20% decline in copper demand on theprice of copper.The new demand is 20% below the original (using our convention that quantity demanded isreduced by 20% at every price); therefore, multiply demand by 0.8 because the new demand is80% of the original demand:(0.8)(31.5 4.5)25.2 3.6.DQ P P '=-=- Equating this to supply,25.2 - 3.6P = -9 + 9P , so P = $2.71.With the 20% decline in demand, the price of copper falls from $3.00 to $2.71 per pound. Thedecrease in demand therefore leads to a drop in price of 29 cents per pound, a 9.7% decline.。
商务英语阅读(第三版)Chapter 2products and pricing
Armed with long-term metrics, firms and analysts can assume a longer-term perspective on the brand, leading to improved profitability.
Short-term decreases reflect the time it takes for consumers to acclimate to the price changes and respond to the advertising. Without long-term brand-health measures, the analyst may have come to a misleading conclusion about the value of the brand.
real-time (para. 6) adj. technical a real-time computer system deals with information as fast as it receives it 〔某个过程或事件发生的〕实际 时间，实时
Do you agree that a short-term orientation may erode a brand’s ability to compete in the marketplace? Why (or why not)?
弹性及其应用经济学原理曼昆中英文双语
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
价格需求弹性旳决定原因
需求倾向于富有弹性：
n 假如物品是奢侈品 n 时期更长 n 相近替代品旳数量更多 n 市场定义旳范围更窄
The Variety of Demand Curves
u Perfectly Inelastic
Quantity demanded does not respond to price changes.
u Perfectly Elastic
Quantity demanded changes infinitely with any change in price.
(10 8)
(10 8) / 2 (2.20 2.00)
22 percent 2.32 9.5 percent
(2.00 2.20) / 2
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
中点法:一种计算百分比变化和弹性旳更加好措施
The Midpoint Method: A Better Way to Calculate Percentage Changes and Elasticities
The midpoint formula is preferable when calculating the price elasticity of demand because it gives the same answer regardless of the direction of the change.
英语价钱知识点总结
英语价钱知识点总结The concept of pricePrice is the amount of money that a buyer pays to acquire a product or service from a seller. It is a crucial factor in the exchange of goods and services in a market-based economy. Prices can be set by sellers based on their production costs, market demand, and competition, and they can also be influenced by government regulations and monetary policies.Types of pricesThere are different types of prices based on how they are determined and their impact on the economy. Some of the key types of prices include:1. Market price: The market price is the price at which a product or service is traded in a free market, where supply and demand determine the price. It represents the equilibrium point where the quantity of goods supplied by sellers matches the quantity demanded by buyers. Market prices can fluctuate based on changes in supply and demand, and they play a crucial role in allocating resources efficiently in the economy.2. Cost-based price: Cost-based pricing involves setting the price of a product or service based on its production costs, including raw materials, labor, and overhead expenses. This approach ensures that the seller earns a profit margin to cover expenses and generate a return on investment. However, cost-based pricing may not reflect the actual value of the product to consumers and can lead to pricing inefficiencies.3. Dynamic pricing: Dynamic pricing involves setting the price of a product or service based on real-time changes in market conditions, such as demand, competition, and consumer behavior. This pricing strategy is commonly used in industries such as travel, hospitality, and e-commerce, where prices can fluctuate based on factors such as seasonality, time of day, and customer preferences.4. Fixed price: Fixed pricing involves setting a constant price for a product or service over a certain period, regardless of changes in market conditions. This approach provides price stability for both sellers and consumers, but it may not reflect changes in supply and demand dynamics.Factors influencing priceSeveral factors can influence the price of a product or service, including:1. Supply and demand: The fundamental economic theory of supply and demand plays a crucial role in determining market prices. When the demand for a product or service exceeds its supply, prices tend to rise, and vice versa. Understanding supply and demand dynamics is essential for businesses to set competitive prices and optimize their production and sales strategies.2. Production costs: The costs of producing a product or service, including raw materials, labor, and overhead expenses, can significantly impact its price. Businesses need to carefully manage their production costs to ensure profitability while remaining competitive in the market.3. Competition: The level of competition in a market can influence prices, as firms may adjust their pricing strategies to gain market share or differentiate their products from competitors. In competitive markets, prices tend to be lower, benefiting consumers, while in monopolistic markets, prices may be higher due to limited competition.4. Government regulations: Government policies and regulations, such as taxes, tariffs, and price controls, can have a direct impact on prices. For example, excise taxes on cigarettes and alcohol can increase their prices, while price controls on essential goods and services can limit price increases to protect consumers.Price elasticity of demandPrice elasticity of demand measures the responsiveness of consumer demand to changes in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. Products or services with elastic demand are highly responsive to price changes, while those with inelastic demand are less sensitive to price fluctuations.Understanding price elasticity of demand is crucial for businesses to set optimal prices and forecast changes in consumer demand. For example, products with elastic demand may require lower prices to increase sales, while those with inelastic demand can support higher prices without significant decreases in demand.Role of price in the economyPrices play a crucial role in a market-based economy by facilitating the efficient allocation of resources, signaling information to consumers and producers, and influencing consumer behavior. Some of the key roles of price in the economy include:1. Resource allocation: Prices help allocate scarce resources to their most productive uses by signaling the relative value of goods and services. When prices rise, producers are incentivized to increase production, and consumers may reduce their demand, leading to a more efficient allocation of resources.2. Information signaling: Prices convey information about the value, quality, and availability of products and services to consumers and producers. For example, higher prices may signal scarcity, while lower prices may indicate abundance. This information helps consumers make purchasing decisions and guides producers in resource allocation and production planning.3. Incentivizing innovation and investment: Prices provide incentives for innovation and investment by rewarding businesses with higher profits for creating new products,improving efficiency, or meeting consumer needs. Higher prices for innovative products can encourage competition and drive technological advancements in various industries.4. Consumer behavior: Prices influence consumer behavior by affecting purchasing decisions, saving and investment choices, and overall spending patterns. Consumers tend to buy more of a product or service when the price is lower and less when the price is higher, leading to changes in consumption patterns and overall market demand.ConclusionPrice is a fundamental concept in economics and finance, influencing consumer behavior, business decisions, and overall market dynamics. Understanding the various types of prices, factors influencing price, price elasticity of demand, and the role of price in the economy is essential for businesses, consumers, and policymakers to make informed decisions and navigate market conditions effectively. By analyzing price trends and market dynamics, businesses can optimize their pricing strategies, identify new opportunities, and drive sustainable growth in the global economy.。
曼昆微观经济学教材第六章练习英文答案
104WHAT’S NEW IN THE SIXTH EDITION:There is a new In the News feature on “Should Unpaid Internships Be Allowed?”LEARNING OBJECTIVES ：By the end of this chapter ， students should understand ：➢ the effects of government policies that place a ceiling on prices.➢ the effects of government policies that put a floor under prices.➢ how a tax on a good affects the price of the good and the quantity sold 。
➢ that taxes levied on sellers and taxes levied on buyers are equivalent.➢ how the burden of a tax is split between buyers and sellers.CONTEXT AND PURPOSE:Chapter 6 is the third chapter in a three —chapter sequence that deals with supply and demand and how markets work 。
Chapter 4 developed the model of supply and demand 。
Chapter 5 added precision to the model of supply and demand by developing the concept of elasticity —the sensitivity of the quantity supplied and quantity demanded to changes in economic conditions. Chapter 6 addresses the impact of government policies on competitive markets using the tools of supply and demand that you learned in Chapters 4 and 5。
金融衍生品定价理论(同济-英文版)第二章(arbitrage-free principal)上课教案精品文档65页
asset (stocks, …), interest rate, foreign exchange, credit, commodity, …………
Two attitudes toward risks
Risk aversion Risk seeking
futures are generally traded on an exchange a future contract contains standardized articles the delivery price on a future contract is generally
=
Underlying asset put or call
Derivative call or put
Forward Contracts
an agreement to buy or sell at a specified future time a certain amount of an underlying asset at a specified price.
willing to risk with one's money by frequently buying and selling derivatives (futures, options) for the prospect of gaining from the frequent price changes. Arbitrage - based on observations of the same kind of risky assets, taking advantage of the price differences between markets, the arbitrageur trades simultaneously at different markets to gain riskless instant profits
Chapter 2 answers
CHAPTER 2PRICING OF BONDSANSWERS TO QUESTIONS FOR CHAPTER 2(Questions are in bold print followed by answers.)1. A pension fund manager invests $10 million in a debt obligation that promises to pay7.3% per year for four years. What is the future value of the $10 million?To determine the future value of any sum of money invested today, we can use the future value equation, which is: P n= P0 (1 + r)n where n = number of periods, P n= future value n periods from now (in dollars), P0= original principal (in dollars) and r = interest rate per period (in decimal form). Inserting in our values, we have: P4 = $10,000,000(1.073)4 = $10,000,000(1.325558466) = $13,255,584.66.2. Suppose that a life insurance company has guaranteed a payment of $14 million to a pension fund 4.5 years from now. If the life insurance company receives a premium of $10.4 million from the pension fund and can invest the entire premium for 4.5 years at an annual interest rate of 6.25%, will it have sufficient funds from this investment to meet the $14 million obligation?To determine the future value of any sum of money invested today, we can use the future value equation, which is: P n= P0 (1 + r)n where n = number of periods, P n= future value n periods from now (in dollars), P0= original principal (in dollars)and r = interest rate per period (in decimal form). Inserting in our values, we have: P4.5 = $10,400,000(1.0625)4.5 = $10,400,000(1.313651676) = $13,661,977.43. Thus, it will be short $13,661,977.43 – $14,000,000 = –$338,022.57.3. Answer the following questions.(a) The portfolio manager of a tax-exempt fund is considering investing $500,000 in a debt instrument that pays an annual interest rate of 5.7% for four years. At the end of four years, the portfolio manager plans to reinvest the proceeds for three more years and expects that for the three-year period, an annual interest rate of 7.2% can be earned. What is the future value of this investment?At the end of year four, the portfolio manager’s amount is given by: P n= P0 (1 + r)n. Inserting in our values, we have P4= $500,000(1.057)4 = $500,000(1.248245382) = $624,122.66. In three more years at the end of year seven, the manager amount is given by: P7= P4(1 + r)3. Inserting in our values, we have: P7= $624,122.66(1.072)3 = $624,122.66(1.231925248) = $768,872.47. (b) Suppose that the portfolio manager in Question 3, part a, has the opportunity to invest the $500,000 for seven years in a debt obligation that promises to pay an annual interest rate of 6.1% compounded semiannually. Is this investment alternative more attractive than theone in Question 3, part a?At the end of year seven, the portfolio manager’s amount is given by the following equation, which adjusts for semiannual compounding. We have: P n = P 0(1 + r/2)2(n). Inserting in our values, we have P 7 = $500,000(1 + 0.061/2)2(7) = $500,000(1.0305)14 = $500,000(1.522901960) =$761,450.98. Thus, this investment alternative is not more attractive. It is less by the amount of $761,450.98 – $768,872.47 = –$7,421.49.4. Suppose that a portfolio manager purchases $10 million of par value of an eight-year bond that has a coupon rate of 7% and pays interest once per year. The first annual coupon payment will be made one year from now. How much will the portfolio manager have if she(1) holds the bond until it matures eight years from now, and (2) can reinvest all the annual interest payments at an annual interest rate of 6.2%?At the end of year eight, the portfolio manager’s amount is given by the following equation, which adjusts for annual compounding.We have:()11+ Par Value n n + r P A r ⎡⎤-=⎢⎥⎢⎥⎣⎦where A = coupon rate times par value. Inserting in our values, we have:88(1 + 0.062 1) = 0.07($10,000,000) 0.062P ⎡⎤-⎢⎥⎣⎦+ $10,000,000 = $700,000[9.9688005] + $10,000,000 = $6,978,160.38 + $10,000,000 = $16,978,160.38.5. Answer the following questions.(a) If the discount rate that is used to calculate the present value of a debt obligation’s cash flow is increased, what happens to the price of that debt obligation?A fundamental property of a bond is that its price changes in the opposite direction from thechange in the required yield. The reason is that the price of the bond is the present value of the cash flows. As the required yield increases, the present value of the cash flow decreases; hence the price decreases. The opposite is true when the required yield decreases: The present value of the cash flows increases, and therefore the price of the bond increases.(b) Suppose that the discount rate used to calculate the present value of a debt obligation’s cash flow is x %. Suppose also that the only cash flows for this debt obligation are $200,000 four years from now and $200,000 five years from now. For which of these cash flows will the present value be greater?Cash flows that come earlier will have a greater value. As long as x% is positive and the amount is the same, the present value will be greater for the $200,000 four years from now compared to fiveyears from now. This can also be seen by noting that if x > 0 then ()()4511 1x 1x ⎡⎤⎡⎤>⎢⎥⎢⎥++⎣⎦⎣⎦. The latter inequality implies ()()4511$2,000 $2,0001x 1x ⎡⎤⎡⎤>⎢⎥⎢⎥++⎣⎦⎣⎦will hold.6. The pension fund obligation of a corporation is calculated as the present value of the actuarially projected benefits that will have to be paid to beneficiaries. Why is the interest rate used to discount the projected benefits important?The present value increases as the discount rate decreases and decreases as the discount rate increases. Thus, in order to project the benefits accurately, we need an accurate estimate of the discount rate. If we underestimate the discount rate then we will be projecting more available pension funds than we will actually have.7. A pension fund manager knows that the following liabilities must be satisfied:Years from Now Liability (in millions)1 2.02 3.03 5.44 5.8Suppose that the pension fund manager wants to invest a sum of money that will satisfy this liability stream. Assuming that any amount that can be invested today can earn an annual interest rate of 7.6%, how much must be invested today to satisfy this liability stream?To satisfy year one’s liability (n = 1), the pension fund manager must invest an amount today that is equal to the future value of $2.0 million at 7.6%. We have:To satisfy year two’s liability (n = 2), the pension fund manager must invest an amount today thatis equal to the future value of $3.0 million at 7.6%. We have: To satisfy year three’s liability (n = 3), the pension fund manager must invest an amount today that is equal to the future value of $5.4 million at 7.6%. We have:To s atisfy year four’s liability (n = 4), the pension fund manager must invest an amount today thatis equal to the future value of $5.8 million at 7.6%. We have: If we add the four present values, we get $1,858,736.06 + $2,591,174.80 + $4,334,679.04 + $4,326,920.42 = $13,111,510.32, which is the amount the pension fund manager needs to invest today to cover the liability stream for the next four years.8. Calculate for each of the following bonds the price per $1,000 of par value assuming semiannual coupon payments.Bond Coupon Rate (%) Years to Maturity Required Yield (%)A 8 9 7B 9 20 9C 6 15 10D 0 14 8A. Consider a 9-year 8% coupon bond with a par value of $1,000 and a required yield of 7%. GivenC = 0.08($1,000) / 2 = $40, n = 2(9) = 18 and r = 0.07 / 2 = 0.035, the present value of the coupon payments is:()111 r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ = ()1811 1.035$40 0.035⎡⎤-⎢⎥⎢⎥⎣⎦= 1.857489211 $400.0035⎡⎤-⎢⎥⎢⎥⎣⎦ = []0.53836111 $40 0.4035⎡⎤-⎢⎥⎣⎦= []13.1896$40 817 = $$527,587.The present value of the par or maturity value of $1,000 is: ()1n M + r = ()80$1,0001.035= $1,00015.6757375= $538,361. Thus, the price of the bond (P) = present value of coupon payments + present value of par value = $527,587 + $538,361 = $1,065.95.B. Consider a 20-year 9% coupon bond with a par value of $1,000 and a required yield of 9%. Given C = 0.09($1,000) / 2 = $45, n = 2(20) = 40 and r = 0.09 / 2 = 0.045, the present value of the coupon payments is:()111 r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ = ()4011 1.045$45 0.045⎡⎤-⎢⎥⎢⎥⎣⎦ = 11 5.81863645$45 0.045⎡⎤-⎢⎥⎢⎥⎣⎦ = 1 0.1719287 $45 0.045-⎡⎤⎢⎥⎣⎦=$45[18.401584] = $828.071.The present value of the par or maturity value of $1,000 is: ()1n M + r = ()40$1,0001.045 = $1,0005.81863645= $171.929. Thus, the price of the bond (P) = $828.071+ $171.929= $1,000.00. [NOTE. We already knew the answer would be $1,000 because the coupon rate equals the yield to maturity.]C. Consider a 15-year 6% coupon bond with a par value of $1,000 and a required yield of 10%. Given C = 0.06($1,000) / 2 = $30, n = 2(15) = 30 and r = 0.10 / 2 = 0.05, the present value of the coupon payments is:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ = ()3011 1.05$30 0.05⎡⎤-⎢⎥⎢⎥⎣⎦ = 11 4.3219424$300.05⎡⎤-⎢⎥⎢⎥⎣⎦ = 10.2313774 $30 0.05-⎡⎤⎢⎥⎣⎦=$30[15.372451] = $461.174.The present value of the par or maturity value of $1,000 is: ()1n M + r = ()30$1,0001.05 =3219424.4000,1$ =231.377. Thus, the price of the bond (P) = $461.174+ $231.377= $692.55.D. Consider a 14-year 0% coupon bond with a par value of $1,000 and a required yield of 8%. Given C = 0($1,000) / 2 = $0, n = 2(14) = 28 and r = 0.08 / 2 = 0.04, the present value of the coupon payments is:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦=2811 (1.04)$0 0.04⎡⎤-⎢⎥⎢⎥⎣⎦=11 2.998703319$0 0.055⎡⎤-⎢⎥⎢⎥⎣⎦= 055.0 0.33477471 1 0$⎥⎦⎤⎢⎣⎡-=$0[16.66306322] = $0. [NOTE. We already knew the answer because the coupon rate is zero.]The present value of the par or maturity value of $1,000 is: ()1n M + r = ()28$1,0001.04 = $1,0002.99870332 =$333.48. Thus, the price of the bond (P) = $0 + $333.48 = $333.48.9. Consider a bond selling at par ($100) with a coupon rate of 6% and 10 years to maturity.(a) What is the price of this bond if the required yield is 15%?We have a 10-year 6% coupon bond with a par value of $1,000 and a required yield of 15%. GivenC = 0.06($1,000) / 2 = $30, n = 2(10) = 20 and r = 0.15 / 2 = 0.075, the present value of the coupon payments is:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ = 2011 (1.075)$30 0.075⎡⎤-⎢⎥⎢⎥⎣⎦ = 11 4.2478511$30 0.075⎡⎤-⎢⎥⎢⎥⎣⎦ = 1 0.2354131$30 0.075-⎡⎤⎢⎥⎣⎦=$30[10.1944913] = $305.835.The present value of the par or maturity value of $1,000 is: ()1n M + r = ()20$1,0001.075 = $1,0004.2478511 =235.413. Thus, the price of the bond (P) = $305.835 + $235.413 = $541.25.(b) What is the price of this bond if the required yield increases from 15% to 16%, and by what percentage did the price of this bond change?If the required yield increases from 15% to 16%, then we have:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦=2011 (1.08)$30 0.08⎡⎤-⎢⎥⎢⎥⎣⎦= [] 9.8181474 30$= $294.544.The present value of the par or maturity value of $1,000 is: ()1n M + r = ()20$1,0001.08= $214.548.Thus, the price of the bond (P) = $294.544 + $214.548= $509.09.The bond price falls with percentage fall is equivalent to $509.09$541.25$541.25- = -0.059409 orabout –5.94%.(c) What is the price of this bond if the required yield is 5%?If the required yield is 5%, then we have:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ = 2011 (1.025)$30 0.025⎡⎤-⎢⎥⎢⎥⎣⎦= [] 15.5891623 30$= $467.675.The present value of the par or maturity value of $1,000 is: ()1n M+ r = ()20$1,0001.025= $610.271.Thus, the price of the bond (P) = $467.675 + $610.271 = $1,077.95.(d) What is the price of this bond if the required yield increases from 5% to 6%, and by what percentage did the price of this bond change?If the required yield increases from 5% to 6%, then we have:()111n r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦ =2011 (1.03)$30 0.03⎡⎤-⎢⎥⎢⎥⎣⎦= [] 614.8774748 30$= $446.324.The present value of the par or maturity value of $1,000 is: ()1n M + r =)03.1(000,1$20 = $553.676.The price of the bond (P) = $446.324 + $553.676 = $1,000.00. [NOTE. We already knew the answer would be $1,000 because the coupon rate equals the yield to maturity.]The bond price falls with the percentage fall equal to ($1,000.00 – $1,077.95) / $1,077.95 = -0.072310 or about –7.23%.(e) From your answers to Question 9, parts b and d, what can you say about the relative price volatility of a bond in a high-interest-rate environment compared to a low-interest-rate environment?We can say that there is more volatility in a low-interest-rate environment because there was a greater fall (–7.23% versus –5.94%).10. Suppose that you purchased a debt obligation three years ago at its par value of $100,000 and nine years remaining to maturity. The market price of this debt obligation today is $90,000. What are some reasons why the price of this debt obligation could have declined from the time you purchased it three years ago?The price of a bond will change for one or more of the following three reasons:(i) There is a change in the required yield owing to changes in the credit quality of the issuer.(ii) There is a change in the price of the bond selling at a premium or a discount, without anychange in the required yield, simply because the bond is moving toward maturity.(iii) There is a change in the required yield owing to a change in the yield on comparable bonds (i.e., a change in the yield required by the market).The first and third reasons are the likely reasons for the situation where the bond has plummeted from $100,000 to $90,000. The bond has plummeted in value because the credit quality of the issuer has fallen and/or the bond has plummeted because the yield on comparable bonds has increased.11. Suppose that you are reviewing a price sheet for bonds and see the following prices (per $100 par value) reported. You observe what seem to be several errors. Without calculating the price of each bond, indicate which bonds seem to be reported incorrectly, and explain why.Bond Price Coupon Rate (%) Required Yield (%)U 90 6 9V 96 9 8W 110 8 6X 105 0 5Y 107 7 9Z 100 6 6If the required yield is the same as the coupon rate then the price of the bond should sell at its par value. This appears to be the case of bond Z. If the required yield decreases below the coupon rate then the price of a bond should increase. This is the case for bond W. This is not the case for bond V so this bond is not reported correctly. If the required yield increases above the coupon rate then the price of a bond should decrease. This is the case for bond U. This is not the case for bonds X and Y so these bonds are not reported correctly. Thus, bonds V, X, and Y are incorrectly reported because the change in the bond price is not consistent with the difference between the coupon rate and the required yield.12. What is the maximum price of a bond?Consider an extreme case of a 100-year 20% coupon bond with a par value of $1,000 that after one year falls so that the required yield is 1%. Given C = 0.2 ($1,000) / 2 = $100, n = 2(99) = 198 and r = 0.01 / 2 = 0.005, the present value of the coupon payments is:()111 r P = C r ⎡⎤-⎢⎥+⎢⎥⎣⎦= 11 (1.005)$100 0.005⎡⎤-⎢⎥⎢⎥⎣⎦= 11 2.684604$100 0.005⎡⎤-⎢⎥⎢⎥⎣⎦=1 0.3724944 $100 0.005-⎡⎤⎢⎥⎣⎦= $100[125.50112] = $12,550.112.The present value of the par value of $1,000 is: ()1n M + r =()198$1,0001.005= $1,0002.684604 = $372.494.Thus, the price of the bond (P) = $12,550.112 + $372.494 = $12,922.61.This is a percent increase of ($12,922.6 – $1,000) / $1,000 = 11.92606 or about 1,192.61%.If the required yield falls to 0.001%, then the bond price would increase to $20,778.33, which would be a percent increase of about 1,977.83%.If the required yield falls to 0.00001%, then the bond price would increase to $20,778.33, which would be a percent increase of about 1,977.83%.If the required yield falls to 0.0000000001%, then the bond price would increase to $20,801.76, which would be a percent increase of about 1,980.18%.Thus, we see that even for these extreme numbers (that are highly unlikely), we find there appears to be a limit on how high a bond price might rise assuming that rates do not reach negative numbers.If the required yield is a negative number then there would be no limit to how high a bond price might rise. For example, if the required yield becomes a negative 1%, then the bond price would increase to $70,468.18. If it becomes a negative 10%, then the bond price becomes$2,296,218.049,925.23.13. What is the “dirty” price of a bond?The “dirty” (or “full”) price is the amount that the buyer agrees to pay the seller, which is the agreed-upon price plus accrued interest. The price of a bond without accrued interest is called the clean price. The exceptions are bonds that are in default. Such bonds are said to be quoted flat, that is, without accrued interest.14. Explain why you agree or disagree with the following statement: “The price of a floater will always trade at its par value.”One would disagree with the statement: “The price of a floater will always trade at its par value.”First, the coupon rate of a floating-rate security (or floater ) is equal to a reference rate plus some spread or margin. For example, the coupon rate of a floater can reset at the rate on a three-month Treasury bill (the reference rate) plus 50 basis points (the spread).Next, the price of a floater depends on two factors: (1) the spread over the reference rate and (2) any restrictions that may be imposed on the resetting of the coupon rate. For example, a floater may have a maximum coupon rate called a cap or a minimum coupon rate called a floor . The price of a floater will trade close to its par value as long as (1) the spread above the reference rate that the market requires is unchanged and (2) neither the cap nor the floor is reached.However, if the market requires a larger (smaller) spread, the price of a floater will trade below (above) par. If the coupon rate is restricted from changing to the reference rate plus the spread because of the cap, then the price of a floater will trade below par.15. Explain why you agree or disagree with the following statement: “The price of an inverse floater will increase when the reference rate decreases.”One would disagree with the statement: “The price of an inverse floater will increase when the reference rate decreases.”In general, an inverse floater is created from a fixed-rate security. The security from which the inverse floater is created is called the collateral. From the collateral two bonds are created: a floater and an inverse floater. The two bonds are created such that (1) the total coupon interest paid to the two bonds in each period is less than or equal to the collateral’s coupon intere st in each period, and (2) the total par value of the two bonds is less than or equal to the collateral’s total par value. The total par value of the floater and inverse floater equals the par value of the collateral. Regardless of the level of the reference rate, the combined coupon rate for the two bonds is equal to the coupon rate of the collateral. However, if the reference rate exceeds a certain percentage, then the formula for the coupon rate for the inverse floater will be negative. To prevent this from happening, a floor is placed on the coupon rate for the inverse floater. Typically, the floor is set at zero. Because of the floor, the coupon rate on the floater must be restricted so that the coupon interest paid to the two bonds does not exceed the collateral’s coupon interest. Thus, when a floater and an inverse floater are created from the collateral, a floor is imposed on the inverse and a cap is imposed on the floater.The price of an inverse floater is found by determining the price of the collateral and the price of the floater. This can be seen as follows: collateral’s price = floater’s price + inverse’s price. Therefore, inverse’s price = collateral’s price –floater’s price.The factors that affect the price of an inverse floater are affected by the reference rate only to the extent that it affects the restrictions on the floater’s rate. This is quite an important result. Some investors mistakenly believe that because the coupon rate rises, the price of an inverse floater should increase if the reference rate decreases. This is not true. The key in pricing an inverse floater is how changes in interest rates affect the price of the collateral. The reference rate is important only to the extent that it restricts the coupon rate of the floater.。
Unit 2 Markets and Welfare - 学生阅读
Unit Two Markets and Welfare READING ONEThe Market Forces of Demand and SupplyA market is a group of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Sometimes markets are highly organized, while sometimes less.PriceSuppose an economy runs on the lines of the purely competitive market of free enterprise，then what is produced and the prices at which the products are sold depend upon the decisions and choices made by buyers and producers．Sometimes during a good season for citrus fruits so many oranges are produced that there is a glut，and the farmers find that the low prices they receive do not cover their costs of transporting the fruit to market；sometimes the fruit-growers allow people to pick all they want，free，or avoid the fruit rotting．What and how much should be produced depend on the price mechanism which makes known to firms．The price mechanism is the process by which prices rise and fall as a result of changes in demand and supply, and thereby acts as a signal to producers to guide them on their production plans．This process is most easily seen in the way in which prices for fruit and vegetables fluctuate according to changes in supply due to seasonal climatic variations and the difficulty of storing a surplus．There were no restrictions at a11 if our economy were entirely competitive, then the market forces，or price mechanism，would operate freely. Producers would put the products to the market which consumers were willing to pay enough for it. Thedemand for a product and the price at which it can be sold indicate to the producer the best way to allocate resources in order to make a profit．As for the demand for a commodity, economists mean the quantity which buyers are willing to purchase at a given price over a given period of time. Demand in an economic sense only exists if the consumers have the money to buy the goods and are willing to pay for them．So, we call it effective demand，which means a desire to obtain an article accompanied by the ability and willingness to pay for it at the price asked．In economics，when we speak of demand，we are usually referring to effective demand．Generally speaking, consumers want to buy goods and services as cheaply as they can，while sellers want to sell at the highest prices they can obtain，but not so high as to lose sales．The fact that buyers are likely to buy more of an item as the price falls is called the law of demand．On the other hand，as prices rise，sellers would like to sell more and will, if it is possible, offer a larger quantity for sale．This is defined as the law of supply．Somehow these two conflicting desires of buyers and sellers must be brought into some kind of agreement，or there will be a surplus of highly priced goods which buyers are not willing to buy, or a shortage of goods because sellers will not produce them for sale at a low price．From the perspective of the demand side ---- the buyers，the higher the price of a commodity, the greater the value of alternatives which must be given up to buy it．That is to say，the opportunity cost appears．Therefore buyers should take the prices of the items they want and at the prices of other goods into consideration，and most important of all，at their incomes and money available for spending．Changes in price surely affect consumer demand all the way．DemandIf a vendor is selling apples，and he finds that at 10 cents a kilogram，70 kilograms can be sold．On increasing the price per kilogram to 20 cents，60 kilograms are sold；at 30 cents，50 kilograms are sold；and so on，until at the top price of 80 centsno apples at all are sold．This can be expressed as a demand schedule，shown in Table 2.1．. The figures in this demand schedule can then be plotted on a graph (Figure 2．1) and the result is called a demand curve．The demand curve in Figure 2．1 shows the total demand by consumers for apples at this particular shop．Table2.1 Demand Schedule for ApplesAs far as economists or businessmen are concerned, total market demand means all the individual buyers’ demands for a product，at various prices, added together．In economics we are really more interested in the market demand than in the sales made by an individual vendor，because total demand affects the economy as a whole and gives signals to producers on what and how to produce and in what quantities．According to Figure 2．1, you can see that the price is shown on the vertical axis，while quantity is shown on the horizontal one．This is a conventional demandand supply graph．Figure 2．1 demonstrates that as prices fall, a larger quantity of a good is demanded．The typical demand curve slopes down from left to right．This indicates that consumers buy more of a good at lower prices and less at higher prices，but at very low prices demand does not necessarily increase．In Figure 2．1．, this sometimes can be called an expansion or contraction，or a movement along the curve.SupplyWhenever mentioning the term of market mechanism，we have to consider the decisions made by the supplier or seller．A seller wants to sell as many goods as possible，and at the highest prices possible, which is quite a contrary desire to that of the buyer．The seller must bear in mind that ---- if they want to survive in business, covering costs and making a profit are the necessity．Surely，it is necessary to supply goods which consumers will want to buy, and provide the price which they can afford．At the same time, the prices being charged by competitors for similar goods must also be taken into account．The result of the seller’s deliberations will also result in a curve，a supply curve (Table 2．2)．We can use the same example as for the demand curve：the shopkeeper selling apples．The supply schedule would be like this.Table 2.2 Supply Schedule for ApplesSupply not only depends on demand, but also on the price the seller receives．A compromise between how much and at what price the seller decides to sell and the consumers’ plans to buy must be arrived at．This is called the equilibrium price and is the price at which the buyer is prepared to buy the quantity which the seller is prepared to sell at that price，so that the market is cleared and there is nosurplus and no shortage．In the example of the apples，by comparing the demand and supply schedules the equilibrium price can be seen to be 30 cents per kilogram because at that price both buyers and sellers are satisfied with the price．If you plot the demand and supply curves on the same graph you will find that they intersect at the equilibrium price．Changes in DemandWhat can cause changes in demand for an item? First of all, it is the change of price. but there are also other influences which can change demand for goods and services．The major causes are：prices of related goods, changes in consumer tastes, prices of all other goods and services, the income of the consumer, and future expectations, etc.Figure 2．1 just shows demand changing simply on price，none of the other factors which affect the consumers purchasing have changed；such as their incomes or tastes, etc．A change in the price of a good results in a movement along an existing demand curve．If the other conditions which affect demand should change，and not the price，then our graph will look different because we have what is called a shift in the curve；and it will look like Figure2．3．In Figure 2．3 the price has remained unchanged but there has been a change in demand caused by factors other than price．Although the price of the commodity hasremained unchanged，there has been an increase in demand for it at that price．This increased demand could have been caused by a change in any of the other factors which influence demand，such as the size of income，prices of alternative goods，changes in taste，and so on．Similarly the demand curve could shift to the left if there is a change in any of these conditions other than price，influencing people to buy less of a commodity even if the price remains unchanged．Changes in SupplySupply can be also affected by：the price received for the item , the cost of producing the item, t axes imposed which raise the item’s market price to consum ers, subsidies awarded to producers which reduce the costs of production, prices of other goods, future expectations, changes in supply due to the nature of the good, etc.Supply, the same as with demand，any change of price results in a movement up or down the existing supply curve if no other changes occur to affect supply．Just as any change in underlying conditions，apart from prices，causes a shift in the demand curve，so any change in the conditions other than market prices causes a shift in the supply curve．The supply curve can move leftwards if, for example，costs of production rose，with consumers being unwilling to pay more for the item and suppliers unwilling to supply as much at the same price．A drop in production costs could lead to more goods being put on the market without a price change．so，there is an increase in supply at the same price from S1 to S2，as in Figure 2．4，but such an increase might lead to a surplus on the market and a possible need to reduce the market price．This means that a new equilibrium price would have to be reached．Buyers would be prepared to buy more at the lower price，there is a movement along the demand curve but not a shift in the position of the curve．Consumers have reacted to a price change brought about by a change in conditions of supply, but this demand change is not directly because supply changed，only because there Was price change．Alternatively, a firm may receive benefits from reduced costs of production but，rather than increasing supply and SO reducing prices，may decide to make greater profits while supplying the same quantity．Whether or not all of an increased supply would be bought would really depend on the demand for the good．Theoretically, it is reduced prices which lead to increased demand．New Words and Proper Termsfluctuate 涨落，起伏；波动surplus 剩余(额)，过剩(物)glut 供过于求；(使市场)存货过多axis 轴；轴线equilibrium 均衡；平衡状态impose 征(税)，罚(款)；增加(负担)；加以(惩罚)subsidy 补贴，津贴；补助金Notes1．on the lines of the purely competitive market of free enterprise. 根据独立企业纯粹竞争的市场．．on the lines of根据，free enterprise指允许自由经营、不受政府管制的独立企业。
2.the changing structure of world__ output and trade
Growth of World Output and Trade
Events Caused Fluctuation
The oil crisis
East Asian financial crisis 9.11 event
The oil crisis interrupted economic growth twice and caused major slumps in 1973-1974 and in 1979-1982 respectively. The industrialized countries, along with the oil-importing developing countries, felt helpless during the 1970s as they endured two rounds of sudden and dramatic increases in oil prices at the hands of OPEC
Three implications of trade expansion
This faster expansion of trade relative to output has three implications. 1. The trade has been growing faster than output implies an increase in the degree of iபைடு நூலகம்ternational specialization between countries.
-----First there are some important changes in the geographical composition of world trade. This shows the share of world trade accounted for by a different countries or regions.