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10-4 Homework: Problem Set
Complete the following problems and submit by the end of the
Joe has never trusted banks and always kept his money in cash.
Joe pulls out his money jar, discovers that it has $20,000 in it,
and decides it is unsafe to keep that much cash. Joe stops at the
Local National Bank the following day, opens a checking account,
and deposits the $20,000.

Assume that all banks in the banking system have a 10% reserve
requirement. Further, assume that all banks in the banking system
are fully loaned up both before and after Joe makes his deposit.
Based on the Multiple Expansion of Bank Deposits concept, answer
the following:

1. By what amount will total lendable deposits in the banking
system increase after the initial deposit?
2. By what amount will new loans in the banking system increase
given a monetary multiplier of 10 ( 1/.1)?
3. By what amount will reserves in the banking system increase
after the initial deposit?

In addition, consider any factors that are not included in your
calculations and might affect the amount of expansion if they were

Need to know what to put on the forms

This is information is from and only a part of the Dunphy_s
return 2013. You will need a Forms 4562, 4797, 8949, and Sch D.
4. Phillip’s full-time real estate business is named _Phillip
Dunphy Realty._ His business is located at 645 Grove Street, Los
Angeles, CA 90018, and his employer identification number is
93-3488888. Phillip’s gross receipts during the year were $730,000.
Phillip uses the cash method of accounting for his business.
Phillip’s business expenses are as follows:
$ 5,000
Professional dues
Professional journals
Employee wages
Insurance on office contents
Accounting services
Miscellaneous office expense
Utilities and telephone
Payroll taxes
To be calculated
On March 20, Phillip moved his business out of the old offices
at 1103 Allium Lane into a newly constructed and equipped office on
Grove Street. Phillip sold the old office building and all its
furnishings. Phillip’s expenditures for the new office building are
as follows:
Date Acquired
$ 300,000
Office building
Computer system
Phillip computes his cost recovery allowance using MACRS. He
would like to use the õ179 immediate expensing, but he has elected
to not claim any bonus depreciation. Phillip has never claimed õ179
or bonus depreciation before. The assets Phillip sold on March 20
are as follows:
Date Acquired
Sales Price
Original Cost
Accumulated Depreciation as of Beginning of the Year
Office building
Office equipment
$ 30,000
Phillip has never sold any assets relating to his business
before this transaction.
5. The Dunphys sold 60 shares of Fizbo Corporation common stock
on September 3, for $65 a share (minus a $50 total commission). The
Dunphys purchased the stock on November 8, 2012, for $90 a share.
They also sold a painting for $13,000 on March 1. Claire purchased
the painting for $20,050 on September 1, 2006, as an


Unit 3 Discussion 1
Relevant Costs
Two partners own together a small landscaping business in North
Carolina, called Summer Lawn Care. They have been specializing in
summer grass seeding, installation, and maintenance. Recently, the
partners acquired special technology and know-how for winter grass
installations and maintenance. They also added a tree cutting
service as recent storms in the area had caused demand for this
service to soar. One of the partners insists that the name of the
business should change to Lawn and Tree Care, so that it better
reflects the range of services and, thus, generates more customer
interest, and thus contracts. The second partner wants to keep the
old name and argues, _We have already paid for business cards,
vehicle paint, signage, and ads in Yellow Pages_. Evaluate the
arguments of the two partners. Explain and illustrate their points
by identifying the relevant and irrelevant costs for this


ECO 550 Chapter 1 &2 Quiz
Managerial Economics
Applications, strategy and Tactics
James R. McGuigan
R. Charles Moyer
Frederick H. Deb. Harris

1. The form of economics most relevant to managerial
decision-making within the firm is:
b. |welfare economics|
c. |free-enterprise economics|
d. |microeconomics|
e. |none of the above|
2. If one defines incremental cost as the change in total cost
resulting from a decision, and
incremental revenue as the change in total revenue resulting from a
decision, any business decision is profitable if:
a. |it increases revenue more than costs or reduces costs more
than revenue|
b. |it decreases some costs more than it increases others
(assuming revenues remain constant)|
c. |it increases some revenues more than it decreases others
(assuming costs remain constant)|
d. |all of the above|
e. |b and c only|
3. In the shareholder wealth maximization model, the value of a
firm’s stock is equal to the present
value of all expected future ____ discounted at the stockholders’
required rate
of return.
a. |profits (cash flows)|
b. |revenues|
c. |outlays|
d. |costs|
e. |investments|
4. Which of the following statements concerning the shareholder
wealth maximization model is
(are) true?
a. |The timing of future profits is explicitly considered.|
b. |The model provides a conceptual basis for evaluating
differential levels of risk.|
c. |The model is only valid for dividend-paying firms.|
d. |a and b|
e. |a, b, and c|
5. According to the profit-maximization goal, the firm should
attempt to maximize short-run profits
since there is too much uncertainty associated with long-run
a. |true|
b. |false|
6. According to the innovation theory of profit, above-normal
profits are necessary to compensate
the owners of the firm for the risk they assume when making their
a. |true|
b. |false|
7. According to the managerial efficiency theory of profit,
above-normal profits can arise because
of high-quality managerial skills.
a. |true|
b. |false|
8. Which of the following (if any) is not a factor affecting the
profit performance of firms:
a. |differential risk|
b. |innovation|
c. |managerial skills|
d. |existence of monopoly power|
e. |all of the above are factors|
9. Agency problems and costs are incurred whenever the owners of
a firm delegate decision-making
authority to management.
a. |true|
b. |false|
10. Income tax payments are an example of ____.
a. |implicit costs|
b. |explicit costs|
c. |normal return on investment|
d. |shareholder wealth|
e. |none of the above|
11. The common factors that give rise to all principal-agent
problems include the
a. |unobservability of some manager-agent action|
b. |presence of random disturbances in team production|
c. |the greater number of agents relative to the number of
d. |a and b only|
e. |none of the above|
12. The Saturn Corporation (once a division of GM) was
permanently closed in 2009.ÿÿ What went wrong with
a. Saturn_s cars sold at prices higher than rivals Honda or
Toyota, so they could not sell many cars.
ÿb. Saturn sold cars below the prices of Honda or Toyota,
earning a low 3% rate of return.
c. Saturn found that young buyers of Saturn automobiles were
very loyal to Saturn and GM.
d. Saturn implemented a change management view that helped make
first time Saturn purchasers trade up to Buick or Cadillac.
ÿe. all of the above
13. Which of the following will increase (V0), the shareholder
wealth maximization model of the
V0_(shares outstanding) = St=1 (p t ) / (1+ke)tÿÿ
Real Option Value.
a. Decrease the required rate of return (ke).
b. Decrease the stream of profits (pt).
c. Decrease the number of periods fromÿÿ to 10
d. Decrease the real option value.
e. All of the above.
14. The primary objective of a for-profit firm is to
a. maximize agency costs
b. minimize average cost
c. maximize total revenue
d. set output where total revenue equals total cost
e maximize shareholder value
15. Possible goals of Not-For-Profit (NFP) enterprises include
all of the following EXCEPT:
a. maximize total costs
b. maximize output, subject to a breakeven constraint
c. maximize the happiness of the administrators of the NFP
d. maximize the utility of the contributors
e. a. and c.
16. The flat-screen plasma TVs are selling extremely
well.ÿThe originators of this technology are earning higher
profits.ÿÿ What theory of profit best reflects the
performance of the plasma screen makers?
a. risk-bearing theory of profit
b. dynamic equilibrium theory of profit
c. innovation theory of profitÿÿ
d. managerial efficiency theory of profit
e. stochastic optimization theory of profit
17. Recently, the American Medical Association changed its
recommendations on the frequency of
pap-smear exams for women.ÿThe new frequency recommendation
was designed to address the family histories of the
patients.ÿÿ The optimal frequency should be where the
marginal benefit of an additional pap-test:
a. equals zero.
b. is greater than the marginal cost of the test
c. is lower than the marginal cost of an additional test
d. equals the marginal cost of the test
e. both a and b.

ECO 204 Principles of Microeconomics

DQ 1
Market Structures
Explain the most important characteristic in perfect
competition, monopolistic competition, oligopoly, and monopolies
and relate the characteristic to how these firms can make profits
in the short run. In your analysis, make sure to relate an example
for each of the market structures listed and how it relates to the
particular characteristics.
DQ 2
Barriers to Entry
Analyze the major barriers for entry and exit into the
airline industry. Explain how each barrier can foster either
monopoly or oligopoly. What barriers, if any, do you feel give rise
to monopoly that will allow the government to become involved to
protect consumers?

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.

An income elasticity (Ey) of 2.0 indicates that for a
____ increase in income, ____ will increase by ____.



one percent; quantity supplied; two units



one unit; quantity supplied; two units



one percent; quantity demanded; two percent



one unit; quantity demanded; two units



ten percent; quantity supplied; two percent

ECO 204 Week 3 DQ 2 Fixed and Variable Costs 100% Original Tutorial

DQ 2
Fixed and Variable Costs. After reading Chapter
8 in the text and viewing the required
video for this week, Fixed, variable, and marginal
cost, address the following in your initial post:
a. First, describe several different fixed costs and variable
costs associated with operating an automobile.
b. Next, assume that you would like to travel from Los Angeles
to New York City by either car or plane.
Which costs would you take into account in making your decision,
fixed costs, variable costs or both?
Make sure to explain your analysis in the decision that you have
to make.
Guided Response: Review the discussion board posts of your
classmates. Analyze the difference in your answer to your peers in
response to the different costs that are discussed. Respond to at
least two of your classmates. Discuss the different types of costs
like fixed, variable, or both.

ECO 365 Week 5 Learning Team B Competitive Strategies and Government Policies

Learning Team Bÿ Competitive Strategies and Government
Management has recognized the effect of changes in the
real-world competitive environment and government policies on other
industries and anticipates similar events occurring in their
industry, so they ask you for a report considering the following
Write a 1,500 _ 2,000-word paper in which you
describe how each of the following are or potentially will affect
your industry or one with which you are familiar:

New companies entering the market, mergers, and globalization,
on pricing and the sustainability of profits: Identify the type of
merger activity in your industry or one with which you are
familiar_horizontal, vertical, or conglomerate_and explain why you
made that choice.


Current and expected government policies and regulations,
including taxes and regulations in place to address issues related
to externalities


Global competition on the decisions made by management with
regards to change in labor demand, supply, relations, unions, and
rules and regulations in your chosen industry

Recommend how the industry you chose may
respond to each of the previous points.
Format your paper consistent with APA