Formulas 2 - Post-Midterm

Question 1

What is the value of production quota?

Answer 1

(CoP - MCP)*Quota Qty = Quota Value

Question 2

What is the value of import quota?

Answer 2

(CoP - World Price) * Imports = import quota value

Question 3

What is the amount that will be imported under a quota system? AKA, what is the Q of the import quota?

Answer 3

Import Quota Q = Qty D - Production Quota

Question 4

What is the value of import quota rent?

Answer 4

(CoP - World Price) * (Qty D - Prod’n Quota)

Question 5

How do we find a reaction function?

Answer 5

1. Need objective function
2. Find market demand
3. Profit function
4. Optimal q where derivative of profit = 0
5. Separate out q1 from ^

Question 6

Profit

Answer 6

Profit = TR - TC
Profit = (P * Q) - (MC * Q)

Question 7

Current Ratio

Answer 7

Current Assets / Current Liabilities
should be >1

Question 8

Quick Ratio / Acid Test Ratio

Answer 8

(Current Assets - Inventory)/ Current Liabilities

Question 9

Return on Equity

Answer 9

Net income from operations / Shareholder equity

Question 10

Return on Assets

Answer 10

Net income (profits after taxes) / total assets

Question 11

What happens when we are finding a derivative, and there’s a term from a different variable?

Answer 11

If it doesn’t contain the variable we’re working with, it disappears; either if it’s got no variable, or it’s only variable is the “other” variable.