...Hungry Howie’s, Pizza Company has decided to raise the price of their large pizza by 3%. The pizza company should consider: 1.Advertising showing how their pizza are made with comparison to how other pizza company make their pizza. 2. Add a product that complements their pizza, for example, a mix fruit drink. Television commercials should show the high quality of their pizza and new mix fruit drink. Advertising should stress how important their pizza is to the consumers’ everyday living, for example, “Don’t cook to night, our pizzas are homemade and ready for you.” A strong complement (mix fruit drink) for the pizza will make price elasticity of demand for the pizza more inelastic. A. A new fashion trend dictates the wearing of kilts. The demand for kilts will increase and curve shift right. B. The price of apples increases. No change in demand for apples, the quantity demand will change but no shifting of the demand curve. C. The price of Pepsi, a substitute for Coke, increases. The demand for coke will increase, on the same demand curve. D. The price of dog food increases. No change in demand. There is a decrease in quantity demanded of dog food. E. The consumers start liking minivans all of a sudden. No change in demand. If the cost of manufacturing minivans decreases, then supply of minivans will increase. F. The price of food used to feed dogs increases. The demand for dogs will decrease. G. A fall in income forces prospective yacht...
Words: 538 - Pages: 3
...RM solutionChapter 5: Solutions to Problems 1. Suppose you buy a futures contract on BSE 30 Sensex futures at 16,500 on March 10. The initial margin is INR 8,500 and the maintenance margin is INR 5,000. At what futures price would you receive a margin call? Solution: Initial Margin = 8500 Maintenance Margin = 5000 Futures price = 16,500 Value per contract = 165,000 Margin call will be activated when the maintenance margin goes below 5,000, or the loss from futures exceeds 3,500. Since you bought Sensex futures, loss will arise if Sensex falls, and a loss of 3,500 will have to be made in order for a margin call to occur. Thus, margin call will be activated when the value of futures falls below 161,500, or Sensex falls below 16,150. 2. On January 2, when the futures contract on Jet Airways stock started trading for expiry on March 31, Kishore sold 10 contracts to Raghav, Raja sold 15 contracts to Jeeva, and Rama sold 20 contracts to Bose. On January 3, Jeeva bought 5 contracts from Raghav and Bose sold 10 contracts to Asjeet. Calculate the open interest in this contract on January 2 and January 3. Solution: Jan 2: Kishore sold 10 contracts Raghav bought 10 contracts Raja sold 15 contracts Jeeva bought 15 contracts Rama sold 20 contracts Bose bought 20 contracts Open interest: total sold contracts = 45 = total bought contracts. Jan 3: Jeeva buys 5 contracts Raghav sold 5 contracts Bose sold 10 contracts Asjeet sold 10 contracts Net position:...
Words: 1558 - Pages: 7
..."inflation" to refer to a rise in the price level. Rising in price and increase in money supply is two different meanings. The increases of money supply can also being called as monetary inflation while rising in price as price inflation. Economists generally agree that in the long run, inflation is caused by increases in the money supply. However, in the short and medium term, inflation is largely dependent on supply and demand pressures in the economy. In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money or in other word a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time. 2.0 THE EXISTENCE OF INFLATION AND HOW IT MEASURED In order to know whether the existence of inflation, we must analyze the demand supply curve and see how it can relate to an increase in price. That is if we do believe that any increase in price somehow relates to inflation. An increase in price does not necessarily must relate to inflation. The identifiers that are usually associated with price are demand, inflation and deflation...
Words: 2412 - Pages: 10
...This acquisition has not been recommended by the Zellmont board, and therefore it could be regarded as a hostile takeover at the moment. As it is seen on its financial statements, Ashar corporation has been a very healthy corporation during the past few years. We can see that they have a really stable Income Statement, with high figures regarding their revenues, EBIT, Net Income. Even though, there is a decrease of the figures from 2004 to 2005, if we check in the Balance Sheet, it can be justified by the acquisition of fixed assets and long-term debt and equity. This can be a worrying figure since the company has already long-term debt, but if we look out of the box, we should know that steel companies, in order to grow and maximize their profit, they need to acquire a lot of fixed costs, which will be the base for their operations. It can be a bit risky because if the value of the steel goes down, then the debt to asset ratio will increase. Although all these possible outcomes, and looking forward in the future of the steel industry, it is not really probable that the price of the steel will substantially go down, due to the trend that has been following up in the last years. We also know that Ashar Corporation is a really diversified company, so we trust that this diversification gives us a substantial support in case any division of the company goes wrong. I think that if Ashar Corporation ends up acquiring Zellmont, it will certainly gain a lot of...
Words: 1105 - Pages: 5
...the palm oil price changes on the buyers and the sellers with the relation with the demand and the supply of the palm oil in the market. Gold h become the trend of nowadays and people tend to invest their money in gold to for the stability in future. Thus, the price of the gold is keeping increasing and the impact may not the same as the other kind of commodity such as crude oil and rubber. The few stock of gold in market and the investor attitude in keeping the gold gave the influence to the price in the market. As the gold is having the value on its on interior value, there is not much advancement of technologies in the industries. This supply will never increase in the market with the high demand each year especially on the festive seasons, thus, the gold price will always increase. Abstract Keywords: Gold, Commodity, Supply, demand, price. Introduction The articles “The Gold Rush is on” was cited from The Star Online written on 5 May 2011 by Vijenthi Nair. People are now rushing to by the gold as the price of the gold was kept on increasing each week. Even though the price is hiking non- stop gold lover is keep on hunting for the gold as they are fear the price will go even higher. The price increased has created the demand for gold to become higher as people have non-stop buying due to a lot of speculation created. In spite of it, people still hope for the price to go lower as they will buy more for the future investment. The increasing of the gold demand had...
Words: 1877 - Pages: 8
...housing buyers. The package is expected to be one of the fundamental solutions to relieve the burden of mounting unsold local real estate stock.ND 30 trillions ($1.4 billion) credit package for potential house buyers deployed. However, as of mid- December, the disbursement rate was reported to hit VND555 billion, or less than 2% of the total value of the package, according to the Ministry of Construction. 2. Gold prices fall by VND 11.6 million, gold bullion tender sessions held during the year. By the end of the last day of 2013, the bid and ask prices of SJC gold bullion were quoted at VND34.62 million and VND34.92 million per tael (1 tael = 1.2 ounces), down VND11.62 million ($545) per tael compared to early 2013 – a record price drop for any one-year period ever recorded. The dramatic decrease of gold prices made the role of gold investment – usually a safe haven – fade away in 2013. After the sales of 26,000 taels of gold bullion, or around 0.98 ton in the first auction session held on March 28, 2013, SBV sold a total of 1.82 million taels, or almost 70 tons of gold bullion, during 76 sessions in which the central bank offered 1.932 million taels throughout the year. 3. Interest rates matching those of 2005-2006 4. Macroeconomic stability maintained, inflation under control. 5. Stock market makes strong recovery. 6. Ongoing negotiations for Trans-Pacific Partnership trade agreement. 7. FDI on a rise, investigation on transfer pricing at FDI firms launched...
Words: 627 - Pages: 3
...Unit 9 Problem Set 1: Monetary Policy and Inflation 1. Consider an economy that uses gold as its currency. Define each of the three properties of money listed below. Considering these properties, is gold a good monetary system? a. Medium of exchange: any item that buyers give to sellers when they purchase goods and services. b. Unit of account: a standard unit in which prices can be stated and the value of goods and services can be compared. c. Store of value: the property of money that holds that money preserves value until it is used in an exchange. d. Is gold a good monetary system? Gold standard works for a while. It is just that we are running out of gold. It was supposed to keep the government in check for the amount of money that it could print, but then in times of trouble it would use the gold as an emergency fund that it would have to pay back, sometime. It use to work in international trade systems on larger scale because of different types of currency. We now have the fiat money which is just money that the government can have better control on. 2. Given your answers to the previous question, explain whether you think gold had advantages over the use of fiat money. You can’t just print gold like you can paper money. When you have the ability to just print money, everything else will also go up in price because there is no real value to paper money. Gold has a better value to it because you know that if you don’t have it, you will get nothing...
Words: 1094 - Pages: 5
...Pan American Silver Corp. (NASDAQ: PAAS) * Enterprise Value: $833.83M | * Enterprise Value/Oz.: $1.36 | * Industry: Silver Production | * Symbol: PAAS | * Production: 19,330,000 (9 months) | * Market Capital: $1.03B (as on 7/1/16) | * Revenue: $511,728,000 (9 months) | * Share Price: $6.81 (as on 7/1/16) | * Net Income: $ (9.46)M (as on 30/9/15) | * P/E Ratio: N/A | Pan American Silver Corp. is a Canadian company focusing on silver mining in Mexico, Peru, Bolivia and Argentina with corporate office in Vancouver. The company is trading on the Toronto Stock Exchange under the SYM: PAA and SYM: PAAS on the NASDAQ. Founded in 1994, the company acquired its first operation, the Quiruvilca mine in Peru, in 1995. It has grown into an established and respected mine builder and operator through the acquisition and reengineering of existing mines, or through the development of late-stage exploration assets that they successfully permitted, built and put into ongoing mining operations. In two decades, with constant increase in production and reserve year after year the company has become the world’s second largest primary silver producer. Mines and Claims Pan American Silver owns seven operating mines and six development and exploration projects. All the projects and five of the seven operating mines are under 100% ownership of the company. The operating mines and development projects are all located in Mexico, Peru, Bolivia and Argentina...
Words: 3522 - Pages: 15
...Of Management Lucknow August 2013 A MICROECONOMIC STUDY ON GOLD Submitted to Professor Sanjay K Singh By Section E, Group J Aman Doharey (PGP30244) Mahesh Raja R (ABM11045) Prerna Pal (PGP30265) Rohit Mandappalli (PGP29341) Shradhha MeryllinePanna (PGP30280) Swagata Das Chowdhury (PGP30419) Tanuj Kumar Lodhi (PGP30420) Table of Contents Introduction Background Protection Requirement Elasticity Of Gold Gold Consumption Scenario in India Need and Objective Of Study Research Methodology Tools and Techniques Hypotheses Data Analysis 1. US Dollar 2. Crude Oil 3. Silver 4. Inflation 5. Sensex Values Findings and Conclusions INTRODUCTION This report emphasizes on studying, interpreting and illustrating the various economic factors affecting the consumption and price of the precious metal Gold. We examine the impact of factors that maybe reason for such distortion and also see how the change in gold price impacts other commodities in the open market. Background Used as a sovereign since ages, gold has always been a sought after commodity. The price variation has almost always been upwards and has had a steep rise in this trend. A few pointers about Gold can be inferred as below. Production Gold is majorly obtained through mining, other sources may include recycling, trading etc. Through these sources gold enters the market. Requirement Gold is an essential commodity in any country’s economic state. It is...
Words: 3203 - Pages: 13
...Depression as well as what brought the country back. A look into our past can possibly help to prevent future disaster facing our economy. The most commonly known factor leading to the Great Depression was the crash of the United States stock market. Although the stock market crash of 1929 is seen as the starting point of the Great depression, there were a number of causes beforehand that lead to the event that is now known as Black Thursday. The 1920’s had experienced a tremendous surge in stock prices. The Federal Reserve could not justify these prices by future earnings and in 1928 the Federal Reserve raised interest rates in order to slow rising stock prices (Pells, 2012, p.4). These higher interest rates decreased attraction to spending in areas including construction and automobile manufacturing. Another factor leading to the decrease of construction was the boom in housing construction in the early 1920’s. This boom led to an excess of housing (Pells, 2012, p.4). When prices began to decline stock investors began to lose confidence in the stock market and began to liquidate...
Words: 2695 - Pages: 11
...the world depended on the gold standard to determine the value of goods and services. This paper will describe in more detail the gold standard, the positive and negative aspects of using the gold standard and in addition the paper will summarize the major functions of the world’s major foreign exchange markets. The gold standard was a monetary system that many countries used in order to determine the value of domestic currencies in relation to a specific amount of gold. The value of money, bank deposit and notes were transformed into gold at the specific amount. Britain was the first country to adopt the gold standard in 1816, followed by the United States. From 1834 until 1933 the specified price of gold in the United States was $20.67 per ounce (Bordo, 2002). However, in 1933 U.S. President Franklin D. Roosevelt put an end to the gold standard when he prohibited the possession of gold by any persons except for the purposes of owning or manufacturing jewelry (Moffatt, 2008). This was the beginning of the Bretton Woods System. Under the Bretton Woods System, countries agreed to settle their international balances by converting deficits into U.S. dollars at a flat exchange rate of $35 per ounce (Bordo, 2002). This monetary system only lasted until 1971 when President Richard Nixon completely ended the trading of gold (Moffatt, 2008). Since that time the gold standard has not been used by any major economies. The most important benefit of using the gold standard was that it insured...
Words: 1260 - Pages: 6
...shares) with a strike price of $25 and an expiration date in four months. If at the end of four months the stock price proves to be less than $25, you can exercise the options and sell the shares for $25 each. Problem 1.9. A stock when it is first issued provides funds for a company. Is the same true of an exchange-traded stock option? Discuss. An exchange-traded stock option provides no funds for the company. It is a security sold by one investor to another. The company is not involved. By contrast, a stock when it is first issued is sold by the company to investors and does provide funds for the company. Problem 1.10. Explain why a futures contract can be used for either speculation or hedging. If an investor has an exposure to the price of an asset, he or she can hedge with futures contracts. If the investor will gain when the price decreases and lose when the price increases, a long futures position will hedge the risk. If the investor will lose when the price decreases and gain when the price increases, a short futures position will hedge the risk. Thus either a long or a short futures position can be entered into for hedging purposes. If the investor has no exposure to the price of the underlying asset, entering into a futures contract is speculation. If the investor takes a long position, he or she gains when the asset’s price increases and loses when it decreases. If the investor takes a short position, he or she loses when the asset’s price increases and gains...
Words: 3308 - Pages: 14
...GOLD STANDARD The gold standard was a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price. England adopted a de facto gold standard in 1717 after the master of the mint, Sir Isaac Newton, overvalued the guinea in terms of silver, and formally adopted the gold standard in 1819. The United States, though formally on a bimetallic (gold and silver) standard, switched to gold de facto in 1834 and de jure in 1900 when Congress passed the Gold Standard Act. In 1834, the United States fixed the price of gold at $20.67 per ounce, where it remained until 1933. Other major countries joined the gold standard in the 1870s. The period from 1880 to 1914 is known as the classical gold standard. During that time, the majority of countries adhered (in varying degrees) to gold. It was also a period of unprecedented economic growth with relatively free trade in goods, labor, and capital. The gold standard broke down during World War I, as major belligerents resorted to inflationary finance, and was briefly reinstated from 1925 to 1931 as the Gold Exchange Standard. Under this standard, countries could hold gold or dollars or pounds as reserves, except for the United States and the United Kingdom, which held reserves only in gold. This version broke down in 1931 following Britain’s departure from gold in the...
Words: 1959 - Pages: 8
...shares) with a strike price of $25 and an expiration date in four months. If at the end of four months the stock price proves to be less than $25, you can exercise the options and sell the shares for $25 each. Problem 1.9. A stock when it is first issued provides funds for a company. Is the same true of an exchange-traded stock option? Discuss. An exchange-traded stock option provides no funds for the company. It is a security sold by one investor to another. The company is not involved. By contrast, a stock when it is first issued is sold by the company to investors and does provide funds for the company. Problem 1.10. Explain why a futures contract can be used for either speculation or hedging. If an investor has an exposure to the price of an asset, he or she can hedge with futures contracts. If the investor will gain when the price decreases and lose when the price increases, a long futures position will hedge the risk. If the investor will lose when the price decreases and gain when the price increases, a short futures position will hedge the risk. Thus either a long or a short futures position can be entered into for hedging purposes. If the investor has no exposure to the price of the underlying asset, entering into a futures contract is speculation. If the investor takes a long position, he or she gains when the asset’s price increases and loses when it decreases. If the investor takes a short position, he or she loses when the asset’s price increases and gains...
Words: 3308 - Pages: 14
...michelebaker26@yahoo.com 1 Gasoline Prices Supply and demand have played a large part in the increase of gasoline prices the nation has experienced lately. The Law of Demand clearly indicates that the rise in demand for gasoline will lead to an increase in prices. This has been a topic that seems to continue coming up in conversations both in the classroom as well as everyday interaction as it seems to be affecting everyone. Some cannot afford to put gas in their SUVs anymore because the prices have been fluctuating and continuously increasing over the last couple of years. Even though I have read several research studies and articles on this before, I found a very interesting point that I had not previously heard of or thought about. I have often wondered what we as Americans can do to reduce demand of gasoline, since the increase in demand has obviously led to the rise in petroleum prices. However, this study shows that the problems may be stemming from the increase usage in both China and India to power their cars and factories. Unfortunately, there is nothing we can do to reduce the demand that other countries are creating. The article suggests that really the only thing that Americans can do is to decrease their personal demand for the fuel by getting rid of the gas guzzling SUVs or turning to alternative sources of transportation. Here in Arizona one of the skeptics of the gasoline price hike was Attorney General Terry Goddard. He personally looked into the price spike here in Arizona...
Words: 1802 - Pages: 8
