Explore BrainMass
Share

# Econometrics

### Acme Water Price Ceiling

Acme Water is a privately owned company that is the sole supplier of water to a rural town in Pennsylvania. The owner of the firm has provided the manager of the company an incentive to maximize the firm's profits, and the manager is currently selling 100,000 gallons of water per week at a price of \$.05 per gallon. The marginal

### Monopolist's marginal cost

A monopolist is profit maximizing where the elasticity of demand is -2 and price is \$4. What is the monopolist's marginal cost?

### Present value of alternatives

(See attached file for full problem description) You have just been hired as a consultant to help a firm decide which of three options to take to maximize the value of the firm over the next three years. The following table shows year-end profits for each option. Interest rates are expected to be stable at 8% over the next 3

### Probabilities

An ice cream vendor sells three flavors: chocolate, strawberry, and vanilla. Forty five percent of the sales are chocolate, while 30% are strawberry, with the rest vanilla flavored. Sales are by the cone or the cup. The percentages of cones sales for chocolate, strawberry, and vanilla, are 75%, 60%, and 40%, respectively. For

### Probabilities

A. Scores of high school students on a national mathematics exam in Egypt were normally distributed with a mean of 86 and a standard deviation of 4. 1. What is the probability that a randomly selected student will have a score of 80 or higher? 2. If there were 97,680 students with scores higher than 91, how many students too

### Interpretation

A company operating a chain of drug stores plans to open a new store in one of the locations. The management of the company figures that at the first location the store will show an annual profit of \$20,000 if it is successful and an annual loss of \$2,000 if it is not. At the second location, the store will show an annual profit

### Find the mean and standard deviation of the return on a portfolio consisting of an equal investment in each of the two stocks

An analysis of the stock market produces the following information about the returns of two stocks. Stock 1 Stock 2 Expected Returns 16% 18% Standard Deviations 20 30 Assume that the returns are positively correlated with = 0.90. Find the me

### Price earning ratio

6. The P/E ratio (price earnings) ratio for each stock is determined by dividing the price of a share of stock by the earnings per share reported by the company for the most recent four quarters. A sample of 10 stocks taken from the Wall Street Journal (on September 29th, 2000) provided the following P/E ratios: 5, 7, 9,

### Joint probability distribution example problem

The joint probability distribution on the returns of two securities X and Y is shown in the table below. X Y 7 10 14 8 0.12 0.03 0.3 9 0.15 0.09 0.06 10 0.05 0.18 0.02 a. Calculate the expected return for each security b. Calculate the variance and standard deviation for each security

### Problem

The P/E ratio (price earnings) ratio for each stock is determined by dividing the price of a share of stock by the earnings per share reported by the company for the most recent four quarters. A sample of 10 stocks taken from the Wall Street Journal (on September 29th, 2000) provided the following P/E ratios: 5, 7, 9, 12

### Ordinary Least Squares (OLS)

1) Indicate with your reasoning which of the following models can be estimated using Ordinary Least Squares (OLS), where X, Y, Z are variables and α, β, γ are coefficients to be estimated: ... *(Please see attachment for models).

### Household Expenditure Functions

Market research is often concerned with how consumers adjust their expenditure on various commodities as their level of income increases. In this example we focus on households that consist of two adults and no children, and we examine how a change in income changes expenditure on food and transportation. Observations on weekly

### Measuring Productivity

I have a time series set of data of employees in the motor vehicle industry from 1972-2001 (in thousands) as well as average weekly hours of employees in the motor vehicle industry and also motor vehicle output (in billions of dollars). I need to measure productivity, as either output/unit of labor or else output/hour, but I nee

### Geometric Mean (example question)

Geometric Mean (example question) The prices of five computer stocks increased by 37.2 %, 1,140.0 %, 2.7 %, 842.0% and 0.95 %, respectively since 1990. Compute the geometric mean rate of return for the five stocks. (Hint: First convert percents to decimal equivalent)