Question

3- What is the purpose of a strike? What are the costs to workers and to management?

4- Explain how the optimal quantity of air pollution is determined.

Answer #1

Ater a strike(worker strike), Mc Donald’s and Fast Food Workers’
Union agreed to bargain for wage and
employment level to adjust the wage and employment level. Is it
possible for Mc Donald’s and union
benefit from collective bargaining? In which case this will be
possible and how?Explain it.

1. A trader buys a call option with a strike price of €45 and a
put option with a strike price of €40. Both options have the same
maturity. The call costs €3 and the put costs €4. Draw a diagram
showing the variation of the trader’s profit with the asset price.
Explain the purpose of this strategy

A call option with a strike price of $30 costs $1.5. A put
option with a strike price of $25 costs $2.5. Explain how a
strangle can be created from these two options. What is the pattern
of profits from the strangle?

1. When workers connected with the automobile industry go on
strike, it typically makes big headlines since the automaker will
usually end up being shut down if the strike drags on. Suppose the
makers of brakes for GM go out on strike and GM has no other source
from which to purchase brakes for its new automobiles. Explain how
following a restrictive current asset management policy would
affect GM in this case. What are the pros and cons of GM...

A 3 month calls cost 2.50 with a strike of 30 on a stock which
costs $25. If the risk free rate is 2.5% what should be the cost of
a 3 month put with a strike of 30?

What is the purpose of using standard costs?

5.1. A one-year call option on a stock with a strike price of
$45 costs $3; a one-year put option on the stock with a strike
price of $45 costs $5. Suppose that a trader buys five call options
and three put option. What is the breakeven stock price above which
the trader makes a profit?

The Acme Giant Rubber Band Company has the following inverse
demand and supply curves of workers. ? = 200 − 0.25? ? ? = 50 +
0.5? ? where W is the annual wage rate (in thousands), ? ? is the
number of workers demanded at wage W and ? ? is the number of
players willing to play at the wage W. The company is in the
desert. It is isolated and far away from any cities and is...

Suppose that a June put option on a stock with a strike price of
$60 costs $4 and is held until June. Under what circumstances will
the holder of the option make a gain? Under what circumstances will
the option be exercised? Draw a diagram showing how the profit on a
short position in the option depends on the stock price at the
maturity of the option.
**Can you please explain step by step on how to do this
question***...

Suppose that two power plants each releases 200 units of toxic
air into the atmosphere per year. Both firms are ordered by the
federal government to reduce their pollution levels. Let Q denote
the amount of pollution reduction. Firm A’s marginal costs
associated with pollution reduction are M C = 2Q − 20. Firm B’s
marginal costs associated with pollution reduction are MC = 3Q. The
marginal benefit of pollution reduction is MB = 240. (a) What is
the socially...

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