Ms. Aura is a psychic. The demand for her services is given by Q= 2,000 –10P, where Qis the number of one-hour sessions per year and Pis the price of each session. Her marginal revenue is MR= 200 –0.2Q. Ms. Aura’s operation has no fixed costs, but she incurs a cost of $150 per session (going to the client’s house).a. What is Ms. Aura’s yearly profit?Find the number of sessions that Ms. Aura will provide by equating the marginal revenue to the marginal cost of a session: setting MR = MC yields 200 –0.2Q = 150 which solves as Q = 250. The price that would generate demand for 250 sessions is $175 as 2,000 –10(175) = 250. Thus, her annual profit is 175(250) –150(250) = $6,250 per year.

Mae jong corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of $2 par value ordinary shares. the market rate of interest on similar bonds is 12%. interest is payable annually on december 31, and the bonds were issued for total proceeds of $1,000,000. in accounting for these bonds, mae jong corp. will: (a) first assign a value to the equity component, then determine the liability component. (b) assign no value to the equity component since the conversion privilege is not separable from the bond.(c) first assign a value to the liability component based on the face amount of the bond.(d) use the “with-and-without” method to value the compound instrument.

When used-car dealers signal the quality of a used car with a warranty, a. buyers believe the signal because the cost of a false signal is high b. it is not rational to believe the signal because some used-car dealers are crooked c. the demand for lemons is eliminated d. the price of a lemon rises above the price of a good used car because warranty costs on lemons are greater than warranty costs on good used cars

The face of a company is often that of the lowest paid employees who meet the customers. select one: true false