Homework Answers
a.
The per-gallon cost that is relevant for pricing decisions is $2.68. This is because the first gallon of oil sold after the oil decrease will require the purchase of a new gallon of oil at the new price to replace it.
b.
There is no need to wait. Because the relevant cost of each gallon of oil sold is now $2.68, the retailer can immediately lower his $3.25-per-gallon price by $0.14 without losing any per-unit profit.
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4. A heating oil retailer has been buying heating oil at $2.82 per gallon and keeps...
Suppose the initial margin on heating oil futures is $8,500, the maintenance margin is $7,000 per...
Suppose the initial margin on heating oil futures is $8,500, the maintenance margin is $7,000 per contract, and you establish a long position of 16 contracts today, where each contract represents 42,000 gallons. Tomorrow, the contract settles down $0.08 from the previous day's price. What is the maximum price decline on the contract that you can sustain without getting a margin call? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer...
Suppose each of the 1 million Islandian households has the same demand curve for heating oil. How much consumer surplus...
Suppose each of the 1 million Islandian households has the same
demand curve for heating oil. How much consumer surplus would each
household lose if it had to pay $2 per gallon instead of $1 per
gallon for heating oil, assuming there were no other changes in the
household budget?
Instructions: Enter your response rounded to two
decimal places.
$ per year.
With the money saved by not subsidizing oil, by how much could
the Islandian government afford to cut each...
Futures contract specifications for random length lumber and heating oil are shown below. Use the table...
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The average gasoline price of one of the major oil companies has been hovering around $2.20...
The average gasoline price of one of the major oil companies has been hovering around $2.20 per gallon. Because of cost reduction measures, it is announced that there will be a significant reduction in the average price over the next month. In order to test this belief, we wait one month, then randomly select a sample of 36 of the company's gas stations. We find that the average price for the stations in the sample was $2.15. The standard deviation...
Assume the average gasoline price of one of the major oil companies has been $3.00 per...
Assume the average gasoline price of one of the major oil companies has been $3.00 per gallon for quite some time. Because of recent shortages in production of crude oil, it is believed that there has now been a significant INCREASE in the average price. In order to test this belief, we randomly selected a sample of 36 of the company's gas stations and determined that the average price for the stations in the sample was $3.06. Assume that the...
please help with question #1. please use % change in quantity divided by % change...
please help with question #1. please use
% change in quantity divided by % change in price formula. thanks
for your help.
Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD. The price of gasoline is volatile and varies significantly from day to day. The price per gallon varies based on the seasonal blend of gasoline, which is determined by clean-air requirements. Cal's pricing options are based on the desired profit margin Conventional Gasoline Regular Spot Prices...
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please help with question 1. please answer question in table format. thank you the website...
please help with question 1. please answer question in
table format. thank you
the website that was posted in the
scenario is attached showing the price of gas in ny harbor. please
help with question 1. Thanks
BICI DEL G H I Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD. The price of gasoline is volatile and varies significantly from day to day. The price per gallon varies based on the seasonal blend of gasoline, which...
5. (10 points) As the price of gasoline goes up, people are willing to drive farther to fill their tank in order to save money. Assume you had been buying gasoline for $2.40 per gallon and that i...
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Suppose the initial margin on heating oil futures is $8,500, the maintenance margin is $7,000 per contract, and you establish a long position of 16 contracts today, where each contract represents 42,000 gallons. Tomorrow, the contract settles down $0.08 from the previous day's price. What is the maximum price decline on the contract that you can sustain without getting a margin call? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer...
Suppose each of the 1 million Islandian households has the same
demand curve for heating oil. How much consumer surplus would each
household lose if it had to pay $2 per gallon instead of $1 per
gallon for heating oil, assuming there were no other changes in the
household budget?
Instructions: Enter your response rounded to two
decimal places.
$ per year.
With the money saved by not subsidizing oil, by how much could
the Islandian government afford to cut each...
Price (cents per gallon) 90 100 110 120 130 140 150 Quantity Demanded (thousand gallons per week 80 70 60 50 40 30 20 Quantity Supplied (thousand gallons per week 20 30 40 50 60 70 80 A market research team has come up with the demand and supply schedules for gasoline in Motorville in the table above. Use these data to analyze the situation in the market for gas in Motorville a) Draw a figure showing the demand curve...
please help with question #1. please use
% change in quantity divided by % change in price formula. thanks
for your help.
Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD. The price of gasoline is volatile and varies significantly from day to day. The price per gallon varies based on the seasonal blend of gasoline, which is determined by clean-air requirements. Cal's pricing options are based on the desired profit margin Conventional Gasoline Regular Spot Prices...
please help with question 1. please answer question in
table format. thank you
the website that was posted in the
scenario is attached showing the price of gas in ny harbor. please
help with question 1. Thanks
BICI DEL G H I Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD. The price of gasoline is volatile and varies significantly from day to day. The price per gallon varies based on the seasonal blend of gasoline, which...
5. (10 points) As the price of gasoline goes up, people are willing to drive farther to fill their tank in order to save money. Assume you had been buying gasoline for $2.40 per gallon and that it went up to $2.83 per gallon at the station where you usually go. If you drive an F-150 pickup that gets 25 miles per gallon, what is the round-trip distance you can drive to break even if it will take 16 gallons...
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