The bank has a montly fixed cost of $10,000 plusan annual variable cost (interest paid on depsoitsplus various admin fees equal to 5% of the loanscreated. Each loan is $100,000, 30 year fixed APRmortgage, and the unemployment rate is 5%.Q = 125-624ir +0.26F- 90.4Ua) What is the bank's annual profits from thisportfolio?b) What is the itnerest elasticity of demand for theloans?c) What is the unemployment elasticity of demandfor loans?d)What is the cost function?

Variable costs vary based on the amount of output produced. Variable costs may include labor,…

Answered: ) What is the itnerest elasticity of…

) What is the itnerest elasticity of demand for the pans? ) What is the unemployment elasticity of demand or loans? DWhat is the cost function?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The bank has a montly fixed cost of $10,000 plus
an annual variable cost (interest paid on depsoits
plus various admin fees equal to 5% of the loans
created. Each loan is $100,000, 30 year fixed APR
mortgage, and the unemployment rate is 5%.
Q = 125-624ir +0.26F- 90.4U
a) What is the bank's annual profits from this
portfolio?
b) What is the itnerest elasticity of demand for the
loans?
c) What is the unemployment elasticity of demand
for loans?
d)What is the cost function?

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