equilibrium price and quantity shortage of rides due to price ceiling Reduced demand due to crashed stock market. Operating licenses restricting the number of rides to 10 million per year. Concept Introduction Equilibrium Price: The equilibrium price is the market price at which the quantity demanded by the consumers equals the quantity supplied by the producers. Equilibrium Quantity : The equilibrium quantity is that quantity where the demand and supply of a product or service is equal. Price Ceiling: In the situation of crisis, when the prices are expected to rise suddenly, the government imposes ceilings on the price to ensure that the prices are not charged unreasonably and price cannot be increased beyond that ceiling. Quantity Control or Quota: The government intervenes by specifying a limit of quantity that can be bought or sold in the market. The quantity of goods or services that can be bought or sold under such system is known as quota limit.

Question

1. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate fund, and the third is a (riskless) T-bill money market fund that yields a rate of 8%. The probability distributions of the risky funds have the following characteristics: Standard Deviation (%) Expected return (%) Stock fund (Rs) 20 30 Bond fund (RB) 12 15 The correlation between the fund returns is .10.

Answer 1

Question

Chapter 4, Problem 5P

To determine

equilibrium price and quantity

shortage of rides due to price ceiling

Reduced demand due to crashed stock market.

Operating licenses restricting the number of rides to 10 million per year.

Concept Introduction

Equilibrium Price: The equilibrium price is the market price at which the quantity demanded by the consumers equals the quantity supplied by the producers.

Equilibrium Quantity: The equilibrium quantity is that quantity where the demand and supply of a product or service is equal.

Price Ceiling: In the situation of crisis, when the prices are expected to rise suddenly, the government imposes ceilings on the price to ensure that the prices are not charged unreasonably and price cannot be increased beyond that ceiling.

Quantity Control or Quota: The government intervenes by specifying a limit of quantity that can be bought or sold in the market. The quantity of goods or services that can be bought or sold under such system is known as quota limit.

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Can you show me the answers for parts a and b? Thanks.