Q1. Old Economy Traders opened an account to short sell 1,300 shares of Internet Dreams at $46 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $46 to $59, and the stock has paid a dividend of $3.50 per share.
What is the remaining margin in the account? (Omit the "tiny_mce_markerquot; sign in your response.)
Q2. My utility function depends on the two commodities. When and, my demand functions are such that I spend all my income on commodity 2 but never buy any of commodity 1, no matter how large or small my income may be. Does it follow that is an economic "bad" for me? If so, explain why. If not, give an alternative explanation.