Read chapter 11 in the class text and respond to the following: 1.) What concept in the assigned chapter describes the minimum rate of return that must be earned from investments to ensure the value of the firm does not decrease? 2. What is the criteria or guiding principles for using the capital asset pricing model (CAMP) to determine the value of equity securities? 3. What is a weighted average cost of capital (WACC) and what are its advantages and disadvantages with regards to capital budgeting?

David consumes two things: gasoline (g) and bread (b). david's utility function is u(g, b) = 10g^0.25 b^0.75. use the lagrange technique to solve for david's optimal choices of gasoline and bread as a function of the price of gasoline, p_g, the price of bread, p_b, and his income m. with recent decrease in the price of gasoline (maybe due to external shock such as shale gas production) does david increase his consumption of gasoline? for david, how does partial differential g/partial differential p_g depend on his income m? that is, how does david's change in gasoline consumption due to an increase in the price of gasoline depend on his income level? to answer these questions, find the cross-partial derivative, |partial differential^2 g/partial differential m partial differential p_g.