Should an economic model describe reality exactly?
> Which goods will a nation typically import? a. those goods in which the nation has an absolute advantage b. those goods in which the nation has a comparative advantage c. those goods in which other nations have an absolute advantage d. those goods in whi
> An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can pro- duce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars;
> An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot dogs were to change consumers’ preferences, it would a. expand the production possibilities frontier. b. contract the production possibilities frontier.
> Why should policymakers think about incentives?
> You win $100 in a basketball pool. You have a choice between spending the money now and putting it away for a year in a bank account that pays 5 percent interest. What is the opportunity cost of spending the $100 now?
> A marginal change is one that a. is not important for public policy. b. incrementally alters an existing plan. c. makes an outcome inefficient. d. does not influence incentives.
> Describe three ways a government policymaker can try to raise the growth in living standards in a society. Are there any drawbacks to these policies?
> What is a market? What are the characteristics of a perfectly competitive market?
> In what way is a college degree a form of capital?
> Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending. a. Describe some forms of private spending that represen
> Most economists are ________ that natural resources will eventually limit economic growth. As evidence, they note that the prices of most natural resources, adjusted for overall inflation, have tended to ________ over time. a. concerned, rise b. concerne
> If the price of imported French wine rises, is the CPI or the GDP deflator affected more? Why?
> Suppose that people consume only three goods, as shown in this table: a. What is the percentage change in the price of each of the three goods? b. Using a method similar to the CPI, compute the percentage change in the overall price level. c. If you were
> If a Pennsylvania gun manufacturer raises the price of rifles it sells to the U.S. Army, its price hikes will increase a. both the CPI and the GDP deflator. b. neither the CPI nor the GDP deflator. c. the CPI but not the GDP deflator. d. the GDP deflator
> List the four components of expenditure. Which is the largest?
> A farmer sells wheat to a baker for $2. The baker uses the wheat to make bread, which is sold for $3. What is the total contribution of these transactions to GDP?
> The government purchases component of GDP does not include spending on transfer payments such as Social Security. Thinking about the definition of GDP, explain why transfer payments are excluded.
> Which of the following does NOT add to U.S. GDP? a. Air France buys a plane from Boeing, the U.S. air- craft manufacturer. b. General Motors builds a new auto factory in North Carolina. c. The city of New York pays a salary to a policeman. d. The federal
> What is a competitive market? Briefly describe a type of market that is not perfectly competitive.
> The textile industry of Autarka advocates a ban on the import of wool suits. Describe five arguments its lobbyists might make. Give a response to each of these arguments.
> Draw the supply-and-demand diagram for an importing country. Identify consumer surplus and producer surplus before trade is allowed. Identify consumer surplus and producer surplus with free trade. What is the change in total surplus?
> When China’s clothing industry expands, the increase in world supply lowers the world price of clothing. a. Draw an appropriate diagram to analyze how this change in price affects consumer surplus, producer surplus, and total surplus in a nation that imp
> When a nation opens itself to trade in a good and be- comes an importer, a. producer surplus decreases, but consumer surplus and total surplus both increase. b. producer surplus decreases, consumer surplus increases, and so the impact on total surplus is
> If the government doubles the tax on gasoline, can you be sure that revenue from the gasoline tax will rise? Can you be sure that the deadweight loss from the gasoline tax will rise? Explain.
> How do the elasticities of supply and demand affect the deadweight loss of a tax? Why do they have this effect?
> Consider the market for rubber bands. a. If this market has very elastic supply and very inelastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Use the tools of consumer surplus and producer surplus in
> Eggs have a supply curve that is linear and upward-sloping and a demand curve that is linear and downward-sloping. If a 2 cent per egg tax is increased to 3 cents, the deadweight loss of the tax a. increases by less than 50 percent and may even decline.
> Draw the supply and demand curves for turkey. In the equilibrium, show producer and consumer surplus. Explain why producing more turkeys would lower total surplus.
> In a supply-and-demand diagram, show producer and consumer surplus at the market equilibrium.
> Explain each of the following statements using supply-and-demand diagrams. a. “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.” b. “When the weather turns warm in New England every summer, the price
> Suppose the demand for French bread rises. Explain what happens to producer surplus in the market for French bread. Explain what happens to producer surplus in the market for flour. Illustrate your answers with diagrams.
> John has been working as a tutor for $300 a semester. When the university raises the price it pays tutors to $400, Jasmine enters the market and begins tutoring as well. How much does producer surplus rise as a result of this price increase? a. by less t
> What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium?
> A recent study found that the demand-and-supply schedules for Frisbees are as follows: a. What are the equilibrium price and quantity of Frisbees? b. Frisbee manufacturers persuade the government that Frisbee production improves scientistsâ€
> A $1 per unit tax levied on consumers of a good is equivalent to a. a $1 per unit tax levied on producers of the good. b. a $1 per unit subsidy paid to producers of the good. c. a price floor that raises the good’s price by $1 per unit. d. a price ceil
> How might a drought that destroys half of all farm crops be good for farmers? If such a drought is good for farmers, why don’t farmers destroy their own crops in the absence of a drought?
> If the elasticity is greater than 1, is demand elastic or inelastic? If the elasticity equals zero, is demand perfectly elastic or perfectly inelastic?
> Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run. a. If the price of heating oil rises from $1.80 to $2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the lon
> A linear, downward-sloping demand curve is a. inelastic b. unit elastic. c. elastic. d. inelastic at some points, and elastic at others.
> Make up an example of a monthly supply schedule for pizza, and graph the implied supply curve. Give an example of something that would shift this supply curve, and briefly explain your reasoning. Would a change in the price of pizza shift this supply cur
> A change in which of the following will NOT shift the demand curve for hamburgers? a. the price of hot dogs b. the price of hamburgers c. the price of hamburger buns d. the income of hamburger consumers
> Does a change in consumers’ tastes lead to a movement along the demand curve or to a shift in the demand curve? Does a change in price lead to a movement along the demand curve or to a shift in the demand curve? Explain your answers.
> Consider the market for minivans. For each of the events listed here, identify which of the determinants of demand or supply are affected. Also indicate whether demand or supply increases or decreases. Then draw a diagram to show the effect on the price
> Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets? a. The supply curve shifts to the left. b. The supply curve shifts to the right. c. The demand curve shift
> Suppose that a skilled brain surgeon also happens to be the world’s fastest typist. Should she do her own typing or hire a secretary? Explain.
> Give an example in which one person has an absolute advantage in doing something but another person has a comparative advantage.
> Pat and Kris are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Pat takes 4 hours to brew a gallon of root beer and 2 hours to make a pizza. Kris
> When two individuals produce efficiently and then make a mutually beneficial trade based on comparative advantage, a. they both obtain consumption outside their production possibilities frontier. b. they both obtain consumption inside their production po
> Why might economic advisers to the president disagree about a question of policy?
> The first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. What do you s
> Draw an example of a production possibilities frontier for Robinson Crusoe, a shipwrecked sailor who spends his time gathering coconuts and catching fish. Does this frontier limit Crusoe’s consumption of coconuts and fish if he lives by himself? Would he
> Describe some of the trade-offs faced by each of the following: a. a family deciding whether to buy a new car b. a member of Congress deciding how much to spend on national parks c. a company president deciding whether to open a new factory d. a professo
> Calculate the daily production quantities and sequences from the following monthly requirements for product models A, B, and C. Assume the month has 20 production days. a. 5000 A, 2500 B, and 3000 C b. 2000 A, 3000 B, and 6000 C
> Visit a repetitive manufacturing facility in your area. What are the major causes of inventory? Be sure to ask about lot sizes and setup times. Would a lean production system work in this facility? Why or why not?
> What does it mean to say that a supply chain can be too lean? Give examples why this may be a problem.
> How would you, after the fact, audit a project to determine whether it was successful?
> In a company that processes insurance claims, the average flow rate is 10 claims per hour and the average throughput time is six hours. a. How many claims are in the system on average? b. If the demand for claims to be processed is seven per hour and the
> Six jobs must be processed through machine A and then machine B as shown be low. The processing time for each job is also shown a. Develop a Gantt chart to determine the total time required to process all six jobs. Use the following sequence of jobs: 1
> Specify the kinds of objectives that might be appropriate for each of the situations listed in question 1.
> The Ace Steel Mill estimates the demand for steel in millions of tons per year as follows: Millions of Tons Probability 10 ……………………………………0.10 12 ……………………………………0.25 14 ……………………………………0.30 16 …………………………………..0.20 18 ……………………………………0.15 a. If capacity is set
> What problems are created by simultaneously considering the capacity questions of how much, how large, where, when, and what type?
> The number of daily calls for the repair of Speedy copy machines has been recorded as follows: October………………………. Calls 1……………………………..….. 92 2………………………………… 127 3………………………………… 106 4……………………………..…..165 5 ………………
> What is the distinction between forecasting and planning?
> We have taken 12 samples of 400 book pages found the following proportions of defective pages: .01, .02, .02, .00, .01, .03, .02, .01, .00, .04, .03, and .02. A page is considered defective when one or more errors are detected. a. Calculate the control l
> Suppose you make electronic calculators that contain a chip purchased from a local vendor. How would you decide how much inspection to perform on the chips supplied to you?
> What are the differences between quality of design and quality of conformance?
> As we discussed at the beginning of the chapter, Starbucks has a large, global supply chain that must efficiently supply over 17,000 stores. Although the stores might appear to be very similar, they are actually very different. Depending on the location
> What are the main ways in which processes are managed to accommodate environmental regulations?
> Suppose a lean work center is being operated with a container size of 25 units and a demand rate of 100 units per hour. Also assume it takes 180 minutes for a container to circulate. a. How many containers are required to operate this system? b. What is
> Define repetitive manufacturing and compare it with job shop or batch manufacturing
> Suppose a bank clears checks drawn on customers’ checking accounts by using the following process: a. If the capacity for receiving checks is 1000 checks per hour, for sorting checks is 800 checks per hour, and for shipping checks is 12
> Explain how the process view of an organization is likely to uncover the need for greater cross-functional cooperation.
> Locate each of the following services on the service delivery system matrix: a. Vending machine b. Housecleaning service c. Appliance repair
> Why are assembly-line processes usually so much more efficient but less flexible than batch processes? Give three reasons.
> In what circumstances might a market-pull approach or a technology-push approach to new-product design be the best approach?
> Describe a possible operations mission that fits the following business situations: a. Ambulance service. b. Production of hybrid automobile batteries. c. Production of electronics products that have a short product life cycle
> Who are the various stakeholders that need to be considered in resolving these issues?
> Calculate the Net Present Value of the stormwater project, given the financial information in the case.
> In the following operations, isolate a system for analysis and define customers, services produced, suppliers, and the primary process flows. a. A college b. A fast-food restaurant c. A library
> The flow of materials through eight departments is shown as follows. Even though the table shows flows into and out of the different departments, assume that the direction of flow is not important. In addition, assume that the cost of moving material dep
> What should be done based on the calculations from question 1?
> How should the various functional areas in the organization be included in the Lean Six Sigma initiative, and what role should senior and middle management play in this change initiative?
> What were the challenges facing Mayo and the role of leadership?
> What are the pros and cons of the options presented in the case?
> Draw a current state value stream map indicating the customer, supplier, information flow and relevant metrics •What is the takt time? •What is the total lead time (processing + waiting)? •What is the total value added and non-value added time? •What is
> Using the service blueprint, make a list of all the key service failure points and the associated customer expectations. For example a service failure point with expectations is: check-in should be fast and hassle free. You should find 10 to 15 service f
> What action should Rhodes take to solve his problems?
> Prepare a master production schedule for the next 6 weeks using the EOQ's calculated in Question 1 and a work force of 10 employees. What inventory turnover ratio is achieved by this master schedule? How does this turnover compare with past levels and wi
> Evaluate the importance of inventory and inventory management of the Southern Toro distributorship for both irrigation products and spare parts. Should the inventory be cut back?
> Explain the relationship between quality and productivity under the lean philosophy.
> Describe how the system you have designed will help the company meet customer-service and cost objectives.
> 1. Using Exhibit 1.3 as a model, describe the source-make-deliver-return relationships in the following systems: a. An airline b. An automobile manufacturer c. A hospital d. An insurance company Making Sourcing Planning Delivering Returning
> What are the internal strengths and weaknesses of BYD along with external, opportunities and threats (SWOT Analysis)?
> What specific principles, practices, or techniques might be useful to effectively integrate suppliers?
> Would your recommendation change if the foreign exchange rate increased or decreased by 15%?
> Develop an S&OP plan by month for fiscal 2015. Consider the use of several different production strategies. Which strategy do you recommend? Hint: Use of Excel will greatly save time in making these plans.
> What forecasting methods should the company consider? Please justify.
> The Superior Manufacturing Company wants to make two shipments from Dallas, Texas to Los Angeles, California. The first shipment weighs 10,000 pounds and the second shipment weighs 15,000 pounds. The carrier charges $10 per hundredweight (cwt) if the goo
> Describe the historical development of the logistics field.
> A manufacturing company has the following financial information (in millions of $): Sales ……………………………………………$823 Cost of goods sold Direct labor……….…………………………. 85 Purchased materials ………………. 310 Overhead …………………………………….
