Speedy Business Cards, Inc., supplies customized business cards to commercial and individual customers. The company is preparing a bid to supply cards to the Nationwide Realty Company, a large association of independent real estate agents. Because paper, ink, and other costs cannot be determined precisely, Speedy anticipates that costs will be normally distributed around a mean of $20 per unit (each 500-card order) with a standard deviation of $2 per unit. a. What is the probability that Speedy will make a profit at a price of $20 per unit? b. Calculate the unit price necessary to give Speedy a 95 percent chance of making a profit on the order. c. If Speedy submits a successful bid of $23 per unit, what is the probability that it will make a profit?
> Describe the difference between vertical and horizontal business relationships.
> Describe the difference between limit pricing and predatory pricing strategies.
> The typical CEO of a major U. S. corporation is 56-58 years old and gets paid $3-5 million per year. From a game-theory perspective, explain why corporate governance experts advise that such executives be required to hold common stock worth 7-10 years of
> Instructors sometimes use quizzes to motivate students to adequately prepare for class. However, preparing and grading quizzes can become time-consuming and tedious. Moreover, if students prepare adequately for class, there is no need for quizzes. What d
> Define the Nash equilibrium concept.
> Does game theory offer a strategy appropriate for situations in which no strategy results in the highest payoff to a player regardless of the opposing player=s decision?
> Explain how the Prisoner’s Dilemma example shows that rational self-interested play does not always result in the best solution for all parties.
> Would a linear regression model of the advertising/sales relation be appropriate for forecasting the advertising levels at which threshold or saturation effects become prevalent? Explain.
> In prepared remarks before Congress in mid-2007, Federal Reserve Chairman Ben Bernanke testified: "The principal source of the slowdown in economic growth … has been the substantial correction in the housing market. [and] The near-term prospects for the
> The Walt Disney Company is a diversified worldwide entertainment company with operations in four business segments: media networks, parks and resorts, studio entertainment and consumer products. The media networks segment consists of the company's televi
> Explain why revenue and profit data reported by shippers such as FedEx Corp. and United Parcel Service Inc. can provide useful information about trends in the overall economy.
> "Interest rates were expected to increase by 85% of all consumers in the May 2004 survey, more than ever before," said Richard Curtin, the Director of the University of Michigan’s Surveys of Consumers. "More consumers in the May 2004 survey cited the adv
> Blue Chip Financial Forecasts gives the latest prevailing opinion about the future direction of the economy. Survey participants include 50 business economists from Deutsche Banc Alex Brown, Banc of America Securities, Fannie Mae, and other prominent cor
> Forecasting the success of new product introductions is notoriously difficult. Describe some of the macroeconomic and microeconomic factors that a firm might consider in forecasting sales for a new teeth whitening product.
> Discuss some of the microeconomic and macroeconomic factors a firm must consider in its own sales and profit forecasting.
> Do the U.S. antitrust statutes protect competition or competitors? What is the difference?
> Explain why state tax rates on personal income vary more on a state-by-state basis than do corresponding tax rates on corporate income.
> When will an increase in the minimum wage increase employment income for unskilled laborers? When will it cause this income to fall? Based on your experience, which is more likely?
> Antitrust statutes in the United States have been used to attack monopolization by big business. Does labor monopolization by giant unions have the same potential for the misallocation of economic resources?
> Given the difficulties encountered with utility regulation, it has been suggested that nationalization might lead to a more socially optimal allocation of resources. Do you agree? Why or why not?
> Oh, Lord, Won’t You Buy Me a Mercedes-Benz (Factory)?1 In 1993, Alabama emerged victorious as the site of Mercedes-Benz AG’s first U.S. car plant. States like Alabama are vying more desperately than ever to lure new industrial jobs and hold on to those
> Give an example of monopoly in the labor market. Discuss such a monopoly's effect on wage rates and on inflation.
> Why are both industry and firm demand curves downward sloping in monopoly markets?
> From a social standpoint, what is the problem with monopoly?
> Describe the economic effects of countervailing power, and cite examples of markets in which countervailing power is observed.
> Describe the monopoly market structure and provide some examples.
> What are the main characteristics of accurate forecasts?
> Cite some examples of forecasting problems that might be addressed using regression analysis of complex multiple-equation systems of economic relations.
> Perhaps the most famous early econometric forecasting firm was Wharton Economic Forecasting Associates (WEFA), founded by Nobel Prize winner Lawrence Klein. A spin-off of the Wharton School of the University of Pennsylvania, where Klein taught, WEFA was
> In the 1880s, cattlemen in the American West crowded more and more animals onto common grazing land to feed a growing nation. Cattlemen contended, “None of us knows anything about grass outside of the fact that there is lots of it, and we aim to get it w
> What is the essential difference between public and private goods? Give some examples of each and some examples of goods and services that involve elements of both.
> Is the large publicly traded corporation in eclipse? Some say yes. Harvard financial economist Michael Jensen, for example, argues that the experience of the past 2 decades indicates that corporate internal control systems have failed to deal effectively
> What role does the price elasticity of demand play in determining the short-run effects of regulations that increase fixed costs? What if they lead to increased variable costs?
> Air pollution costs the U.S. billions of dollars per year in worker absenteeism, healthcare, pain and suffering, and loss of life. Discuss some of the costs and benefits of a Pigou tax on air pollution.
> “Regulation is often proposed on the basis of equity considerations and opposed on the basis of efficiency considerations. As a result, the regulation versus deregulation controversy is not easily resolved.” Discuss this statement.
> The former chairman of the Federal Communications Commission heralded Voice over Internet Protocol, or VoIP, as “the most important shift in the entire history of modern communications since the invention of the telephone.” Using cheap computer software
> To measure public project desirability, positive and negative aspects of the project must be expressed in terms of a common monetary unit. Explain the importance of the present value concept in benefit/cost ratio calculations using a 5 percent interest r
> In 1848, the idea of cost-benefit analysis originated with a French engineer by the name of Jules Dupuit. Economists argue that underlying calculations of costs and benefits must be based upon actual market behavior and not based upon consumer and produc
> A pipeline break reduced the supply of gasoline to the Phoenix, Arizona, area in August, 2003. Press reports indicated that some stations ran out of gasoline, consumers waited in line for hours, and some drivers started following gasoline tankers as they
> Does the fact that public decisions are sometimes made by self-interested politicians and bureaucrats undermine the efficiency of public-sector decision making?
> Public support dropped for a Medicare prescription-drug law endorsed by President George W. Bush and passed by a Republican-controlled Congress following withering criticism from Democrats. Democrats were upset that the law prevented Medicare from neg
> Market Imperfections. Markets usually allocate resources in a manner that creates the greatest net benefit to society. An efficient allocation is one that maximizes the net benefits to society. Indicate whether each of the following statements is true or
> Level 3 Communications, LLC, provides integrated telecommunications services including voice, Internet access, and data transmission using rapidly improving optical and Internet protocol technologies (i.e., “broadband”). Level 3 is called a facilities-ba
> Keystone Manufacturing, Inc., is analyzing a new bid to supply the company with electronic control systems. Alpha Corporation has been supplying the systems and Keystone is satisfied with its performance. However, a bid has just been received from Beta C
> Tex-Mex, Inc., is a rapidly growing chain of Mexican food restaurants. The company has a limited amount of capital for expansion and must carefully weigh available alternatives. Currently, the company is considering opening restaurants in Santa Fe or Alb
> Recently, the housing market suffered the worst slump in nearly two decades. Hot housing markets like Boston, Ft. Lauderdale Florida, and Washington DC cooled as rising interest rates and tightened lending standards eliminated lots of potential buyers. W
> Firefly Products, Inc., has just completed development of a new line of skin-care products. Preliminary market research indicate two feasible marketing strategies: (1). creating general consumer acceptance through media advertising or (2). creating di
> Perry Chandler, a broker with Caveat Emptor, Ltd., offers free investment seminars to local PTA groups. On average, Chandler expects 1 percent of seminar participants to purchase $25,000 in tax-sheltered investments and 5 percent to purchase $5,000 in st
> The certainty equivalent concept can be widely employed in the analysis of personal and business decision making. Indicate whether each of the following statements is true or false and explain why: The appropriate certainty equivalent adjustment factor,
> Identify each of the following as being consistent with risk-averse, risk-neutral, or risk-seeking behavior in investment project selection. Explain your answers. a. Larger risk premiums for riskier projects b. Preference for smaller, as opposed to large
> Kinked Demand Curves. Assume Safety Service Products (SSP) faces the following segmented demand and marginal revenue curves for its new infant safety seat: 1. Over the range from 0 to 10,000 units of output, P1 = $60 - Q, MR1 = ∂TR1/∂Q = $60 - $
> Bertrand Equilibrium. Coke and Pepsi dominate the U. S soft-drink market. Together, they account for about 75% of industry sales. Suppose the quantity of Coke demanded depends upon the price of Coke (PC) and the price of Pepsi (PP) QC = 15 - 2.5PC + 1.25
> Statisticians use the Greek letter beta to signify the slope coefficient in a linear relation. Financial economists use this same Greek letter β to signify stock-price risk because betas are the slope coefficients in a simple linear relation that links t
> Stackelberg Model. Imagine that a two-firm duopoly dominates the market for spreadsheet application software for personal computers. Also assume that the firms face a linear market demand curve P = $1,250 - Q where P is price and Q is total output in t
> Cournot Equilibrium. VisiCalc, the first computer spreadsheet program, was released to the public in 1979. A year later, introduction of the DIF format made spreadsheets much more popular because they could now be imported into word processing and other
> Cartel Equilibrium. Assume the Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply relations for hammers: QD = 60,000 - 10,000P (Demand), QS = 20,000P (Supply). a. Calculate the perfectly
> Monopolistic Competition. Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-speed electronic computers with immense storage capacity and computing capability. Although Gray=s market is restricted to industri
> Competitive Markets v. Cartels. Suppose the City of Columbus, Ohio, is considering two proposals to privatize municipal garbage collection. First, a handful of leading waste disposal firms have offered to purchase the city's plant and equipment at an att
> Monopolistically Competitive Demand. Would the following factors increase or decrease the ability of domestic auto manufacturers to raise prices and profit margins? Why? a. Decreased import quotas b. Elimination of uniform emission standards c. Incr
> Market Structure Measurement. In 2005, Federated Department Stores, Inc. proposed to acquire The May Department Stores Co., thereby combining the two largest chains in the United States of so-called “traditional” or “conventional” department stores. Conv
> Market Structure Concepts. Indicate whether each of the following statements is true or false and explain why. a. Equilibrium in monopolistically competitive markets requires that firms be operating at the minimum point on the long-run average cost curve
> Creative Accountants, Ltd., is a small San Francisco-based accounting partnership specializing in the preparation of individual (I) and corporate (C) income tax returns. Prevailing prices in the local market are $125 for individual tax return preparation
> The James Bond Fund is a mutual fund (open-end investment company) with an objective of maximizing income from a widely diversified corporate bond portfolio. The fund has a policy of remaining invested largely in a diversified portfolio of investment-gra
> On May 12, 2000, the two daily newspapers in Denver, Colorado, filed an application with the U.S. Department of Justice for approval of a joint operating arrangement. The application was filed by The E.W. Scripps Company, whose subsidiary, the Denver Pub
> Kate Warner, a senior loan officer with Citybank in Cleveland, Ohio, has both corporate and personal lending customers. On average, the profit contribution margin or interest rate spread is 1.5 percent on corporate loans and 2 percent on personal loans.
> Delmar Custom Homes (DCH) uses two types of crews on its Long Island, New York,, home construction projects. Type A crews consist of master carpenters and skilled carpenters, whereas B crews include skilled carpenters and unskilled labor. Each home invol
> The Syflansyd Nut Company has enjoyed booming sales following the success of its "Sometimes You Feel Like a Nut, Sometimes You Don't" advertising campaign. Syflansyd packages and sells four types of nuts in four different types of mixed-nut packages. The
> Indicate whether each of the following statements is true or false and explain why. a. Constant returns to scale and constant input prices are the only requirements for a total cost function to be linear. b. Changing input prices will always alter the sl
> Production Function Estimation. Consider the following Cobb-Douglas production function for bus service in a typical metropolitan area: Q = b0 Lb1 kb2 Fb3 Where Q = output in millions of passenger miles, L = labor input in worker hours, K = capital
> Net Marginal Revenue. Crane, Poole & Schmidt, LLC is a successful Boston-based law firm. Worker productivity at the firm is measured in billable hours, which vary between partners and associates. Partner time is billed to clients at a rate of $250 per ho
> Ticket Services, Inc., offers ticket promotion and handling services for concerts and sporting events. The Sherman Oaks, California, branch office makes heavy use of spot radio advertising on WHAM-AM, with each 30-second ad costing $100. During the past
> Marginal Revenue Product of Labor. To better serve customers interested in buying cars over the Internet, Smart Motors, Inc., hired Nora Jones to respond to customer inquiries, offer price quotes, and write orders for leads generated by the company=s web
> The First National Bank received 3,000 inquiries following the latest advertisement describing its 30-month IRA accounts in the Boston World, a local newspaper. The most recent ad in a similar advertising campaign in Massachusetts Business, a regional bu
> Optimal Compensation Policy. Café-Nervosa.com, based in Seattle, Washington, is a rapidly growing family business that offers a line of distinctive coffee products to local and regional coffee shops. Assume founder and President Frasier Cran
> Time Warner, Inc., the world’s largest media and entertainment company, is best known as the publisher of magazines such as Fortune, Time, People, and Sports Illustrated. The Company is a media powerhouse comprised of Internet technologies and electronic
> Determine whether the following production functions exhibit constant, increasing, or decreasing returns to scale. a. Q = 0.5X + 2Y + 40Z b. Q = 3L + 10K + 500 c. Q = 4A + 6B + 8AB d. Q = 7L2 + 5LK + 2K2 e. Q = 10L0.5K0.3
> “Pay for performance” means that employee compensation closely reflects the amount of value derived from each employee’s effort. In economic terms, the value derived from employee effort is measured by net marginal revenue product. It is the amount of p
> Indicate whether each of the following statements is true or false. Explain your answers. a. Decreasing returns to scale and increasing average costs are indicated when εQ < 1. b. If the marginal product of capital falls as capital usage grows, the retur
> The following production table gives estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume that these are just illustrative points on a spectrum of continuous input combinations.) a. Do th
> The United States spends more per person on health care than any other country in the world. Still, recent studies show that the United States ranks relatively low in the overall quality of health care provided. France is often described as providing its
> In Massachusetts, a state education law authorized the establishment of charter schools. Charter schools are public schools that receive state funding as well as some measure of autonomy from local school boards and the rules that govern conventional sch
> Highway crashes continue to claim the lives of thousands of Americans. Grim statistics underscore the need for better laws, stricter enforcement, and safer driving behavior. In 2006, approximately 43,300 persons died on the nation’s highways. Alcohol-rel
> In benefit-cost analysis, public-sector managers seek to learn if society as a whole will be better off by the adoption of a specific social program or public-sector investment project. Rather than seeking to maximize profits or the value of the firm, pu
> Because resources for social programs and public-sector investment projects come from private-sector consumption and/or investment, economists typically advocate the use of a social rate of discount that reflects this private-sector opportunity cost. A g
> Incidence of Regulation Costs. The Smokey Mountain Coal Company sells coal to electric utilities in the southeast. Unfortunately, Smokey’s coal has a high particulate content, and, therefore, the company is adversely affected by state and local regulatio
> Market Structure Analysis at Columbia Drugstores, Inc. Demonstrating the tools and techniques of market structure analysis is made difficult by the fact that firm competitive strategy is largely based upon proprietary data. Firms jealously guard price, m
> Over the last century, The Boeing Co. has become the largest aerospace company in the world. Boeing’s principal global competitor is Airbus, a company that has its roots in a European consortium of French, German and later, Spanish and U.K companies. Th
> Determine the missing amount for each of the following: Assets Liabilities + Stockholders' Equity %3D $ 175,000 $300,000 а. b. $ 880,000 X $525,000 c. $2,100,000 $600,000 I| || ||
> Using the data from E8-20, indicate the effects on net assets and EPS for the following dates: 1. June 1 (date of declaration) 2. July 15 (date of record) 3. August 14 (date of payment) Data from Exercise 8-20: The date of declaration, date of record, a
> Using the data from P7-5, indicate the effects on the liquidity metric free cash flow and profitability metric asset turnover for each of the following: ▪ Impaired goodwill ▪ Patent amortization ▪ Natural resource depletion Data from Problem 7-5: Data rel
> Using the data from P8-4, indicate the effects on net assets and EPS for the March 8, 13, and 26 transactions. Data from Problem 8-4: Vaga Optics produces medical lasers for use in hospitals. The following accounts and their balances appear
> Using the data from P8-3, indicate the effects on net assets and EPS of each of the following: 1. Issuing the bonds payable on July 1, 20Y3. 2. Interest payment on December 31, 20Y3. 3. Payment of the face value of the bonds at maturity. Data from Pro
> Use the data from E7-9 to answer each of the following: 1. Using the integrated financial statement framework, indicate the effects (higher or lower) of using double-declining-balance depreciation rather than straight-line depreciation on accumulated dep
> Using transactions listed in E6-5, indicate the effects of each transaction on the liquidity metric days’ sales in receivables and profitability metric return on sales. Data from Exercise 6-5: Illustrate the effects on the accounts and financial statement
> At the end of the current year, the accounts receivable account has a balance of $2,875,000 and sales for the year total $34,500,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent ass
> Staples, Inc., (SPLS) is a leading office products distributor, with retail stores in the United States, Canada, Asia, Europe, and South America. The following financial statement data were adapted from recent ï¬
> Determine the missing amounts (in millions) for the condensed balance sheets shown below. Costco Target (TGT) Wal-Mart (COST) (WMT) Assets $33,440 $41,404 $ (c) Liabilities 22,823 (b) 122,312 Stockholders'equity (a) 13,997 81,394
> Using transactions listed in E6-4, indicate the effects of each transaction on the liquidity metric days’ sales in receivables and profitability metric return on sales. Data from Exercise 6-4: Illustrate the effects on the accounts and financial statement
> The estimated amount of depreciation on equipment for the current year is $133,000. a. How is the adjustment recorded? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease. b. If the ad
> The total assets and total liabilities for a recent year of Apple (AAPL) and HP (HPQ) formerly Hewlett-Packard are shown here. Determine the stockholders’ equity of each company. Apple HP (in millions) (in millions) Assets $290,47
