Match the term to the definition. There are NO DUPLICATES in this set.

The difference between the rate of output at a firm’s minimum average cost and the profit-maximizing rate of output

Vocabulary:

Question for Discussion ---------- 2. Examine the role demand-side factors play in shaping the pattern of world trade. 3. Why do demand-side factors sometimes lead to the geographical concentration of manufacturing industries in particular countries or regions?

Breakdown of a cartel agreement

Consider a town in which only two residents, Sam and Teresa, own wells that produce water safe for drinking. Sam and Teresa can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.

Suppose Sam and Teresa form a cartel and behave as a monopolist. The profit-maximizing price is

per gallon, and the total output is

gallons. As part of their cartel agreement, Sam and Teresa agree to split production equally. Therefore, Sam's profit is

, and Teresa's profit is

.

Suppose that Sam and Teresa have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Sam says to himself, "Teresa and I aren't the best of friends anyway. If I increase my production to 40 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."

After Sam implements his new plan, the price of water   to

per gallon. Given Teresa and Sam's production levels, Sam's profit becomes

and Teresa's profit becomes

.

Because Sam has deviated from the cartel agreement and increased his output of water to 40 gallons more than the cartel amount, Teresa decides that she will also increase her production to 40 gallons more than the cartel amount.

After Teresa increases her production, Sam's profit becomes

, Teresa's profit becomes

, and total profit (the sum of the profits of Sam and Teresa) is now

.

Use the Aggregate Demand and Aggregate Supply model to analyze the impacts of the following events, show this on a graph for each situation.

1) Steelworkers go on strike and produce less steel.

2) US Senators read about the glories of the Internet and so demand for high tech government purchases increases.

3) A series of Investment Banks such as Lehman Bros and Bear Sterns go bankrupt,

2. Monopolists are neither productively efficient nor allocative efficient, and perfect competition is both productively efficient and allocatively efficient. However, Pareto optimal requires it is impossible to make one person better off without making at least one other worse off.

Ture or false. And why.

"Sales taxes are fairer than income taxes because sales taxes cannot be avoided by the rich." Evaluate this idea. Describe the evidence about the distribution of sales tax burdens among different income taxpayers. Would it be possible to design a sales tax that is more progressive than an income tax?

The year is 1870, the location is the town of Silverton in Colorado. There are two saloons in town: Red's Beard and Sadie's White Garter. After years of cut-throat competition the two owners, Red and Sadie, decide to cooperate in order to make more money. They have been making $400 per month each by competing fair and square. They decide if they each raise prices and limit the number of beers served, they will earn $1,000 per month each. However if one limits the number of beers and raises prices and the other does not, then they will earn only $200 per month while their competitor will earn $1,500 per month. Not knowing what to do, they turn to you, the prospecting game theorist, to help them figure out what to do.

Fill in the following table with the payoffs they can expect. Enter as follows: (Red's payoff, Sadie's payoff). Enter whole numbers - no commas.

Based on the payoffs, what is the likely outcome of the game? Explain

both of them raises prices

both of them do not raise prices

sadie does but red does not

red does but sadie does not raise prices

Discuss several that you use heuristic in every day life

The mortgage backed securities issued by Freddie and Fannie are fully backed by the Federal government.

Bank holding companies came about largely due to

Give an example of a foreign trade practice that U.S. firms view as "unfair". How do U.S. trade laws attempt to enforce "fair trade" ?

1. Explain in detail the importance of Political, Social, Economic and Cultural factors of a country.
2. Explain how Covid-19 have impacted these factors globally

Washington (CNN)President Donald Trump imposed tariffs on French wine, Italian cheese, and single malt Irish whiskey last year -- and could escalate them by the end of the week. That's worrying owners of specialty shops, restaurants and importers, some of whom have already raised prices on customers. "We're faced with a big dilemma. How much can we raise prices without losing our customer base," said Lou Di Palo, who runs the 110-year-old Di Palo's in Manhattan with his family. Most of what they sell, including cheeses, meats and wine, is imported from Italy -- and that's not something Di Palo intends to change to avoid the cost of the tariff. "If we have to shift a large portion of our inventory to American-made cheeses, then we'd be just like every other supermarket. That's not what people travel to Di Palo's for," he said. In October, the administration imposed a 25% tariff on a variety of goods worth $7.5 billion in retaliation for the subsidies Europe provided to aircraft maker Airbus. But since then, the administration has threatened to hike the rate up to 100% because of a lack of progress in resolving the issue. A decision could come this week, when an initial review period ends. Dozens of people testified before a US Trade Representative's Office hearing last month, protesting the European tariffs, as well as an additional set of duties Trump threatened over a French proposed tax on digital services -- which would affect large American tech companies like Facebook and Google. Those tariffs would have hit French champagne and handbags, but Trump and French President Emmanuel Macron have since agreed to a temporary truce. The Trump administration is targeting the iconic European goods, as well as imposing tariffs on aircraft in retaliation. Still, many of those who testified expressed frustration that wine, for example, was being taxed over an issue that had nothing to do with them. "It can be hard for customers to understand why these retaliatory tariffs are impacting their lives," said Amanda Smeltz, the wine director at Manhattan restaurants estela and Altro Paradiso, whose owner recently sent emails to customers asking them to submit written comments to USTR. It argued that the tariffs would make it hard for small businesses to survive. Smeltz fears that if a 100% tariff is imposed, certain items will disappear from the American market. "If you ever enjoyed a beautiful whiskey from Ireland or a fine bottle of wine on your birthday -- you can kiss those things goodbye," she added. The Trump administration is allowed to revise the tariffs every six months, changing the products included and the rate of the duty. That makes it hard for businesses to plan for the future. "We just don't know what's going to happen and its debilitating for our business," said Tom Gellert, principal of the Gellert Global Group, which owns five US-based food importing companies, including one of the biggest importers of cheese. The company has also paid new tariffs on cheeses from a variety of European countries as well as other products like olive oil from Spain, amounting to a total of $3 million since October 18. It has postponed making new capital investments in a cheese facility in New Jersey until there is more trade certainty.

1. Summary. Write  a paragraph  that summarizes the main ideas in the article. You do not have to account for every single fact, just provide a fairly complete description of the general themes.  Your summary should be  well-structured  with appropriate punctuation.  
2. Model. Provide an economic model/theory ( fiscal policy, monetary policy, international trade, economic growth, etc.) and economic analysis of the article using the economic model/thoery that you chose.  Do not re-hash your summary.
3. Graph. Insert an appropriate  graph(s)  of your economic model using MS Word drawing tools (or the equivalent). Please note, graphs showing some data is not an economic model, they are just a convenient way of data representation. You need to include the graph of your economic theory.
4. Economic implications. Provide an economic implication of the case.

Choose a company of your choice, either domestic or foreign, that operates internationally. Discuss the potential types of "collaborative arrangements" (mergers & acquisitions; joint ventures, franchising/licensing etc) you feel would be appropriate for this firm. Are there are particular industries that seem to lend themselves to particular types of collaborative arrangements more readily than others? Be sure to discuss why this might be so.