France and England both produce wine and cloth with constant opportunity costs. France can produce 150 barrels of wine if it produces no cloth or 100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it produces no cloth or 150 bolts of cloth if it produces no wine. When international trade takes place, each country specializes completely in the production of the good in which it has a comparative advantage: 1 barrel of wine exchanges for 1 bolt of cloth and France exports 50 units of wine. We can conclude that France produces _____ units of wine and _____ units of cloth and that France consumes _____ units of wine and _____ units of cloth.

150; 0; 100; 50

150; 0; 50; 50

150; 100; 100; 100

0; 100; 50; 50

1. The following table shows the market shares during the first three months of 2017 for companies in the US personal computer (PC) market:

1. Treating “Others” as a single firm, how would the “Agencies” characterize the concentration level in this market? How does your answer change if “Others” consists of 5 firms each with 5% market share? Explain/Show Work. USE HHI

2. Treating “Others” as a single firm, predict whether the agencies would challenge a merger between Dell and Apple. How does your answer change (if at all) if you treat “Others” as 5 firms each with 5% market share? Explain/Show Work.USE HHI

3. This time, suppose Lenovo and Hewlett-Packard were to merge. Treating “Others” as a single firm, would this merger likely be blocked? If so, is it presumptively illegal? Does your answer change if you treat “Others” as 5 firms each with 5% market share? Explain/Show Work. USE HHI

Imagine that you are the owner of a cookie factory. In your first paragraph, provide examples of four production costs of your cookie factory. Which costs are fixed costs? Which costs are variable costs? In your second paragraph, provide two examples of business decisions that are affected by your costs. Clearly justify your answer.

Keynes and the Neoclassicals

1.  Does it make sense that wages would be sticky downwards but not upwards? Why or why not? (25 points)

2.  Explain why the neoclassical economists believe that the government doesn't need to do much about unemployment. (25 points)

Suppose a public referendum is being held on whether or not to levy a tax on cigarettes. Currently, the supply of cigarettes is given by Qs = -40 + 6P. You estimate the demand for cigarettes to be Qd = 140 - 3P.

You are asked to evaluate the likely effects of a tax on cigarettes equal to $1.50 per pack of cigarettes. Specifically, you are to file a report which predicts by how much this will reduce the amount of cigarettes sold. You are also asked to estimate the proportion of the tax that will be paid by the cigarette companies (sellers), and the proportion of the tax that will be paid by the smokers (consumers) of cigarettes.

To do this, you will first need to calculate the current price and quantity of cigarettes sold.

a) (4 points) What is the equilibrium price and quantity of cigarettes?

P* = __________________________

Q* = __________________________

Next you know from your economics class that you will need to know the price elasticity of demand and the price elasticity of supply of cigarettes

b) (2 points) What is the price elasticity of demand for cigarettes at the equilibrium price?

ε = ________________________

c)  η = ________________________

Using your answers to b) and c), you are now able to determine what proportion of the tax will be paid by buyers, and what proportion of the tax will be paid by sellers.

d) What proportion of the tax will be paid by sellers?

Seller’s Proportion = ___________________________________

e) (3 points) What price will buyers pay after the tax is imposed?

Buyer’s Price = ___________________________________

f) (4 points) What quantity of cigarettes will be sold after the tax?

Q^t = ____________________________________

g) (4 points) What is the deadweight loss from the tax?

DWL = ___________________________________

One former MSU student decided to open a lawn service and landscaping company.            During the first year, she paid rent of $5,000, wages to employees of $50,000, and $10,000            for supplies (gas, oil, and so on). To start this business, she quit her previous job that had paid her $40,000 per year. Her mother invested $10,000 in the business, which was used to           acquire equipment. The company earned $106,000 in revenue in the first year.

3i.        The private explicit cost in the first year is

            ____________________

3ii.       If the average investment in the economy earned a 10% return this year, implicit private cost            for this business is

            ____________________

3iii.      Which is a correct statement about the economic profits of the business in the first year?

            a.         If the average investment in the economy earns a 10% return, economic profits were                                     zero.

            b.         The investor in this business earned a 10% return on investment in the first                                        year.

.           c.         This lawn/landscaping business would have had negative economic profits if the                               average investment in the economy generated a 15% return that year.

            d.         All of the above are correct.

            e.         None of the above is correct.

3iv.      Suppose the state government levied an “environmental tax” on this lawn/landscape business equal to $1,000 per year. The effect of the tax is to

            a.         increase the firm’s average cost, but not the marginal cost.

            b.         increase private implicit cost.

            c.         increase variable cost, but not fixed cost.

            d.         increase social cost, but not private cost.

            e.         have no effect on cost.

Illustrate and explain how the two fundamental theorems of welfare economics describe the relationship between competitive markets and Pareto efficiency

Looking for a proper solution with all relative diagrams included. I know what the theorems are and am looking for an emphasis on the "how" they describe the relationships

Approx 400 words

This problem is about the market for peanut butter. Bad whether and tornadoes in             Georgia greatly affected the peanut crop, and as a result the market price of peanuts increased.

2i.        Suppose the price of peanuts increased from 20 cents per pound to 30 cents per pound,     and the quantity of peanuts purchased fell from 275 million pounds per month to 225        million pounds. The price elasticity of demand for peanuts is

            ___________________

2ii.       What is the effect of the change in the peanut market for the market for peanut butter?

            a.         Demand for peanut butter decreases.

            b.         Supply of peanut butter decreases.

            c.         The price of peanut butter increases.

            d.         Both answers b and c are correct.

            e.         Both answers a and c are correct.

2iii.      Suppose jelly is a complement to peanut butter. What is the effect in the jelly market of the change in the peanut market and the peanut butter market?

            a.         Demand for jelly decreases.

            b.         Demand for jelly increases.

            c.         Supply of jelly decreases.

            d.         Supply of jelly increases.

            e.         Both answers a and c.

2iv.      Suppose the strawberry crop is unusually large resulting in a decrease in the price of         strawberries and a decrease in the price of strawberry jelly. What would happen to the equilibrium price and quantity of peanut butter from the combination of the change in the       peanut market and the change in the strawberry market?

2v.       Suppose the income elasticity of demand for Jiff brand peanut butter is +.5, whereas the       income elasticity of demand for store brand X peanut butter is -.3. If income increases by     10 percent, how much does consumption of Jiff peanut butter change and how much does            consumption of brand X peanut butter change?

            ___________________

What are the four ways that human societies historically have addressed material provisioning? Explain each of them.

Again, on March 27th, 2020, The Bank of Canada decreased its target for the overnight interest rate to 0.25 percent "to provide support to the Canadian financial system and the economy during the COVID-19 pandemic." The decrease in interest rates is an example of an expansionary monetary policy. Assume a closed economy.

In three steps, describe the channels, the monetary transmission mechanism, through which this change in policy leads to a shift of the aggregate demand curve (Hint: AD-AS model)

Explain what happens to aggregate demand, real GDP, and the price level?

The Handy’s Woodworking Company is a small-to-medium sized custom furniture and cabinet making company, with head-office and a spacious plant site at Industrial Estates, Melbourne. It’s Chairman and Chief Executive Officer is Ron Haywood now in his late-sixties. His wife Mrs. Emy Haywood, being an aggressive business woman and somewhat younger than her husband, now effectively runs the company. Ron Heywood is affectionately known to all as "Handy" and so the company is generally known as "Handy's". Handy, after an apprenticeship as a cabinet maker, started his small furniture manufacturing business back in 1964 and he and his wife moved to their present location in 1969. The company quickly gained a reputation for attractively designed and well constructed furniture, using imported hardwoods and indigenous softwoods for its products. Handy's now produces custom furniture to order, several lines of furniture for wholesaler/retailers, and a number of variations of standard kitchen and bathroom cabinets, including units made to order. Over the years the Haywoods continued to prosper and built up a loyal staff and work force. More recently their son, John Haywood, has joined the company's management after having obtained a commerce degree at the local university. At John Haywood's insistence, lured by longer production runs and higher and more consistent mark-ups, the company has moved into subcontract work supplying and installing counter-tops, cabinets and similar fixtures for new commercial construction. To date, Handy's has established a well-founded reputation for supplying millwork to the construction industry. The Opportunity There has been a mini-boom in commercial construction in Western suburbs of Melbourne. Bruce Sharpe (VP of Sales and Estimating) persuaded Handy's directors that they were well placed to expand their manufacturing business. Miles Faster (VP of Production), regularly complained that the company's production efficiency was being thwarted by lack of manufacturing space, made a pitch to John Haywood for moving to completely new and more modern facilities. John Haywood, with a vision of growth based on computer controlled automation, talked over the idea with his father. Handy discussed it with his wife who in turn brought Kim Cashman (Controller) and Spencer Moneysworth (VP of Finance and Administration) into the debate. Cashman and Moneysworth felt strongly that they should remain in their current location since there was spare land on their property, even though it was not the most convenient for plant expansion. They argued that not only would this avoid the costs of buying and selling property, but more importantly avoid the interruption to production while relocating their existing equipment. Besides, the nearest potential location at an attractive price was at least 20 kms further out from the residential area where most of them lived. Polarization of opinions rapidly became evident and so, in the spring of 2010, Handy called a meeting of the directors and key personnel to resolve the issue. After a visit to the factory floor and a prolonged and sometimes bitter argument lasting into the early hours, it was agreed that the company would stay put on its existing property. Handy's Corporate Profile Head Office Melbourne, Victoria Business Furniture manufacturing, custom millwork, and hardwood importer; federal charter 1960; privately held; number of employees approx. 850. Major Shareholder: Rainwood Holdings Ltd. On December 31, 2010, total assets were $181,000,000. In fiscal 2010, sales were $93,250,000 with net earnings of $6,540,000. Directors Chairman & CEO Ron Haywood President Mrs. Emy Haywood Executive Vice President Kim Qualey Director John Haywood Key personnel VP Production Miles Faster VP Finance and Administration Spencer Moneysworth VP Personnel Molly Bussell VP Sales and Estimating Bruce Sharpe Controller Kim Cashman Other key players Ian Leadbetter Handy’s project manager Randy Schemers Industrial design consultant, Schemers and Plotters (S&P) Alfred Fowler Industrial property developers, Director, Expert Developers (ED) Ivar Kontark ED's Project Manager Dave Rivett I. Beam Construction Ltd., steel fabricators and installers Bert Leaky Classic Cladding Co., cladding and roofing contractors Charlie Droppe Water proofing contractor, Rain Water Ltd. Amos Dent Mechanical equipment contract, Reece Associate Olaf Volta Electrical contractor, Zapp Electrical Eddie Forgot Equipment supplier, Piecemeal Corporation Win Easley Project management consultant The Project Concept It was agreed at the meeting that additional production capacity would be added equivalent to 25% of the existing floor area. The opportunity would also be taken to install air-conditioning and a dust-free paint and finishing shop complete with additional compressor capacity. Equipment would include a semi-automatic woodworking production train, requiring the development and installation of software and hardware to run it. The President and Executive Vice Presidents' offices would also be renovated. At the meeting, the total cost of the work, not including office renovation, was roughly estimated at $17 million. Handy agreed to commit the company to a budget of $17 million as an absolute maximum for all proposed work and the target date for production would be eighteen months from now. To give Handy's personnel a feeling of ownership, Molly Bussell (VP of Personnel) proposed that the project should be called Handy 2010. Spencer Moneysworth would take responsibility for Project Handy 2010. Planning Moneysworth was keen to show his administrative abilities. He decided not to involve the production people as they were always too busy and, anyway, that would only delay progress. So, not one for wasting time (on planning), Moneysworth immediately invited Expert Developers (ED) to quote on the planned expansion. He reasoned that this contractor's prominence on the industrial estate and their knowledge of industrial work would result in a lower total project cost. Meanwhile, Kim Cashman developed a monthly cash flow chart as follows: First he set aside one million for contingencies. Then he assumed expenditures would be one million in each of the first and last months, with an intervening ten months at $1.4 million each. He carefully locked the cash flow chart away in his drawer for future reference. All actual costs associated with the project would be recorded as part of the company's normal book-keeping. Upon Moneysworth's insistence, ED submitted a fixed-price quotation. It amounted to $20 million and an eighteen-month schedule. After Moneysworth recovered from the shock, he persuaded Handy's management that the price and schedule were excessive. (For their part, ED believed that Handy's would need considerable help with their project planning and allowed for a number of uncertainties). Further negotiations followed in which ED offered to undertake the work based on a fully reimbursable contract. Moneysworth started inquiries elsewhere but ED countered with an offer to do their own work on cost plus but solicit fixed price quotations for all sub-trade work. Under this arrangement ED would be paid an hourly rate covering direct wages or salaries, payroll burden, head-office overhead and profit. This rate would extend to all engineering, procurement, construction and commissioning for which ED would employ Schemers and Plotters (S&P) for the building and industrial design work. Moneysworth felt that the proposed hourly rate was reasonable and that the hours could be monitored effectively. He persuaded Handy's directors to proceed accordingly. The Design A couple of months later as S&P commenced their preliminary designs and raised questions and issues for decision, Moneysworth found he needed assistance to cope with the paper work. John Haywood suggested he use Ian Leadbetter, a bright young mechanical engineer who had specialized in programming semi-automatic manufacturing machinery. Moneysworth realized that this knowledge would be an asset to the project and gave Leadbetter responsibility for running the project. Ian was keen to demonstrate his software skills to his friend John Haywood. So, while he lacked project management training and experience (especially any understanding of "project life-cycle" and "control concepts") he readily accepted the responsibility. During the initial phases of the mechanical design, Ian Leadbetter made good progress on developing the necessary production line control software program. However, early in design ED suggested that Handy's should take over the procurement of the production train directly, since they were more knowledgeable of their requirements. Miles Faster jumped at the opportunity to get involved and decided to change the production train specification to increase capacity. Because of this, the software program had to be mostly rewritten, severely limiting Leadbetter's time for managing the project. It also resulted in errors requiring increased debugging at startup. Neither Moneysworth nor Leadbetter was conscious of the need for any review and approval procedures for specifications and shop drawings submitted directly by either S&P or by Eddie Forgot of Piecemeal Corporation, the suppliers of the production train. In one two-week period, during which both Faster and Leadbetter were on vacation, the manufacturing drawings for this critical long-lead equipment sat in a junior clerk's in-tray awaiting approval. For this reason alone, the delivery schedule slipped two weeks, contributing to a later construction schedule conflict in tying-in the new services. Construction Site clearing was tackled early on with little difficulty. However, as the main construction got into full swing some eight months later, more significant problems began to appear. The change in production train specification made it necessary to add another five feet to the length of the new building. This was only discovered when holding-down bolts for the new train were laid out on site, long after the perimeter foundations had been poured. The catalogue descriptions and specifications for other equipment selected were similarly not received and reviewed until after the foundations had been poured. Leadbetter was not entirely satisfied with the installation of the mechanical equipment for the dust-free paint shop. As a registered mechanical engineer, he knew that the specifications governed the quality of equipment, workmanship and performance. However, since these documents had still not been formally approved, he was loath to discuss the matter with Ivar Kontrak. Instead, he dealt directly with Amos Dent of Reece Associates, the mechanical sub-contractor. This led to strained relations on the site. Another difficulty arose with the paint shop because the local inspection authority insisted that the surplus paint disposal arrangements be upgraded to meet the latest environmental standards. Startup Two years after the project was first launched, the time to get the plant into production rapidly approached. However, neither Moneysworth nor Leadbetter had prepared any meaningful planning for completion such as owner's inspection and acceptance of the building, or testing, dry-running and production start-up of the production train. They also failed to insist that ED obtain the building occupation certificate. Moreover, due to late delivery of the production train, the "tie-in" of power and other utility connections scheduled for the annual two-week maintenance shut-down could not in fact take place until two weeks later. These factors together resulted in a loss of several weeks of production. Customer delivery dates were missed and some general contractors cancelled their contracts and placed their orders for millwork elsewhere. Finished goods inventories were depleted to the point that other sales opportunities were also lost in the special products areas on which Handy’s reputation was based. Control Costs arising from these and other changes, including the costs of delays in completion, were charged to Handy's account. Project overrun finally became reality when actual expenditures exceeded the budget and it was apparent to everyone that the project was at best only 85% complete. Cashman was forced to scramble for an additional line of credit in project-financing at prime plus 2-1/2%, an excessive premium given Handy's credit rating. From then on, Handy was in a fire fighting mode and their ability to control the project diminished rapidly. They found themselves throwing money at every problem in an effort to get the plant operational. During Handy’s period of plant upgrading, construction activity in the region fell dramatically with general demand for Handy’s products falling similarly. Even though Sharpe launched an expensive marketing effort to try to regain customer loyalty, it had only a marginal effect. Post Project Appraisal The net result was that when the new equipment eventually did come on-line, it was seriously under-utilized. Production morale ebbed. Some staff publicly voiced their view that the over-supply of commercial space could have been foreseen even before the project started, especially the oversupply of retail and hotel space, the prime source of Handy's contracts. John Haywood, not a favorite with the older staff, was blamed for introducing these "new fangled and unnecessarily complicated ideas". Because of this experience, Handy's President Emy Haywood retained project management consultant Win Easley of W. Easley Associates to conduct a post project appraisal. Easley had some difficulty in extracting solid information because relevant data was scattered amongst various staff who were not keen to reveal their short-comings. Only a few formal notes of early project meetings could be traced. Most of the communication was on hand-written memos, many of which were not dated. However, interviews with the key players elicited considerable info, as mentioned above. Prepare your report following the format and the rubrics of Handy 2010 Project Case study: ‘Handy’s 2010 Project’ Project appraisal questions:

a)Was the Handy’s 2010 project well-conceived? Give reasons for your opinion. (2.5 marks)

b)Write a simple project scope statement of the Handy 2010 project. Why do you suppose renovation of the President and Executive Vice President’s offices were included in the project and was that a good idea? (2.5 marks)

c)Was Leadbetter qualified to be a project manager? Should Leadbetter (project manager) have been left to run the project? - rationale your answer? (2.5 marks)

d)Discuss- how did the Handy 2010 project handle risks? What might they have done better? (2.5 marks)

e)What type of contract(s) were awarded in Handy’s project. Rationalise the choice of contracts in this project (contracting for professional services and construction work). (2.5 marks)

f) Identify and describe a set of project schedule milestones from project concept to project completion. What would you have done when you saw that the project would not meet its schedule? (2.5 marks)

g)Evaluate project cost performance. Identify two major causes of cost variation. How should the project budget and expenditures be set out for cost control? (2.5 marks)

Manufacturing jobs in the United States have been declining. How has this shift away from industry affected your local economy? Your local identity?

The first DB question this week is twofold. First of all discuss why the standard of living is likely to be higher in a money economy than in a barter economy. Secondly, discuss whether not credit cards qualify as money in our economy