1. In a 2006 blog entry titled The Secret Tesla Motors Master Plan, Elon Musk outlined his company’s vision and strategy for the electric vehicle industry. His vision was stated as “to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy” in order to create a sustainable future. His Secret Master Plan to reach this overarching goal had four steps:

Build a sports car

Use that money to build an affordable car

Use that money to build an even more affordable car

While doing above, also provide zero emission electric power generation options

Do you think Tesla has a winning strategy? Discuss, using the 3 tests provided for a winning strategy (you can use the tests I provided, or the tests given by the textbook). Clearly state your reasoning. What information would you need to have in order to answer that question?

Inditex's Business Model

Most fashion companies have their clothes manufactured in China. This provides low cost manufacturing but at the expense of flexibility. Managing a distant supply chain creates an inherent problem. By the time finished clothes are on route from your supplier, the prevailing fashion may have changed. The clothes you place in your retail store can end up looking decidedly out of fashion. Most clothing retailers are forced to continue with plans they developed more than six months in advance. Their clothes are usually made and sent out to stores via a centrally controlled system. This permits only slight local changes and most stores receive similar stock.

At Inditex, every store receives a tailored assortment, right down to the number of T-shirts, delivered twice a week. Just over half the stock will be designed and manufactured less than a month before it hits the store. Prices can vary considerably between countries. Shoppers in Spain, Portugal, and Greece can buy the clothes much as thirty per cent cheaper than elsewhere in Europe or overseas markets such as China or the US. As one director at Inditex put it, “company is global, but we shape everything in a very exclusive way to individualise it and shape the store to the customer's needs.”

Part of Inditex's business model is a reliance on communication and collaboration. The store's stock is developed in partnership between designers, country managers based at the brands' HQs, and the local store. This level of collaboration allows everyone to feedback ideas about what customers want and don’t want. The business is configured in a way that allows decisions to be made from the bottom to the top, not just in the stores, but throughout the supply chain. Just over half of Inditex's product is only ever produced in relatively small amounts; even if something is incredibly successful, it will never be reproduced exactly again. Designers find versatile fabrics that can easily work as well in a skirt as a jacket to help facilitate Inditex's flexible approach.

Unlike other clothing manufacturers, Inditex does not advertise. Its avoidance of advertising is party driven by its manufacturing model, which relies on constantly changing its garments. This precludes placing advertisements in magazines or billboards which require a lead time of weeks or month. However, website can be updated every day, reflecting real-time changes. Instead, it relies upon smart locations and regularly updating the look of its stores. It is one of the main areas of capital expenditure for Inditex, with 300 to 400 stores a year to renovate. While competing clothing retailers struggled, Inditex reported a ten per cent rise in sales in 2016, after it had invested €1.4 billion in its warehouses, technology, new stores, and online expansion.

As part of the decision-making process for the Zara brand managers, for each country monitor computer screens at headquarters filled with sales data and talk to store managers or regional directors by phone. Managers are helped by computer algorithms, developed in partnership with Massachusetts Institute of Technology. The use of computer technology helps Zara to get the right mix of sizes for stores. Although managers are guided by these automatic suggestions, they have autonomy to adjust everything manually, according to local feedback and market knowledge.

Over ninety-five per cent of Zara's collections are sold internationally. That said, there are still regional differences. For example, Zara's clothes in Germany tend to be a bit sporty; in Russia, they might wear a pencil skirt with high heels, but in the UK it would be worn with a brogue. At the same time, as different stores around the world are selling similar fashions, Zara stores around the corner from each other might be selling different items of clothing. It's all dictated by their shoppers. Staff at head office can make adjustments for products in as little as three weeks in advance, using production in or close to Europe; primarily Turkey, Spain, and Portugal.

At headquarters in Arteixo, there are eleven factories owned by Inditex producing goods for the Zara brand. Inditex's capability lies in skilled jobs, such as cutting out garment pieces, clothing design, and logistics; all of which it keeps in-house. It owns just two or three per cent of its manufacturing capacity. The sewing of fabric pieces is undertaken by more than 100 nearby partner factories that make pieces sent from the Inditex-owned factories into finished clothes.

Many have referred to this as 'fast fashion'. Executives at Inditex insists: 'It's not fast, it's more accurate. What's fast is the logistics, and the moment of creation must be close to what customers are saying. To be quick is easy. But that is not our model. Everything we do is trying to think inside the skin of the customer. It's more expensive, but you get more loyalty from the customers and more flexibility, more accuracy.

Another of Inditex's capabilities is its distribution system. In Arteixo, all Inditex's factories are linked to its distribution centre by tunnels and a 200-km network of ceiling rails on which 50,000 garments a week from each factory flow around on hangers. Basic items of clothing made in Asia are gathered in Spain, before being sorted for individual stores. The model may be under some pressure since Asia overtook Spain as the biggest source of sales. Routing all its products to a small town in Spain to be sorted, may require changing this to a small town in China. Inditex's Business model appears quite straightforward; which begs the question—why has it not been successfully copied?

The Questions

1. What type of international strategy would you say Inditex is following? Justify your answer.
2. What is Zara’s business strategy? Explain.
3. How is the international strategy of Inditex related to the business strategy of Zara? Explain.
4. Why is it that no other fashion retailer can match Zara's performance?

Explain why aggregate supply is a central feature of macro economics.

1. How is the short-run different from the long run? What is the main theoretical difference? Use graphs to illustrate.

2. Do you think the ongoing COVID-19 pandemic is a short-run fluctuation? If so, can the Fed take up policies to mitigate its negative impact on the economy? Explain.

(Hint: What is the nature of this shock? Is it a demand or supply shock? Or, is it different than a regular demand or supply shock the policymakers need to think out of the box to deal with it?)

Suppose some students are able to borrow for college at a rate of 5%, which also is the market rate of return. For other students, the only source of funds to borrow for college is Louie the Loanshark, who charges an interest rate of 20%. What are the consequences for the educational attainment of these different students? Is there a potential role for government intervention in the education market?

Explain the difference between a short-run and a long-run credit constraint. Give an example of a policy that could overcome each type of constraint. Why is it important for financial aid policy to distinguish between short- and long-run credit constraints?

Beginning in October 2016 for the 2017-2019 academic year, the Free Application for Federal Student Aid (FAFSA) will be available earlier– in October, rather than January– and the FAFSA will now use tax information from two years ago (“prior-prior” year) as opposed to last year a. What economic problem does this policy change address in the allocation of student aid? b. Who benefits from this policy change? c. What are the costs of this policy change? Are there any losers?

. In 1973, the Basic Education Opportunity Grant (later renamed the Pell Grant) was established to provide grant aid to low-income students—not just recent high school graduates (“traditional students”) but also older students who might be returning to school (“nontraditional students”). The program was intended to increase college enrollment among the students most likely to face difficulties financing a college education. a. How is the effect of the Pell grant on college enrollment different for a student who is in his mid-20s than for a recent high school graduate?

Describe the profit maximizing position of a perfectly competitive firm in the long-run. Use a diagram to motivate your answer.

find an article about a merger or acquisition that was announced within the last month. you should include a brief summary of the deal, along with your thoughts on the deal. To help you get started, here are some issues to consider:

Is this a good deal (i.e., is this deal likely to create value for the acquiring firm)?

What synergies does the deal create? Are these synergies realizable?

What is the catalyst for the deal? Why is the deal happening now?

minimum 300 words

The market for kerosene in the U.S. and Europe began to weaken, beginning around 1900, primarily because of a prolonged economic depression.

In a paper appearing in the National Tax Journal, titled “The cost of complexity in federal student aid: Lessons from optimal tax theory and behavioral economics”, Susan Dynarski and Judith Scott-Clayton examine the current federal methodology for determining eligibility for financial aid. At the time they wrote, it was true that “The FAFSA, at five pages and 128 questions, is lengthier than Form 1040EZ and Form 1040A. It is comparable to Form 1040 (two pages, with 118 questions).” Why might the complexity of the FAFSA reduce efficiency in the distribution of financial AID?  

In the real business cycle model, suppose that firms become infected with pessimism (for example, due to COVID-19 outbreak) and they expect that total factor productivity will be much lower in the future.

a. Determine the equilibrium effects of this.
b. If waves of optimism and pessimism of this sort cause GDP to fluctuate, does the model explain the key business cycle facts?
c. Suppose that the monetary authority wants to stabilize the price level in the face of a wave of pessimism. Determine what it should do, and explain.

(History of Economic Thought) Question.

Even though he considered the analyses of some classical economists to be vulgar, Marx valued highly the contributions of economists like Smith and Ricardo, and considered them to be true scientists. In what sense did Marx consider their efforts in economics to be ‘scientific’?

Questions ( 1 ) To use Aggregate Supplier & Aggregate Demand framework in order to explain how an expansionary monetary policy and expansionary fiscal policy can increase the national income (fight recession)?

Subject ::COVID-19 counter: UAE businesses are out to save their cash

By allowing businesses to save on costs, the UAE government has managed to ease short-term concerns. But businesses will need all they cash they can save or loan to get through the difficult months.

Dubai: Preserve cash at all costs – that’s the only priority for UAE businesses as they wait for commercial activity to resume. Even sending their staff on paid annual leaves is a way of cost saving for them.

“More businesses are “forcing” their staff to use up all their accumulated leave rather than allow any encashment,” said an HR consultant advising two of the leading corporate houses in Dubai. “So far, few businesses have taken the real hard decisions of massive layoffs or asking them to go in for extended pay cuts.

“But that will come... soon.”

On Monday, the corporate sector was shaken up by a memo reportedly signed by Emaar’s Mohammed Alabbar that talked about voluntary pay cuts for everyone from the chairman – Alabbar – right down to the support staff. The cuts were 100 per cent for Alabbar and up to 30 per cent for Grade 3 staffers. The cuts came into effect from April 1.

Emaar has so far not officially confirmed whether the circulated memo states the actual case, and if yes, how long the cuts will be in effect. “It’s likely that the cuts will only be for a set period of two to three months,” said a consultant.

Suppose a company invests in technological innovation and, therefore, has lower capital
stocks in the current period. What are the effects on current aggregate output, consumption, investment, employment, real wage, real interest rate, nominal interest rate, and price level? Explain your results and show the graph.