You run a company, GizmoNet, that produces gizmos. Gizmos hook onto iPhones, allowing users to access the internet via a virtual reality interface.

Your company hires software engineers, who are employed for three periods. In period one, they must train at GizmoNet. In this period their total productivity is $10 million, and training costs are $8 million. In periods two and three (after the training) productivity is $17 million and $19 million, respectively. An engineer who received no training would have productivity of $10 million at any other firm in all three periods.

Engineers can quit after training (and always get a job offer at other firms). If they do so, their productivity at other firms is $2 million lower than at GizmoNet in each of the last two periods. Assume no discounting.

b. (10 points) Suppose that the labor market is competitive, so that the firm

must earn zero profit from hiring an engineer. If so, what set of salaries

? , ? , ? must the firm offer to guarantee that the total return on the123

training investment is maximized? To choose an answer if you have more than one possibility, pick the feasible solution that maximizes ? (because

software engineers are impatient and risk averse, so ceteris paribus they prefer to be paid as soon as possible).
Hint: first figure out what has to happen to maximize the return on investment. The figure out any constraints on pay, etc. Only then figure out who should invest and get the return (worker or firm), and to what extent.

c. (5 points) In an economic sense (rather than accounting), who pays for the training investment, and who earns the return on the investment? Briefly explain.

SIU is a university in the UK catering for international students. There are currently 950 students. Fees were £16,000 for the last year and the president is concerned that adverse changes in the economic and educational environment are threatening the university’s future. The income of the market is expected to decline next year by 2%, and it is also expected that the average fee of competitive institutions will fall from £14,000 to £12,000. 10% of revenue is currently spent on promotion. The president does some research and estimates that the relevant demand elasticities are as follows:

PED = -1.6, YED = 2.2, AED = 1.8, CED = 0.8.

1. Briefly outline other marketing mix options for achieving the target (50 words).

1. Suppose that the total aggregate supply of workers is inelastic (constant), with the aggregate supply curve (all sectors combined) given by L^S=100 workers. Suppose there are two industries/sectors with labour demand L_A=120-w_A in sector A and labour demand L_B=100-w_B in sector B.

• Find the aggregate labour demand function L^D(w) of both industries/sectors combined, assuming they pay the same wage w_A=w_B=w
• Calculate the aggregate competitive equilibrium outcome (wage and employment level) when both industries/sectors pay the same wage w_A=w_B=w
• At the equilibrium wage, how many workers will work in sector A and how many workers will work in sector B?
• Draw the demand function in each sector (on two graphs). Label the equilibrium wage and number of workers in each sector.

2. Now (for the same setup as Problem 1) suppose sector A forms a union and bargains for wage w_A=30.

• What is the quantity of labour demanded in sector A after the wage increase?
• How many workers from sector A will now have to look for employment in sector B?
• How many workers will be in sector B after these workers join? What wage will be paid in sector B now?
• For sectors A and B, compare the wage and employment level outcomes versus in Problem 1.
• What is the observed union—non-union wage differential d̂_obs?
• What is the pure (direct) union—non-union wage differential d̂_dir (caused by the union directly)?
• Which differential is greater, and why?

Edit: That's exactly what our prof gave us I'm confused as well :(

For questions below consider the following specific factors model. Vietnam and Thailand produce beans and trucks. Labor is the mobile factor (i.e. labor is used in the production of both goods). The specific factor for beans is land, and the specific factor for trucks is capital. Under the closed-economy equilibrium the relative price of beans with respect to trucks is lower in Thailand than in Vietnam (i.e. under closed economy PbeansThailand/PtrucksThailand < PbeansVietnam/PtrucksVietnam).

For questions (10)~(11) below, assume that as Vietnam goes from closed economy to free trade, the price of trucks remains unchanged, and the price of beans decreases by 10%.

(10). The nominal wage decreases by more than 10% in Vietnam. True or False?

(11). The rental rate of capital increases in Vietnam. True or False?

Describe some bargaining interaction your company has with another entity (firms producing complementary or substitute products, upstream suppliers, or downstream customers), or between internal divisions within your firm. Describe the bargaining as strategic or nonstrategic interaction.

3. Problems and Applications Q3 Lucia and Sharon 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. Lucia takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Sharon takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Lucia's opportunity cost of making a pizza is5/7 gallon of root beer, and Sharon's opportunity cost of making a pizza is 2/3 gallon of root beer. Lucia has an absolute advantage in making pizza, and Sharon or Lucia  has a comparative advantage in making pizza. If Lucia and Sharon trade foods with each other,Sharon will trade away pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates better off is1 1/2 gallons of root beer, and the lowest price that makes both roommates better off is1 1/2 gallons of root beer per pizza.

Are there ways that staff members can influence or change the inmate subculture? If so, how? If not, why not?

Given what you know about why family members do not visit, what ideas do you have for how prisons can increase visitation?

Are there ways that staff members can influence or change the inmate subculture? If so, how? If not, why not?

Please include excel formulas if possible.

For the dataset above answer the following:

a. What are average sales when labor costs exceed $50,000?

b. What are minimum sales when materials costs are less than $20,000?

c. What region had the highest labor costs?

d. What region has the lowest sales?

e. What was the greatest differences in sales across any two regions?

What is the relationship between asceticism and spirit of capitalism for Max Weber?

A researcher gathers data on class size (CLASS) and average test scores (TEST) from 100 fourth grade classrooms with class sizes ranging from 16 to 38 students. The researcher estimates the following simple regression model:

TEST = 510 - 5.3CLASS

(20.5) (2.2)

where the number in parenthesis are the standard errors of the estimated coefficients. The R^2 of the regression is given as R^2 = 0.08 and the standard error of the regression is 12.0.

Suppose the variable TEST were re-standardized by dividing by 100 (ie the new variable TEST2 = TEST/100 was used to repeat the regression). Please give results of the new regression using TEST2. Be sure to report the estimated coefficients, standard errors, R^2 and the standard error of the new regression.

The aggregate-demand (AD), short-run aggregate supply (AS), and long-run aggregate-supply (AS_LR) schedules are as follows. The schedules show the GDP price deflator (P) versus real GDP (Q), with Q measured in trillions of constant dollars.

1. GRAPHS: Graph the AD, AS, and AS_LR curves in the same diagram. Be sure to label the curves and the axes. Indicate potential output (Q_f) on the Q axis.

2. SHORT-RUN AND LONG-RUN AGGREGATE SUPPLY, IN GENERAL: Explain the difference in shape between the AS and AS_LR curves in general.

Note: “in general” means not just for this economy but for any economy.

3. SHORT-RUN AND LONG-RUN EQUILIBRIUM, IN GENERAL: State the general conditions for short-run equilibrium and for long-run equilibrium. Which one implies the other?

Note: “general” means not just for this economy but for any economy.

4. SHORT-RUN EQUILIBRUM, THIS ECONOMY: What is the short-run equilibrium price level? Explain your answer. What is the short-run equilibrium Q? Explain your answer. Show this short-run equilibrium price and output on the graph. Suppose that P is initially at 90. This implies that there is either excess demand or excess supply of Q—which one? And what is the amount of this excess demand or excess supply? Then explain the process of eliminating the excess demand or supply, that is, the process to reach short-run equilibrium.

5. LONG-RUN EQUILIBRIUM, THIS ECONOMY: What is long-run equilibrium GDP (Q)? Explain your answer. Assuming that the AD curve does not shift, what is the long-run equilibrium price level (P)? Explain your answer. Show the long-run equilibrium price and output on the graph. Beginning at short‑run equilibrium, describe the process to long-run equilibrium.

1. Suppose that you ran the following regression:

Wage = Bo + B1Education +e

Where wage is in 1000's of dollars. Now Suppose that your econometrics give you the following results

N= 42

1. Estimate a 95% confidence interval for B1 Show your work carefully. What does this Confidence interval tell us about the relationship between education and wages?

2. Test at the 99% level the null hypothesis that B1 is zero, versus the alternative hypothesis that it's not Show your work and write the result clearly. Also write your conclusion. Interpret your result in words using economic theory.

3. Test at the 95% level the null hypothesis that Bo is zero, versus the alternative that it's positive. Show your work, the result and write your conclusion. Explain in words what does the conclusion mean.

4. Your manager thinks that 1 additional year of education will lead to an increase in wages by 1500 dollars. Choose an alternative hypothesis and explain your choice. Does your estimated relationship support this claim? Use a 5% significance level.

People looking for medicine to relieve pain often find that there is an inherent trade-off between safety and effectiveness. Those drugs that are very effective at relieving pain, like prescription opioids such as oxycodone and hydrocodone, carry the risk of significant side effects. Other drugs, such as the non-steroid anti-inflammatory drugs (NSAIDs) like ibuprofen, are very safe but not very effective at all at reducing pain.

Suppose you know the following:
• The individual always values making a drug safer; however, the incremental gain in effectiveness decreases as the safety level increases;
• The individual always values more pain relief; however, the incremental gain in safety decreases as the pain relief increases;
• If the options are opioids or NSAIDs, he chooses opioids.
• Marijuana’s safety is halfway between the high safety of NSAIDs and the low safety of opioids. It’s effectiveness at pain relief is uncertain.

a. Draw a graph with the attributes (safety and pain relief) on each axis. Draw indifference curves to show that the individual prefers opioids over NSAIDs.
b. Define the marginal rate of substitution in this context. Is the MRS higher for NSAIDs or opioids? Explain how you know.
c. An opponent of medical marijuana makes the argument that marijuana should not be legal since it isn’t as effective as opioids at pain relief. Does marijuana need to be as effective as opioids in relieving pain in order for the individual to prefer it? Indicate on the graph the minimum level of pain relief that marijuana needs to achieve in order for it to be preferred to opioids. Label the difference between this minimum and the pain relief achieved from opioids as A.
d. A proponent of medical marijuana believes that marijuana may help society, especially if the drug regulators ban opioid use. Indicate on the graph the minimum level of pain relief that marijuana needs to achieve in order for it to be preferred to NSAIDs. Label the difference between NSAIDs pain relief and this minimum to make marijuana preferable over NSAIDS as B.
e. Compare the difference A you found in part c to the difference B you found in part d. Why is A so much bigger than B?