IBEX has hired you to analyze demand in 25 regional markets for a new Product Y, called Angelica Pickles. A statistical analysis of the demand in these markets shows (standard errors in parentheses):

QY = 250 - 10P + 6PX + 0.25A + 0.04I (100) (3) (2) (0.1) (0.15)

R2 = 90%

Standard Error of the Estimate = 75

Here, QY is the market demand for Product Y, P is the price of Y in dollars, A is dollars of advertising expenditures, PX is the average price in dollars of another (unidentified) product, and I is dollars of household income. In a typical market, the price of Y is $1,500, PX is $500, advertising expenditures are $50,000, and disposable income per household is $45,000. The numbers in parentheses are standard errors of the coefficients. Based on this information, do the following:

a. Calculate the expected level of demand for Y.

b. Indicate the range within which actual demand is expected to fall with 95% confidence.

c. Interpret R2.

d. Test the significance of Advertising (A), at α = 0.05.

You are given the following information. The current dollar-pound exchange rate is $2 per pound. A representative basket of goods and services costs $100 in the US and $120 (dollars, not pounds) in the United Kingdom. For the next year, the Fed is predicted to keep U.S. inflation at 2%, and the Bank of England is predicted to keep U.K. inflation at 3%. The speed of convergence to absolute PPP is 20% per year. That is, if the real exchange rate today is 1.4 and the speed of convergence to absolute PPP is 15% per year, the real exchange rate in one year will be 1.4-0.30*0.4=1.28).

1. What is the expected U.S. minus U.K. inflation differential for the coming year?

2. What is the current U.S. real exchange rate qUS/UK with the United Kingdom? (recall that qUS/UK is defined as the ratio of prices in the UK to the US, both expressed in a common currency).

3. By what percentage is the dollar overvalued or undervalued relative to its absolute PPP level

4. What do you predict the U.S. real exchange rate with the United Kingdom will be in one year’s time?

5. What is the expected rate of real depreciation for the United States (versus the United Kingdom)?

6. What is the expected rate of nominal depreciation for the United States (versus the United Kingdom)?

7. What do you predict will be the dollar price of one pound a year from now?

2. Consider an inverse demand curve and inverse supply curve given by Q D = 52, 000 − 200P Q S = −8, 000 + 400P a. Find equilibrium price. b. Find equilibrium price. c. Now solve for producer surplus at equilibrium. Show your work! HINT: You will need to know find what price is when the supply curve crosses the y-axis. d. And do the same for consumer surplus at equilibrium. Show your work! e. What if the government instead mandates a policy that imposes a price ceiling of $120 (so can’t charge above $120). What happens first to producer surplus, and then to consumer surplus? Show your work! HINT: Don’t overthink it!

How has the COVID-19 pandemic rippled through international economic channels and affected the aggregate supply, aggregate demand, and macroeconomic status of countries with open economies (such as U.S., Europe, China etc. )?

Suppose we know that for a consumer bundle A is at least as good as bundle B. Then, we can conclude that if the consumer has to choose between bundle A and bundle B, she will necessarily choose bundle A.

a. True b. False

2.

a. b.

3.

4.

Suppose you observe me choosing bundle A=(4,3) over bundle B=(4,5). This

suggests that my tastes do not satisfy the assumption of monotonicity.

True

False

Suppose you observe me choosing bundle A over bundle B on a given occasion, then

you observe me choosing bundle B over bundle C on a second occasion, and you

observe me choosing bundle C over bundle A on a third occasion. Based on this

information, you can conclude that my preferences are not rational.

1. True

2. False

Consider the following bundles: A=(4,8), B=(8,4), and C=(6,6). Suppose you know

that my tastes satisfy the convexity assumption. Then you can conclude that for

me bundle C is better than bundles A and B

1. True

2. False

.

discuss the issue of the MAX 737 crash affecting the company(Boeing). Why is the company concerned with this issue?

(c) A wind turbine construction company bids for a fixed-price order from local government to install 70 wind turbine towers in the far coastal area.  They project the works with their increasing capacity in the coming 6 years in the following table.

Assume the investment costs them $3,008,000 in now.  Once installed, each turbine can earn $100,000.  They assume the average inflation rate will be 4% over these 6 years.  What would be the present worth of this project?  Is it worth to invest?

We consider a GSP auction with four bidders, A, B, C and D. Since there are four bidders only the three highest bidders will be displayed). The click frequency of the first, second and third positions are 100 clicks/hour, 75 clicks/hour and 35 clicks/hour, respectively. Bidders’valuation per click are vA = 10, vB = 6, vC = 4, vD = 3. Bidder B, C and D bid 5, 3 and 1, respectively.

What is the optimal bid for A?

Operation Management Class

A great area of concern is the supply of hospital ventilators. Clearly, the number of available ventilators falls far short of the projected number needed. Why is this the case? Were hospitals justified in carrying the inventory of ventilators that they did? Things to consider:

• What do you suppose the demand curve looks like for ventilator demand? Is it Normally distributed like most of our examples from class? What service level do you think would be appropriate? What are the associated costs?

• What is the lead time for new ventilators? Why is it so long and is there anything that can be done about this? What effect does this lead time have on inventory levels?

1.According to classical economists,

Select one:

a. the economy moves to full employment in the long run

b. the economy is always at full employment in the short run

c. the economy is rarely at full employment

d. business cycles explain long-run fluctuations in the economy

e. the economy is at full employment in the short run, but in the long run, business cycle movements lead the economy away from full employment

2. Generous unemployment benefits

Select one:

a. reduces search effort which raises unemployment

b. reduces search effort which lowers unemployment

c. increases search effort which raises unemployment

d. increases search effort which decreases unemployment

e. None of the above

3. In an expansion,

Select one:

a. government budget deficits tend to rise

b. government budget deficits tend to fall

c. the government debt tends to rise faster than in a recession

d. government tax receipts tend to fall

e. there is pressure on the central bank to monetize the debt

4.The Keynesian model

Select one:

a. relies on the market-clearing assumption

b. is used primarily for long-run analysis

c. is used primarily for short-run analysis

d. focuses on the supply of and demand for resources

e. focuses on fluctuations in the financial markets to explain fluctuations in real GDP

5. The economy’s total stock of capital will always increase when

Select one:

a. depreciation is zero

b. investment is greater than depreciation

c. investment is greater than population growth

d. investment is positive

e. depreciation is greater than investment

What is the future Customer Relationship Management (CRM) that Hilton's Hotel will use ?

In your own words, what is Say's Law?

What does Say's Law imply for the length of recessions? Explain.

What does Say's Law imply is the best policy response for a recession? Explain.

Explain why investment is a source of instability in a market economy.

What is a difference between unemployment and other underused resources, such as unburnt fuel or an idle factory?

COVID-19 makes us recognize those people whose jobs are indispensable to the functioning of society, including front-line health-care workers, grocery workers, and delivery workers. Many earn low incomes while bearing the risk of becoming infected to meet other people’s living and medical needs. What new perspective does COVID-19 give you on the different importance of the essential/non-essential jobs to our economy? (You may want to refer to the material on care from Nancy Folbre earlier in the semester.) Feel free to reflect on how COVID-19 may have altered your future career plans.