Q13: Using a short, written paragraph that includes relevant economic terminology, explain why AND how the market is affected by the event(s). Be clear and as detailed as possible.

Illustrate each market before and after the event(s) using a single, properly-labelled demand and supply graph. Only one graph is necessary for part d).

Summarize the impacts of the event(s) on the market by completing the table at the end of the question. In each cell of the table, insert one of the following: none, increase, decrease, or unknown.

a) Market: Used clothing

Event: A recession occurs

b) Market: Beer in Colorado, Oregon and Washington

Event: Marijuana is legalized in Colorado, Oregon and Washington

c) Market: Ethanol

Event: The price of sugar declines

d) Market: Blueberries

Events: The price of sawdust increases AND

blueberries are recognized as a superfood

4. The difference between capital goods and material inputs is that:

1. Capital goods are durable; Materials are used up
2. Capital goods become physically part of the output produced; Materials do not
3. Capital goods are machinery; Materials are everything else
4. Capital goods are bough on credit; Materials are paid for in cash

5. The amount of output required for consumption by producers at their customary standard of living, plus the amount required to replace capital depreciation and material inputs, is referred to as:

1. Surplus product
2. Net product
3. Total product
4. Necessary product

7. The amount of output allocated towards the consumption of producers at their customary standard of living, plus the surplus product is referred to as:

1. Net product
2. Necessary product
3. Total product
4. Household product

8. An economic system in which a political elite claims the surplus product by taxing farmers and tenants is know as

1. Independent production
2. Central planning
3. Feudalism
4. Agrarian despotism

3.2 Externalities
Consider the perfectly competitive market for strawberries at the Davis farmers market. The market’s inverse demand curve is p = 600 − 20Q. Firms selling strawberries at the farmers market have marginal cost curve MCP = 20Q. Also assume that, because there is a fixed amount of space at the farmers market, each strawberry sold at the farmers market has negative social cost (less bread stands!), with a cost of space-taking of MCst = 12Q. However, because having stawberries around the farmers market puts buyers in a good mood, there is also a positive externality that strawberry firms receive equal to MBgm = 2Q (MB is marginal benefit).
A. What are the perfectly competitive equilibrium price and quantity in this market?
B. What is the socially optimal equilibrium price and quantity in this market?

C. Please draw this market, including the following curves—demand, private marginal cost, and social marginal cost. Also label the following points—the perfectly competitive equilibrium and the socially optimal equilibrium. Also please label axes and where curves cross axes.
D. What is deadweight loss in this market?

Now suppose the Davis farmers market wants to set a specific tax on this market to ensure the socially optimal level of strawberries.
E. What specific tax should the Davis farmers market set?
Now assume that one farm owned by an ex-chancellor of UCD has bribed the Davis farmers market officials to obtain a monopoly in selling strawberries at the farmers market. Assume the demand and marginal cost curves stay the same.
F. What is the un-regulated monopoly equilibrium in this market in terms of price and quantity?

G. Please draw this market, including the following curves—demand, marginal revenue, private marginal cost, and social marginal cost. Also label the fol- lowing points—the un-regulated monopoly equilibrium and the socially optimal equilibrium. Also please label axes and where curves cross axes.
H. What is deadweight loss in this market?

Suppose again that the Davis farmers market wants to set a specific tax on this market to ensure the socially optimal level of strawberries.
I. What specific tax should the Davis farmers market set in the case of the monopoly?

1. What are the costs and benefits of utilizing quantitative methods and qualitative methods? Which method do you believe is superior?
2. Consider a political phenomenon that you would like to study. Compile a list of a couple research questions and hypotheses that can help you in your study.

M5: Discussion on Households: Consumption-Saving Decision
For this discussion highlight how relevant are households' inter-temporal choices in terms of interest rates, postponing consumption (patience), credit availability, income shocks, and foresight for Walgreens Pharmacy USA.

Price controls create two forms of inefficiency. Describe them and illustrate them using the supply and demand model.

In sales:

How can trust-destroying conflicts be avoided?

How does an ABC analysis use the 80/20 rule?

Discuss some of the strategies salespeople can use to handle unethical requests from superiors.

What is an implied warranty and an expressed warranty? You have just filled up your car with gasoline. Give an example of an expressed and an implied warranty that might have accompanied your purchase.

A school is overcrowded and there are three options. The do-nothing alternative corresponds to continuing to use modular classrooms. The school can be expanded, or a new school can be built to “split the load” between the schools. User benefits come from improvements in school performance for the expanded or new schools. If a new school is built, there are more benefits because more students will be able to walk to school, the average distance for those who ride the school buses will be shorter, and the schools will be smaller and more “student friendly.” The disbenefits for the expanded school are due to the impact of the construction process during the school year. The interest rate is 8%, and the life of each alternative is 20 years. Which alternative should be chosen? What is the incremental ratio for the preferred alternative?

(a) Use the benefit-cost ratio.

(b)Use the modified benefit-cost ratio.

(c)Use the public/government version of the B/C ratio.

Describe related models to explain why cities exist. Give an example for each model. ( 50 marks)

i. Model 1: Backyard production – a region without cities

ii. Model 2: Trading city

iii. Model 3: Factory town

1. Which of the following is a sustained rise over time in a nation's production of goods and services?

2. Which of the following would be the best fiscal policy to use during a recession?

3. _____ are people who risk their time, money, and other resources to start and manage a business.

4. How do higher income taxes typically affect the economy?

Case study:

A Few Good People: Several years ago a very successful CEO and principal stockholder in a chemical company came to speak to the students at William and Mary. Our speaker is an entrepreneur who was involved with the start-up of his company. He is financially very successful and at the time he spoke to W&M students he was a member of the advisory board of a business school in his home city. Our speaker revealed that he is quite comfortable making economic trade-offs between fines for chemical pollution of the environment and business profitability. If the expenses related to fines plus the costs of paying-off any officials are less than the gains to be had from low-cost, high-pollution production, he believes the decision is simply a matter of evaluating the cash flows. Our speaker has business operations in many parts of the world and he indicated that getting around pollution problems is often more complicated than simply paying fines. In many countries it is helpful or even necessary to bribe government officials. Bribes might be paid to high-ranking officials who can influence the legislative process or make decisions to approve plant operations and locations. Bribes might also be paid to local officials to overlook violations or to avoid enforcing existing laws. Of course, it goes without saying, the bribes only make business sense if the financial advantages gained are greater than the cost of the bribes. Our speaker complained that under the Foreign Corrupt Practices Act (FPCA) the United States in addition to civil penalties can impose criminal penalties for certain "corrupt" practices possibly including some of the bribery practices described above. He noted that other countries regard these business practices as civil problems that may or may not result in fines. He argued that on a "level playing field" the United States should not subject him to exposure to jail-time when business people from other countries can pay for their premeditated transgressions with fines. Our speaker also identified new international business opportunities by naming countries more welcoming to chemical production because of their lax, unenforced, or non-existent environmental restrictions. He ended his remarks by welcoming inquiries from interested students. He was, as he said, always on the watch for a "few good people" to add to his staff. Our guest was controversial. Some students were upset that such a politically incorrect speaker could have slipped by the speakers' committee. They asked, “How could we expose students to such a pernicious influence?” Other students found themselves more interested in the speaker's formula for success. The speaker did surprise most people in the audience both with his candor and his business practices. As the event progressed the speaker became aware that he was not receiving the admiration and appreciation he expected. Towards the end of his time, he became far less comfortable discussing his leadership, and he has not returned.

Question:

1. When this executive interviews prospective new hires for his company, what qualities do you think he is seeking in those "few good people" to whom he extends offers?
2. Subsequent to passing the FCPA in 1977, the United States has influenced more than 30 other nations to pass comparable legislation. While the speaker clearly saw the FCPA as being anti-business, it is safe to assume that many other businesses (especially large and influential businesses) did not oppose the FCPA (otherwise, it almost certainly would not have passed the U.S. Congress). The FPCA is an example of a “social contract.” This legislation is not applicable to any practice that is found to be corrupt, rather it is written to address specific corrupt practices included in the FCPA such as bribing foreign officials to influence their decision to make purchases (e.g., airplanes). Discuss why business leaders and companies other than the speaker in the case who are involved in global commerce would support the FCPA (and disagree with the speaker).

Retailers will buy 45 cordless phones from a wholesaler if the price is $10 each but only 20 if the price is $60. The wholesaler will supply 35 phones at $30 each and 42 at $42 each. Assuming the supply and demand functions are linear, find the market equilibrium point(q0, p0).

A home industry produces two kinds of products consisting of two types of products namely 'Pastries' and 'Bread Lovers'. Each product requires 3 components of different raw materials, namely flour, butter and eggs. The 'Pastries' product requires 3 flour, 2 butter and 2 eggs. While the product 'Bread Lovers' require 2 flour, 3 butter and 4 eggs. The available resources for the three raw materials for Pastries and Bread Lovers are 15 flour, 8 butter and 10 eggs, respectively. The cost required to make 'Pastries' is $12,000, and 'Bread Lovers' are $15,000. What is the number of each product that must be produced in order to minimize the operating costs of the home industry?

1. State whether the following actions increase, decrease or do not change the total deposits created by the banking system. (5 pts each, Total : 25 pts):

1. Central bank made an open market purchase of 1 Million TL.

2. Central bank increased the required reserve ratio.

3. The recent financial panic caused firms to increase their excess reserves.

4. Central bank provided 1 Million TL worth of loans to the banking system.

5. The recent financial panic caused agents to increase their currency to deposit ratio