India witnessed the launch of its biggest tax reform since Independence, the Goods and Services Tax (GST) characterized as 'The Good and Simple Tax' on July 1, 2017. While the Goods and Services Tax (GST) is focused on ironing out the creases left by the predecessor tax regime and enhancing ease of doing business, it will involve a wave of short term adjustments like obtaining multistate registrations, interpretation of provisions, determining the place of supply, transitional issues, etc. GST, which is a destination-based tax, has been introduced to subsume several state taxes like Value Added Tax, Entry Tax, Octroi, Luxury Tax, Purchase Tax, Entertainment Tax, etc. and federal taxes like Service tax, Central Excise Duties, Counter-vailing Duty, Additional Duties of Customs, etc. GST will thus replace all these taxes with one tax.
a. Examine the impact of GST in Indian context.
b. Compare the previous laws with GST Act.
c. Discuss the administrative machinery of GST in the country. How GST will enhance ease of doing business?

As indicated in your reading in week 6, the overall effectiveness of an ad is a combination of three variables.

List and describe these three variables.

Pick a print ad and demonstrate how these three variables can be used to determine the effectiveness of the ad.

Explain your assumptions and conclusions. Discuss the ad and your evaluation.

List any references used

three variables:

1. Attention: Entertainment value is a major predictor of attention-getting power, but if consumers don’t see the connection of the ad to the brand, the ad won’t lead to a sale.

2. Branding: Communicating an idea or feeling that the consumer already has about the brand confirms the value of reminder advertising. Even better is advertising that communicates a new idea or a new feeling, but one that still fits the brand in the eyes of the consumer. This kind of advertising helps consumers to see the brand in a new light, to think about it in a new way.

3. Motivation: Finally, an effective ad makes the viewer want to take action and buy the product. Pretesting asks the test subject whether they are more likely to buy the product now or in the future.

The assignment is to imagine yourself 10 years in the future. I'm basing my salary off the average financial adviser for myself and a school teacher for my wife. (PA). Me $ 76,035 Her $62,260. I need to make a budget.

Personal and Family Expenses

Personal and Family Expenses (continued)

(a) Suppose a dealer draws one card from a standard, properly shuffled, 52-card deck of cards (that is, all Jokers have been removed). (i) Describe the sample space - i.e. all of the possible outcomes (no need to write them all out, just describe them in words). (1 point) (ii) What is the probability that the card is a Heart? (1 point) (iii) What is the probability that the card is a 6? (1 point) (iv) What is the probability that the card has a number on the face (i.e. not Jack, Queen, King, or Ace)? (1 point)

(b) Suppose I flip a fair coin twice in a row. (i) Write out the set of possible outcomes (the sample space). (1 point) (ii) What is the probability that at least one flip lands with Heads facing up? (1 point) (iii) What is the probability that both flips land with Heads facing up? (1 point)

(c) Consider a business owner who can make one of three decisions about a new product. Each decision generates a lottery over different possible revenue outcomes. If he makes Decision A, then the resulting lottery, p A, generates $20, 000 in revenue with probability 0.3, $12, 000 in revenue with probability 0.15, $5, 000 in revenue with probability 0.35, and $2, 000 with probability 0.2. If he makes Decision B, then the resulting lottery, p B, generates $30, 000 in revenue with probability 0.1, $10, 000 in revenue with probability 0.6, and $1, 000 with probability 0.3. If he makes Decision C, then the resulting lottery, p C , generates $20, 000 in revenue with probability 0.2, and $8, 000 with probability 0.8. (i) Write each lottery in the form (p1, x1; p2, x2; ...; pn, xn). (2 points) (ii) Calculate the expected value (of revenue) from each decision. (3 points)

Run two different multiple regressions using excel. One should include two of the three idepenedent variables and the other should include all three variables. What are the regession equations?

1. What is the mean and median?

2. what is the standard deviation?

3. what is the minimum and maximum at a minimum?

4. When a profit-maximizing firm in a competitive market is able to generate enough revenue to pay all of its variable costs and some of its fixed costs, it should, in the short run,
A. shut down until it is able to produce where average revenue exceeds average fixed cost.
B. shut down and incur a loss in the amount of its fixed costs.
C. continue to produce as long as marginal cost is less than average revenue.
D. continue to produce as long as revenue is sufficient to pay fixed costs.
E. continue to produce since revenue is enough to cover variable costs even though revenue is not enough to cover both its fixed costs and variable costs.
 

5. A competitive firm (price-taker) is able to sell its output for $10 per unit. The 1,000th unit of output that the firm produces has a marginal cost of $12. It follows that the production and sale of the 1,000th unit of output
(x) increases the firm’s total revenue by $10, but increases the firm’s total cost by $12.
(y) decreases the firm’s profit by $2 since price is less than marginal cost by $2.
(z) indicates that the firm should necessarily shut down in the short run since marginal cost exceeds marginal revenue at the output amount of 1,000 units.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

6. Which of the following statements is (are) correct?
(x) When a profit-maximizing firm is earning profits, those profits can be identified as (P – ATC)  Q.
(y) When a perfectly competitive firm makes a decision to shut down in the short run, it is likely that price is below the minimum of average total cost but above the minimum of average variable cost.
(z) As a general rule, profit-maximizing firms in a competitive market produce output at a point where the value of marginal cost and marginal revenue are both decreasing.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only

Vardon Golf Ltd. is a privately held maker of golf clubs. For decades, it produced a full range of clubs, but recently most of its sales have come from hybrids, clubs that combine the best attributes of fairway woods and long irons. The company also produces putters that are starting to find some traction among professionals and low‐handicap amateurs. The company is profitable, but Cooper Palmer, a private equity firm based in London, believes that it has underperformed relative to its potential.

You are an analyst at Cooper Palmer and have been asked to perform a valuation of Vardon Golf. Financial data for 2012, the year just past, include the following:

^* Net fixed assets = Property, plant and equipment, net of depreciation.

If the company continues under current management, the following performance parameters are expected:

^* For the years 2013 through 2017.

However, the partners at Cooper Palmer are convinced that if they ran the company, Vardon could realize growth opportunities and operating efficiencies not expected under current ownership. For example, cost savings would boost EBIT margins, and improved asset utilization would reduce required investments in WCR and NFA. Based on your discussion with the partners, you reestimate the parameters as follows:

Required

1. Assuming a 5‐year explicit forecast horizon and an opportunity cost of capital of 9%, estimate the value of Vardon Golf under current ownership.
2. Reestimate the value of Vardon Golf based on the partners' assessments of potential operating improvements. Vardon's current owners are willing to sell the company for £17.75 million. Is that an attractive price for Cooper Palmer?

Goal: Please answer the questions below. The main goal of this homework is to see if you can calculate the profit maximization point for this small wedding cake business. I hope that you will be able to merge your knowledge of basic accounting and microeconomic theory in order to calculate the profit maximization point, make comments about efficiency, and make logical recommendations to the firm's management to ensure their future success.

Current Situation:The local wedding cake business was very competitive during 2012. Delicious Deserts was the only wedding cake bakery in the entire county of two million people for several years. They often charged as much as $300 to $500 for each wedding cake. But a new competitor recently came into the market and started selling "discount wedding cakes" for less than $150. The quality and the taste of the discount wedding cakes were acceptable for most of their customers. Both businesses operated in a low-to moderate-income county in California where the average household income was not much higher than $40,000 per year.

The Challenge For Delicious Deserts: At first the news of a low-cost competitor was terrible news for Delicious Deserts. They had no choice. They had to charge from $300 to $500 per wedding cake to cover their high costs. However, because of this new competition, the husband and wife owners of Delicious Deserts decided to make the business more efficient and lower costs. They invested in better ovens and created better tasting cakes using special ingredients. Their customers went crazy over their new and unique 80 proof Italian Rum Wedding cake that actually got people slightly drunk if they ate more than three slices. To boost sales during 2012 they hired part-time telemarketers and social media experts. They also increased their advertising in traditional media such as local wedding magazines. They also displayed eye-catching ads in local churches, entertainment centers and jewelry stores. They also experimented with a new pricing model in which they lowered prices each quarter. Indeed, they found that as they lowered their prices, they sold more cakes. They hired an "A" student who took a microeconomics class with Professor Ed Torres to do an elasticity analysis. The student estimated that the price elasticity for wedding cakes was 1.25 (elastic) and that the income elasticity was 2.10 (a luxury good). The owners of Delicious Deserts were not aware of this information. The student told them that they made a huge pricing strategy error for many years by charging high prices on an elastic good within a low-to moderate-income county. The profit and loss statement below shows that Delicious Deserts made a Total Revenue of $275,000 and sold 1,375 wedding cakes. During 2012, they made three times (3X) more than they did versus 2011. Of course, because they invested in new ovens, made more cakes, and hired new part-time staff, the cost of doing business also rose. The net profit for 2012 was a slim $32,175. The salary for a professional desert baker averaged $70,000 per year in California.

Please examine the profit and loss statement on the next page, then answer the questions on pages 4 through 6.

Delicious Deserts, Incorporated Income Statement For The Year Ending December 31, 2012

Revenues

Gross Sales....................................................................$275,000

Less: Sales Discounts ..................................................$ 2,500

Less: Returns (Cancelled Weddings)...........................$ 2,000

Net Sales...............................................................................................$270,500

Cost of Goods Sold

Beginning Inventory (January 1).................................$ 18,000

Cost Of Ingredients To Bake Cakes............................$109,500

Total Cost of Goods For Sale......................................$127,500

Less: Ending Inventory December 31.........................$ 15,000

Costof Goods Sold..............................................................................$112,500

Gross Profit.....................................................................................................$158,000

Operating Expenses

Selling Expenses

Sales Commissions........................................$ 31,000

Advertising...................................................$ 16,000

Other Selling Expenses (Internet).................$ 18,000

Total Selling Expenses...............................................$ 65,000

General and Administrative Expenses

Professional & Office Salaries.................................$ 20,500

Utilities....................................................................$ 5,000

Office Supplies........................................................$ 1,500

Bank Interest Paid on Loans....................................$ 3,600

Insurance.................................................................$ 2,500

Rent (Fixed Cost)....................................................$ 17,000

Total General & Administrative Expense.............................$ 50,100

Total Operating Expenses..................................................$115,100

Net Profit Before Taxes..............................................................................$ 42,900

Less: Federal/State/Local Taxes................................................................$ 10,725

NET PROFIT.............................................................................................$ 32,175

Question #2: What was the Total Variable Cost of running this business?

Answer: $________________________________________

Clue: Add up Cost of Goods Sold, Total Operating Expenses (less Rent), Income Tax Expense and include the write-off losses from Sales Discounts & Wedding Cancellations.

Question #3:Assuming that Delicious Deserts sold 150 cakes during Q1, 300 cakes during Q2, 450 cakes during Q3, and 475 cakes during Q4, what was the Total Revenue during each quarter assuming the prices were: Q1 - $275 per cake, Q2 - $240 per cake, Q3 - $180 per cake and Q4 - $170 per cake?

Q1 - Total Revenue = $____________________________

Q2 - Total Revenue = $____________________________

Q3 - Total Revenue = $____________________________

Q4 - Total Revenue = $____________________________

Question #5 What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits?

Question #6 Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business?

Question #7 Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?