Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in each market is given by: QE = 4,000,000 ? 100PE and QU = 1,000,000 ? 20PU where the subscript E denotes Europe and the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a. What quantity of BMWs should the firm sell in each market, and what should the price be in each market? b. What should the total profit be? c. If BMW were forced to charge the same price in each market, what would be the quantity sold in each market, the equilibrium price, and the company’s profit?

Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent.

Segmented income statements for a typical month appear as follows (all amounts in millions of dollars):

Required:

a. Prepare a differential cost schedule. (Enter your answers in millions rounded to 2 decimal places.)

b. Should Freeflight drop the routes between Europe and the United States?

Tailor​ Johnson, a U.S. maker of fine​ menswear, has a subsidiary in Ethiopia. This​ year, the subsidiary reported and repatriated earnings before interest and taxes​ (EBIT) of 195 million Ethiopian birrs. The current exchange rate is 9.8039 ​birrs/dollar or Upper S equals $ 0.1020 divided by birrS=$0.1020/birr. The Ethiopian tax rate on this activity is 27%. U.S. tax law requires Tailor Johnson to pay taxes on the Ethiopian earnings at the same rate as on profits earned in the United​ States, which is currently 43%. ​However, the United States gives a full tax credit for foreign taxes paid up to the amount of the U.S. tax liability. What is Tailor​ Johnson's U.S. tax liability on its Ethiopian​ subsidiary?

Tailor​ Johnson's U.S. tax liability on its Ethiopian subsidiary is $_______million. ​ (Round to two decimal​ places.)

Attempt 3

The United States Centers for Disease Control and Prevention (CDC) found that 17.9%17.9% of women ages 1212–5959 test seropositive for HPV‑16. Suppose that Tara, an infectious disease specialist, assays blood serum from a random sample of ?=1000n=1000 women in the United States aged 1212–59.59.

Apply the central limit theorem for the distribution of a sample proportion to find the probability that the proportion, ?̂ ,p^, of women in Tara's sample who test positive for HPV‑16 is greater than 0.2010.201. Express the result as a decimal precise to three places.

?(?̂ >0.201)=P(p^>0.201)=

Apply the central limit theorem for the distribution of a sample proportion to find the probability that the proportion of women in Tara's sample who test positive for HPV‑16 is less than 0.1730.173. Express the result as a decimal precise to three places.

Q. The U.S. economy appears to be performing well: Output growth has returned to healthy levels, the labor market is firming, and inflation appears to be under control. But, one aspect of U.S. economic performance still evokes concern: the nation’s large and growing current account deficit (negative net exports). Most forecasters expect the nation’s current account imbalance to decline slowly at best, implying a continued need for foreign credit and a concomitant decline in the U.S. net foreign asset position.

a. Why is the United States, with the world’s largest economy, borrowing heavily on international capital markets—rather than lending, as would seem more natural? b. What implications do the U.S. current account deficit (negative net exports) and our reliance on foreign credit have for economic performance in the United States?

True or False - why?

1. Japan is a wheat importer that represents a small share in the world demand for wheat. Japan lowers its wheat tariff from 20% to 10%.

Question: Japanese consumption of wheat increases as a result of the tariff reduction.

2. Japan is a wheat importer that represents a small share in the world demand for wheat. Japan lowers its wheat tariff from 20% to 10%.

Question: The world price of wheat falls

3. Suppose the United States heavily subsidizes the production of rice by providing water to rice growers at rates considerably below market prices. Rice production is a constant returns to scale technology, the US is the largest producer of rice in the world, and the subsidized rice is consumed in both the United States and Japan.

Question: Total Japanese welfare is harmed by the subsidy because it drives Japanese farmers out of business.

The average annual premium for automobile insurance in the United States is $1520. A representative sample of annual premiums for the state of Michigan is contained in the Excel Online file below. Assume the population is approximately normal. Construct a spreadsheet to answer the following questions.

a. Provide a point estimate of the mean annual automobile insurance premium in Michigan. To the nearest dollar.

b. Develop a 95% confidence interval for the mean annual automobile insurance premium in Michigan.To the nearest cent.

c. Does the 95% confidence interval for the annual automobile insurance premium in Michigan include the national average for the United States?

We would be ___?__% confident that auto insurance premiums in Michigan are __?__ the national average.

3. Recently a news story reported that a paper was published investigating the bacterial infection of boiler chickens sold in the United States. The study design was based on purchasing 600 whole broiler chickens from grocery stores across the United States. The results indicated that 85% of the 600 chickens tested positive for the presence of harmful bacteria.

a) In words, state the population parameter of interest.

b) Construct a 98% confidence interval for the population parameter.

c) Interpret the 98% confidence intervals means in the context of the research question.

d) A spokesperson from the chicken lobby stated that “This study only sampled 600 chickens out of several billions of chickens killed each year. With such a small sample size, I don’t think consumers should be concerned about being exposed to bacteria by consuming chicken.” Is this valid statement? Explain.

Calculate the steady-state level of capital in each of the following economies. Unless other- wise stated, use the standard Solow model assumptions about national production, spend- ing/saving, and capital accumulation.

a) The contribution of physical capital to national production in advanced countries such as the United States may be overstated. Some empirical estimates suggest it is closer to 20%, rather than 33% (the one-third that pops up in the production function), which implies the appropriate (per effective worker) production function for the United States is y = k1/5. (5 points)

b) Research economists at the central bank for a particular country find that a 1% increase in income causes households to increase savings by more than 1%. To account for this, they adjust their growth model by using the assumption that household savings/investment (per effective worker) is given it = syt2. (5 points)

1.     Look at each of the cases below from the point of view of the balance of payments for the United States. Determine the subcategory of the current account or financial account that each transaction would be classified in, and state whether it would enter as a credit or debit.

a.    The U.S. government sells gold for dollars.

b.   A migrant worker in California sends $500 home to his village in Mexico.

c.    An American mutual fund manager uses the deposits of his fund investors to buy Brazilian telecommunication stocks.

d.   A Japanese firm in Tennessee buys car parts from a subsidiary in Malaysia.

e.    An American church donates five tons of rice to the Sudan to help with famine relief.

f.    An American retired couple flies from Seattle to Tokyo on Japan Airlines.

g.    The Mexican government sells pesos to the United States Treasury and buys dollars.