Assume that a new theater is opening near campus. The theater owner wants lots of students to come to see movies, but is nervous about what influences their demand. Through masterful research, the theater owner discovers the following is true about demand for his theater tickets:

Own Price Elasticity    =   3.5      
Cross Price Elasticity    =   2.2      
Income Elasticity    =    4.7

If the owner lowers his price by 20%, by how much will quantity demand change? Show all work.

If the competing theater raises his price by 8%, by how much will quantity demand change at this new theater? Show all work.

If students at the Mount get 9% more income, by how much will demand for tickets change? Show all work.

If incomes fall by 5%, by how much does the theater owner need to lower his price to keep the same number of customers as before? (i.e. to keep quantity demand the same as before the drop in income). Show all work.

What role has the United States played in Latin American independence, and in the development of states after independence?

What are the most important factors in determining why people vote? Are there particular factors that appear to be more important than other factors? Does this hold true for all countries or just the United States? Why are people not voting in the United States? What role do the two parties play in this?

The United States is said to have the most expensive healthcare system in the world, but only ranks 37^th in comparison to other nations in the quality of the health care delivered. In what ways does the United States have better health care than other nations? Cite at least four examples ?

A German sells €1 million and deposits dollars in a United States bank for one month. She believes that the euro will depreciate and will use the dollars from her United States bank account to purchase euro in the spot market in one month. She is:

Do you think federalism works in the United States? Or do you think federalism creates a lot of red tape? Or do do you think federalism helps quell discrimination? Do you think the system of checks and balances works in the United States? How could it be improved?

Question 1.

(This question has two parts: a and b) Assume that the United States and Cambodia both have similar demand functions and similar taste preferences. The United States however is capital abundant while Cambodia is labour abundant. Assume that the two countries produce only two goods: capital-intensive cars and labour-intensive shoes. Currently, the two countries are in the process of negotiating a bilateral free trade agreement (FTA).

Part (a)

Use the concepts of supply and demand to illustrate the situation of bilateral trade between the United States and Cambodia before the creation of their FTA. Note that before the creation of the FTA, both the United States and Cambodia use import tariffs.

How can the Heckscher-Ohlin model be used to explain the positions taken by capital owners and labour owners in each country vis-à-vis a USA-Cambodia FTA. Students are recommended to use graphs in their answer.

Part (b)

If an FTA between the United States and Cambodia is created, according to the Heckscher-Ohlin model what will happen to the total welfare of each country? Specifically, use the concept of Production Possibility Frontier (PPF) to graphically show the changes in the welfare of both countries following the creation of their FTA.

ANWSER FOR (A) AND (B)

Compare GASB financial statement requirements of United States with United Kingdom. Would the same financial statements be used and why?