The mean cost of domestic airfares in the United States rose to an all-time high of $375 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $120. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $540 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $250 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $310 and $490 (to 4 decimals)?

d. What is the cost for the 2% highest domestic airfares? (rounded to nearest dollar)

The United States Department of Agriculture (USDA), in conjunction with the Forest Service, publishes information to assist companies in estimating the cost of building a temporary road for such activities as a timber sale. Such roads are generally built for one or two seasons of use for limited traffic and are designed with the goal of reestablishing vegetative cover on the roadway and adjacent disturbed area within ten years after the termination of the contract, permit, or lease. The timber sale contract requires out sloping, removal of culverts and ditches, and building water bars or cross ditches after the road is no longer needed. As part of this estimation process, the company needs to estimate haul costs. The USDA publishes variable costs in dollars per cubic-yard-mile of hauling dirt according to the speed with which the vehicle can drive. Speeds are mainly determined by the road width, the sight distance, the grade, the curves and the turnouts. Thus, on a steep, narrow, winding road, the speed is slow; and on a flat, straight, wide road, the speed is faster. Shown below are data on speed, cost per cubic yard for a 12 cubic yard end-dump vehicle, and cost per cubic yard for a 20 cubic yard bottom-dump vehicle. Use these data and simple regression analysis to develop models for predicting the haul cost by speed for each of these two vehicles. Discuss the strength of the models. Based on the models, predict the haul cost for 35 mph and for 45 mph for each of these vehicles.

Question 1

In the United States, where land is cheap, the ratio of land to labor used in cattle raising is

higher than that of land used in wheat growing. But in more crowded countries, where land is

expensive and labor is cheap, it is common to raise cows by using less land and more labor than

Americans use to grow wheat. Can we still say that raising cattle is land-intensive compared

with farming wheat? Why or why not?

Question 2

“The world’s poorest countries cannot find anything to export. There is no resource that is

abundant, certainly not capital or land, and in small poor nations not even labor is abundant.”

Discuss.

Question 3

The US labor movement - which mostly represents blue-collar workers rather than professionals

and highly educated workers - has traditionally favored limits on imports from less-affluent

countries. Is this a shortsighted policy or a rational one in view of the interests of union members?

How does the answer depend on the model of trade (compare the predictions from the Ricardian

and the Heckscher-Ohlin models of trade)?

Consider two countries, the United States (U.S.) and Japan. In the U.S., there are two firms, Pikes Peak Steel (PPS) and General Motors (GM), both owned by U.S. citizens. In Japan, there is one firm, Toyota, owned by Japanese citizens. All of the employees of PPS and GM are U.S. citizens and all of the employees of Toyota are Japanese citizens. In a given year, PPS produces $6000 worth of steel and pays wages of $1500. It sells $2000 worth of steel to GM and $4000 worth of steel to Toyota. GM buys $2000 worth of steel from PPS and pays wages of $4000. GM produces $8000 worth of cars during the year; it sells $5500 worth of cars to consumers in the U.S., $1500 worth of cars to the U.S. government, and $1000 worth of cars to consumers in Japan. Toyota buys $4000 worth of steel from PPS and pays wages of $2500. Toyota produces $9500 worth of cars during the year; it sells $5000 worth of cars to consumers in the U.S., $1000 worth of cars to the Japanese government, and $3500 worth of cars to consumers in Japan. For the U.S. and Japan, calculate the following (please show your work) a. Gross domestic product (GDP) using the income and expenditure approaches

What was one of the major reasons why the United States was slower to recover from the 2008–2009 recession than Canada?

3. When a central bank sets a target for the interest rate, what does it commit itself to?

4. According to supply-side theories, what happens if the government cuts the tax rate?

5. Which statement is consistent with the Keynesian theory?

6. Which statement do opponents of active stabilization policy believe?

7. During recessions, how do automatic stabilizers change government deficit and taxes?

8. If the short-run Phillips curve were stable, what would be unusual?

9. According to Friedman and Phelps, no matter what a central bank does to the money supply, what will happen in the long run?

*Excel formulas needed* A Canadian firm is evaluating a project in the United States. This project involves the establishment of a lumber mill in Wisconsin to process Canadian timber. The factory expects to service clients in the construction industry. All cash flow figures are in thousands. Initial Investment. The initial investment is CAD 60,000. The project is over a period of three years. This investment will be depreciated straight line to zero. Operating Results. The firm expects two likely scenarios for the first year of operations. Under the favorable scenario (probability of 40%), the firm expects to produce and sell 2,500 units of a product. Under the unfavorable scenario (probability of 60%), it expects to produce and sell only 1,200 units. The selling price is expected to be CAD 75; the variable expense is expected to be CAD 25, and fixed costs excluding depreciation are expected to be CAD 21,000. Additional Investment. If the firm encounters the favorable scenario during year 1, it could make an investment of CAD 35,000 to enable it to produce and sell a total of 5000 units (double the units) in the second and third years. The cost parameters remain unchanged with the exception of depreciation. This secondary investment will be depreciated equally in years 2 and 3. If the firm chooses not to make the investment in year 1, the results of year 1 will be repeated during years 2 and 3. Discount Rate and Miscellaneous. Assume a discount rate of 11.50 percent and zero taxes.

a. Estimate the NPV of the project.

b. Estimate the NPV of the option to expand.

EXCEL FORMULAS only please. It will be incorrect if not run through Excel.

Thanks in advanced!

In an open​ economy, if the United States government were to purchase computer​ paper; according to the crowding out​ effect,

A.

the​ government's purchase of computer paper means they can not purchase new telephone systems.

B.

there would be less paper available for consumers to use resulting in either a decrease in paper exports or an increase in paper imports.

C.

the government restricts the sale of all paper that is not bought directly from the government.

D.

there will be no impact on consumer spending.

The mean cost of domestic airfares in the United States rose to an all-time high of $380 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $100. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $545 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $255 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $320 and $490 (to 4 decimals)?

d. What is the cost for the 5% highest domestic airfares? (rounded to nearest dollar)

In the United States some critics of the World Trade Organization say that it has failed to protect US interests. Others disagree. Given that high technology products and agricultural products are important export items for the US, which WTO agreements could have been used to protect US interests in these areas, and in what way?