Between 2008 and 2013 the United States fell from 5^th to 10^th place in the Heritage Foundation’s World Ranking of Countries with the Most Economic Freedom. In 2017, Hong Kong, Singapore and New Zealand respectively hold the top 3 spots for being economically free and the U.S. ranks 17^th. Briefly explain why the U.S. has continued to decline in its respective world ranking.

1. You are given the following information about copper in the United States:

	Situation with Tariff	Situation without tariff
World Price	$0.40 per pound	$0.50 per pound
Tariff	$0.20 per pound	0
US Domestic Price	$0.60 per pound	$0.50 per pound
US Consumption	210 million pounds	250 million pounds
US Production	140 million pounds	100 million pounds

INCLUDE CALCULATIONS FOR THE FOLLOWING: (Please)

a. Calculate the loss to US consumers of copper from imposing the tariff.
b. Calculate the gain to US producers of copper from imposing the tariff.
c. Calculate the gain in tariff revenue to the US government from imposing the tariff.
d. Calculate the net gain or loss to the US economy as a whole from imposing the tariff.

Critics have charged that compensation to top managers in the United States is simply too high and should be cut back. For example, a recent Forbessurveys showing the 2012 annual compensation for the top 10 CEOs is attached. Are such amounts excessive? In answering this, it might be helpful to recognize that superstar athletes such as Peyton Manning, A-Rod, Tiger Woods or Lebron James, top entertainers such as Oprah Winfrey and Tom Hanks and many others at the top of their respective fields earn at least as much, if not a great deal more.

Forbes Rank of Top CEO Compensation - 2012

Rank	Name	Company	1-Year Pay ($mil)	5 Year Pay ($mil)	Shares Owned ($mil)	Age
1	John H Hammergren	McKesson	131.19	285.02	51.9	53
2	Ralph Lauren	Ralph Lauren	66.65	204.06	5,010.4	72
3	Michael D Fascitelli	Vornado Realty	64.405	-	171.7	55
4	Richard D Kinder	Kinder Morgan	60.94	60.94	8,582.3	67
5	David M Cote	Honeywell	55.79	96.11	21.5	59
6	George Paz	Express Scripts	51.525	100.21	47.3	57
7	Jeffery H Boyd	Priceline.com	50.185	90.3	128.2	55
8	Stephen J Hemsley	UnitedHealth Group	48.835	169.3	155.8	59
9	Clarence P Cazalot Jr	Marathon Oil	43.71	67.23	30.3	61
10	John C Martin	Gilead Sciences	43.19	214.92	90.9	60

In the late 1980s, Carsten Richter, from Germany, migrated to the United States, where he is now a citizen. A man of many talents and deep foresight, he has built a large fleet of oceangoing oil tankers during his stay in the United States. Now a wealthy man in his 60s, he resides in Aspen, Colorado, with his second wife, Gabriela, age 50. They have two sons, one in junior high and one a high school freshman. For some time, Carsten has considered preparing a will to ensure that his estate will be properly distributed when he dies. A survey of his estate reveals the following:

Ranch in Colorado	$ 1,000,000
Condominium in Santa Barbara	800,000
House in Aspen	1,500,000
Franchise in ice cream stores	2,000,000
Stock in Google	5,000,000
Stock in Wal-Mart	1,000,000
Stock in Silver Mines International	3,000,000
Other assets	200,000
Total assets	$14,500,000

The house and the Silver Mines International shares are held in joint tenancy with his wife, but all other property is in his name alone. He desires that there be a separate fund of $1 million for his sons’ education and that the balance of his estate be divided as follows: 40 percent to his sons, 40 percent to his wife, and 20 percent given to other relatives, friends, and charitable institutions. He has scheduled an appointment for drafting his will with his attorney and close friend, Forrest Gauthier. Carsten would like to appoint Forrest, who is 70 years old, and Carsten’s 40-year-old cousin, Heinrich Richter (a CPA), as co-executors. If one of them predeceases Carsten, he’d like First National Bank to serve as co-executor.

1. How does the age of Carsten’s children complicate the estate plan? What special provisions should he consider?

2. What options are available to Carsten if he decides later to change or revoke the will? Is it more difficult to change a living trust?

3. What duties will Forest Gauthier and Heinrich Richter have to perform as co-executors of Carsten’s estate? If a trust is created, what should Carsten consider in his selection of a trustee or co-trustees? Might Forrest and Henrich, serving together, be a good choice?

- The jobless claims in both the United States (US) and Europe have hit more than 30 million each due to Covid-19, which is expected to rise further in the coming weeks. This implies an unprecedented slowdown in two of the world's largest economies and thus a lower consumer demand.

How this rise in unemployment would affect the inflation and interest rates in these regions (US and Europe)? Provide the reasons for your answer .

- Oil prices have gone down significantly since the start of this year. Most of the developing markets that rely on imported oil can benefit from low oil import bill due to unprecedented decrease in oil prices.

How it would affect the currency exchange rates, inflation and interest rates in developing economies? Provide the reasons for your answer.

The Cold Mountain Furnace Company is a retail store with locations across the eastern United States. The company’s projected income statement for its first year of operations, which ends December 31, 2018, and its projected balance sheet as of December 31, 2018, are shown below:

Sales	$ 4,000,000
Cost of Goods Sold	2,300,000
Gross Margin	1,700,000
Selling and Administrative Expenses	800,000
Net Income	$    900,000

Cash	$   660,000
Accounts receivable	150,000
Inventory	400,000
Property, plant, and equip. (net of accum. deprec.)	200,000
Total assets	$1,410,000
Accounts payable	$   110,000
Common stock	400,000
Retained earnings	900,000
Total liabilities and owner’s equity	$1,410,000

The company is currently forecasting its 2019 operational year. Anticipated Projections for 2019 follow (continues onto next page):

Budgeted Sales
First quarter	$1,050,000
Second quarter	$1,100,000
Third quarter	$1,150,000
Fourth quarter	$1,100,000

All sales are made on credit. Sales are collected in two portions, consisting of 85% in the quarter of the sale and 15% in the quarter following the sale. All of the accounts receivable as of December 31, 2018, will relate to sales in the fourth quarter of 2018.

The cost of goods sold is expected to increase to 60% of sales in 2019. Inventory is purchased in the quarter of expected sale. 80% of inventory purchases are paid for in the quarter of purchase and 20% are paid for in the quarter following purchase. Safety stock is maintained at all times.

The accounts payable balance as of December 31, 2018, will relate to inventory purchases made in the fourth quarter of 2018.

Selling and administrative costs are expected to increase to $225,000 per quarter in 2019. Of this quarterly amount, $10,000 is depreciation expense of the property, plant, and equipment.

The inventory balance at the end of 2019 is expected to be $400,000.

Required:

Prepare the Cold Mountain Furnace Company’s projected Income Statement and Balance Sheet for each quarterly reporting period of 2019. In addition, prepare the company’s projected Income Statement and Statement of Cash Flows for the full year of 2019. Assume that the company is not subject to federal, state, or local income tax.

The United States Department of Agriculture (USDA) claims that the national average price for one gallon of whole milk is $3.49, and that the population standard deviation is $0.64. You believe that the USDA’s claim is not correct, so you select a simple random sample of 35 grocery stores nationwide and record the price of a gallon of whole milk. Your sample mean price for a gallon of whole milk was $3.27. Using a significance level of .05, does it appear that the USDA’s claim is correct? Conduct a complete and appropriate hypothesis test.

Step 1 (Hypotheses)

H₀:    (Click to select)   σ   s   n   p   π   μ   x-bar      (Click to select)   =   ≠   ≤   >   ≥   <    

H_A:    (Click to select)   μ   x-bar   π   p   σ   s   n      (Click to select)   =   ≠   ≤   >   ≥   <    

Step 2 (Decision rule)

Using only the appropriate statistical table in your textbook, the critical value for rejecting H₀ is   (Click to select)   +   -   ±   . (report your answer to 2 decimal places, using conventional rounding rules)

Step 3 (Test statistic)

Using the sample data, the calculated value of the test statistic is   (Click to select)   +   -   ±   . (report your answer to 2 decimal places, using conventional rounding rules)

Step 4 (Evaluate the null hypothesis)

Should the null hypothesis be rejected?    (Click to select)   yes   no    

Step 5 (Practical conclusion)

Should you conclude that the national average price for one gallon of whole milk is $3.49?   (Click to select)   yes   no    

Using only the appropriate statistical table in your textbook, what is the p-value of this hypothesis test?   

Answer:  

XYZ Federal Agency has multiple locations in different parts of the United States. It is going to start a BPM project for its Office of Human Resource (OHR/HR) functions.

The Human Resource system is currently on a thirty-year old mainframe that is shared by another large user. The other user of the mainframe is in the process of redesigning to another platform. That will leave the huge cost of the legacy system to be paid by the HR function.

A cost-benefit analysis was completed that determined it was not cost efficient for the HR function to pay for the entire mainframe. It will cost them the same amount of money to move to a different platform that is more agile, and can provide more reliable real-time metrics for managers to make decisions.

Here is some background information you need to better understand the hiring and onboarding processes in OHR:

? Executives are complaining about the length of time it takes to fill positions when an employee leaves, however, reliable metrics are not available to determine where the delays are occurring. It is probable that there is joint responsibility for the delays. On average it takes 4 months to fill a position.

? In some instances, employees do not have provisions such as computers, passwords, and identification badges when they begin work.

? Applications are accepted either electronically or through the mail. Sometimes the same application comes in through both channels.

? On an annual basis the finance office is given approval for a certain fill level (head count of employees) for each functional area of the agency. This targeted fill level does change unless there is a budget cut, or unless a division reaches its target and has extenuating circumstances allowing them to exceed their target. OHR accomplishes filling above the target by“borrowing” an unfilled position from a different unit.

The process

There are multiple steps required to hire and onboard an employee.

The hiring manager in the functional area must request replacement staff after a current employee gives his two week notice. The position cannot be filled by two employees at the same time. Once the hiring manager requests the staff, the head of the functional area must sign off on the request. The request must include the current job duties, and set up interview questions. The hiring manager must show how he/she is going to score the interviews prior to having the request approved.

Once they place the request, finance reviews and approves the request based on the targeted fill level for that functional area by checking the current number of employees plus outstanding fill requests and comparing it to the

target at the time of the request. They currently keep track of this information in a spreadsheet.

Once finance approves the request, OHR must approve the request for control purposes. They check the information about the position to make sure it agrees with the current job duties.

Once all of the approvals are received they can recruit for the position by posting it for a minimum of 2 weeks. This is a civil service requirement for the federal positions at this agency. They are unable to hire prior to the end of the posting period.

Once the posting period is complete, OHR staff review the candidates’resumes and other supporting documentation to verify they meet the qualifications of the job.

The list of verified candidates is provided to the hiring manager so they may contact the candidate for interviews. The hiring manager must choose a minimum of 3 candidates to interview.

Interviews are held using previously-created criteria for scoring. Once a selection is made, candidates are nominated, and OHR reviews the nomination to ensure that all of the hiring documents are in order. They also run a background check to determine if they misrepresented themselves on their application.

If OHR approves the nomination, the hiring manager can call and offer the position.

The position may be declined, in which case, the hiring manager can choose his second choice or start the process over.

If the position is accepted, an email is sent to Information Technology Assistance for a laptop request and system passwords. Another email is sent to the Office Services Department to request an employee identification badge. For the purposes of this assignment, you may assume that all offered positions are accepted.

The employee is required to complete information on his first day of work related to employee benefits and mandatory tax forms. An orientation session is held where the employee must complete the forms.

Question:

Propose a set of changes in the process. For each change, you should provide:

? A brief description of the process change

? Which issue(s) are being addressed by the proposed change

? How feasible is this change? In other words, how likely it is that the change can be implemented in a way that the benefits of the change exceed the costs in the medium-term (six months to one year timeframe). If the change requires an upfront investment, describe what investment is needed and how likely it is that this investment is justified given the impact of the issue that is being addressed.

The charts show results of studies on four-year colleges in the United States. You want to portray your college in a positive light for an advertising campaign designed to attract high school students. You decide to use hypothesis tests to show that your college is better than the average in certain aspects. EXERCISES

1. What Would You Test? What claims could you test if you wanted to convince a student to come to your college? Suppose the student you are trying to convince is mainly concerned with (a) affordability, (b) having a good experience, and (c) graduating and starting a career. List one claim for each case. State the null and alternative hypotheses for each claim.

2. Choosing a Random Sample Classmates suggest conducting the following sampling techniques to test various claims. Determine whether the sample will be random. If not, suggest an alternative. (a) Survey all the students you have class with and ask about the average time they spend daily on different activities. (b) Randomly select former students from a list of recent graduates and ask whether they are employed. (c) Randomly select students from a directory, ask how much debt money they borrowed to pay for college this year, and multiply by four.

3. Supporting a Claim You want your test to support a positive claim about your college, not just fail to reject one. Should you state your claim so that the null hypothesis contains the claim or the alternate hypothesis contains the claim? Explain.

4. Testing a Claim You want to claim that students at your college graduate with an average debt of less than $25,000. A random sample of 40 recent graduates has a mean amount borrowed of $23,475 and a standard deviation of $8000. At a = 0.05, is there enough evidence to support your claim?

5. Testing a Claim You want to claim that your college has a freshmen retention rate of at least 80%. You take a random sample of 60 of last year’s freshmen and find that 54 of them still attend your college. At a = 0.05, is there enough evidence to reject your claim?

6. Conclusion Test one of the claims you listed in Exercise 1 and interpret the results. Discuss any limits of your sampling process.

College Success                                

Freshman retention rate   

                                                   73.9%

4-year graduation rate 5-year graduation rate

                39.8%

5-year graduation rate

              55.3%

6-year graduation rate

      59.6%

Recent graduate employment rate

94.4%

_______________________________________x

0              20           40         60             80        100

College Cost

Annual tuition, public, In-state

$9130

Annual tuition, public, Out-of-state       

$21,303

Annual tuition, private                 

                                                                                $33,635

Amount borrowed                        

                                                                $29,411

Need-based scholarship or grants

                      $14,719

________________________________________x

0               10,000                20,000                 30,000

                                Amount

Student Daily Life

Sleeping

8.8

Leisure and sports

4.0

Educational Activities

       3.5

Working

2.3

Traveling

1.4

Dining

1.0

Other

                  3.0

_____________________________________x

0              2             4             6            8             10

Average (in hours)

Viet Catfish Case

Sixteen years after the end of the

Vietnam war, the United States and

Vietnam signed a free trade agreement.

In December 2001, Vietnam

agreed to lower import tariffs and

restrictions on U.S. investments in

that nation. In return, the U.S.

agreed to dismantle discriminatory

trade barriers on Vietnamese

exports.

The trade pact was an instant

success. Vietnamese exports to

the U.S. more than doubled in the

first year after the trade pact was

signed, led by exports of textiles,

seafood, shoes, furniture, and

commodities. U.S. investments

in Vietnam also surged.

Catfish farmers in the

Mississippi Delta weren’t happy

about this surge in Viet-U.S. trade.

In fact, they were downright angr y.

For well over a decade, catfish

farmers in Mississippi, Arkansas,

and Louisiana had been struggling

to preserve their profits. As

reported in Chapter 23 of The

Economy Today (Chapter 8 in

The Micro Economy Today) low

entry barriers kept persistent

pressure on prices and profits.

The early entrepreneurs in the

industry had to contend with a

stream of cotton farmers who

sought higher returns in catfish

farming. Despite an impressive

rise in market demand, prices

and profits stayed low as the

industry expanded.

Surging Imports

The Viet-U.S. pact intensified competitive

pressures on Delta catfish

farmers. In 1998, only 575,000

pounds of Vietnamese catfish were

imported into the United States,

mostly in the form of frozen fillets.

Viet imports surged to 20 million

pounds in 2001 and jumped again

to 34 million pounds last year.

That was more competition than

domestic catfish farmers could

bear. The price of frozen fillets fell

by 15 percent in 2001, to a low of

62 cents a pound. Prices kept

falling in 2002, hitting a low of 53

cents a pound at years end. With

average production costs of 65

cents a pound, U.S. catfish farmers

were incurring substantial economic

losses. Suddenly, cotton farming

started looking better again.

Comparative Advantage

Shifting domestic resources from

catfish farming back to cotton

farming is consistent with the

principle of comparative advantage.

Most farm-raised U.S. catfish

are grown in clay-lined ponds filled

with purified waters from underground

wells. The fish are fed

pellets containing soybeans and

corn and are subject to regular

USDA health inspections.

Vietnamese catfish, by contrast,

are grown in giant holding pens

suspended under the free-flowing

Mekong river and other waterways.

The Vietnamese production process is

much less expensive, giving Vietnam’s

catfish farmers an absolute advantage

over U.S. farmers. Given the relatively

high costs of cotton farming in

Vietnam, the Vietnamese also have

a decided comparative advantage in

catfish farming. Because of this, both

the U.S. and Vietnam could enjoy

more output if the U.S. specialized

in cotton farming and Vietnam

specialized in catfish farming. That

is exactly the kind of resource

reallocation the surging Vietnamese

catfish exports was causing.

Trade Resistance

The 13,000 workers in the U.S.

catfish industry don’t want to hear

about comparative advantage.

They simply want to keep their jobs.

And their employers want to regain

economic profits. They aren’t willing

to sacrifice their own well-being for

the sake of cheaper fish and so-called

gains from trade.

Economic theory may not be on

the side of the domestic catfish

industry, but U.S. politicians

certainly are. At the urging of Trent

Lott, the Senate majority leader

from Mississippi, the U.S. Congress

decided that of the 2,000 or so

varieties of catfish, only the North

American channel variety of catfish

could be labeled as “catfish.”

Vietnamese catfish had to be labeled

as “basa” or “tra,” as in

the Vietnamese language.

To further discourage consumption

of imports, the Catfish Farmers of

America, an industry lobbying group,

ran advertisements warning American

consumers that “basa” and “tra” “float

a round in Third World rivers nibbling on

who knows what.” Arkansas

C o n g ressman Marion Berry warned that

Viet fish might even be contaminated by

Agent orange-- a defoliant sprayed over

the Vietnamese countryside by U.S.

f o rces during the Vietnam war. None of

these nontariff barriers halted the influx

of Viet catfish however.

Dumping Charges

U.S. catfish farmers decided to mount

a more direct attack on Viet catfish. The

Catfish Farmers of America filed a complaint

with the U.S. Department of

C o m m e rce, charging Vietnam of “dumping”

catfish on U.S. markets. Dumping

occurs when foreign producers sell their

p roducts abroad for less than the costs

of producing them or less than prices

in their own market.

On its face, the complaint seemed to

have no merit. Export prices were no

lower than domestic prices in Vi e t n a m .

Plus, Vietnamese farmers were evidently

e a rning economic profits. Hence, neither

form of dumping seemed plausible.

The Department of Commerce found a

loophole to resolve this contradiction.

C o m m e rce officials decided that

Vietnam was still not a “market econom

y.” As a “nonmarket economy” its

prices could not be regarded as re l i a b l e

indices of underlying costs. Instead, the

U.S. Department of Commerce would

have to independently assess the “true ”

costs of Vietnamese catfish production.

To determine the “true” costs of

Vietnamese catfish farming, U.S.

investigators went to Bangladesh!

Bangladesh is widely regarded as a

market economy, with a level of

development similar to Vi e t n a m ’s.

So Bangladesh prices were assigned

to Vietnamese farmers. With no fully

integrated firms and fewer natural

resource advantages, Bangladesh

ended up with hypothetical costs in

excess of Vietnamese prices. With this

“evidence” in hand, the Commerce

Department concluded in January 2003

that Vietnamese catfish were indeed

being dumped on U.S. markets.

Anti-Dumping Duties

To “level the playing field,” the

U.S. Commerce Department leveled

temporary import duties (tariffs) of

37-64 percent. Importers of Viet

catfish had to deposit these duties

into an escrow account until the

U.S. International Trade Commission

(ITC) reviewed the case. The ITC

must not only affirm the practice of

dumping, but must also determine

that U.S. catfish farmers have been

materially damaged by such unfair

foreign competition. If the ITC so

rules, then the duties become

permanent and payable. If the ITC

rejects the dumping or damage

charges, the duties are rescinded

and the escrowed payments are

refunded. The odds are never

good for foreign producers: The

Commerce department ruled in

favor of domestic producers 91

percent of the time and the ITC

concurred 80 percent of the time.

The catfish case was similarly

decided: on July 23 of this year

the ITC unanimously ruled that

Viet catfish had injured U.S.

catfish farmers. The temporary

duties of 37-64 percent were

made permanent and retroactive

to January.

With your knowledge of comparative advantage and international trade – explain who were the winners and losers and why in this Catfish Case? Use economic terms and concepts to expain and support your answer. (5 points)