Imagine you are a small company providing electrical contracting in the United States. You are losing money on several jobs bid before the steel tariffs affected the cost of electrical conduit. Although you can account for increased costs in future projects and possibly even offset your current loses by including a greater profit margin, in the short term you need a bridge loan to carry operating expenses.

How will you approach lenders and what type of assurances do you think will entice them to provide the loan you seek? Are there alternative sources beyond banks and venture capitalists?

Topic: Economic Benefits, External Costs and the Regulation of Unconventional Gas in the United States.

Article Summary : The article discussed was written by Ian Cronshaw and R. Quentin Grafton and published in Energy Policy in 2016. The article examines the external costs and economic benefits created by the recent rapid growth in unconventional gas production (UGC) in the United States. It examines how policy makers should design and implement regulations that reduce the amount of external costs of UGC while remaining cost-effective for the producers. Cronshaw and Grafton propose 10 principles that regulators and producers of UGC should implement that would cost-effectively reduce external cost by UGC. Cronshaw and Grafton argues that firms that utilize UGC in the United States are now able to access previously unattainable sources of natural gas in which the economic benefits amount to $433 billion in 2012 and has directly and indirectly employs 2.7 million (Cronshaw and Grafton 2016, 181). Cronshaw and Grafton discuss how UGC has created multiple external costs to those residing in nearby communities. Water and air pollution, land access, traffic congestion, and loss of property values are some of the external cost associated with UGC (Cronshaw and Grafton 2016, 182). The article concludes with discussing how regulators need to implement cost-effective measures that reduce the external costs of UGC in order to maintain the net benefits of UGC in the United States.

Assessment : Cronshaw and Quentin’s argument for advising industry regulators to consider the cost-effectiveness of imposing policy designed to reduce the external costs of UGC is sensible. Cronshaw and Quentin phrase their concerns over keeping UGC advantageous to those production firms using that method by providing the framework that gas production within Europe was slowing and that they were developing gas importing infrastructures in order to satisfy their demand for gas. This article does a good job in highlighting the topics of social efficacy and external costs and benefits. Throughout the article, Cronshaw and Quentin continually discuss what the external costs are of UGC and how they impact the surrounding communities. This furthers the discussion provided by Field and Field (2015) in displaying another situation in which the private costs of UGC does not consider the external costs of UGC. Furthermore, Cronshaw and Grafton expand on Field and Field (2015) discussion of how market failure can occur when the social value is remarkable different than the market value. As such, Cronshaw and Grafton (2016) explain public intervention using regulations is necessary for the social value of UGC to increase towards the market value of UGC.

Implication: The article by Cronshaw and Grafton has limited amount of implications within other areas of environmental and resource economics. Cronshaw and Grafton look at the external benefits and costs of UGC through the lens of policy implementation and industry regulation. As such, it only provided a case study on how external costs and benefits are incurred within an industry and how regulation would also be need for the furtherance of that industry. Other researchers can use Cronshaw and Grafton’s article as a research model to do the same type of assessment and advisement for other enterprises within natural resource industry.

Question: How do the authors address opportunity costs and social efficiency as part of their analysis?

1. The table shows the number of computers per household in the United States.

1. Construct a probability distribution.
2. Graph the probability distribution using a histogram and describe its shape.
3. Find the mean, variance, and standard deviation of the probability distribution and interpret the results.
4. Find the probability of randomly selecting a household that has at least four computers.

Vericity Corporation, located in the United States, has an accounts receivable of SF400 million due in one year from a firm in Switzerland. The current spot rate is SF1.67/$ and the one year forward rate is SF1.58/$. The annual interest rate is 3.0% in Switzerland and 4.0% percent in the United States. Vericity can also buy a one-year put option on the Swiss franc at the strike price of $.6440 per Swiss franc for a premium of $0.005 per Swiss Franc.

a. Compute the guaranteed dollar proceeds at the time of payment if Vericity decides to hedge using a forward contract. Show your calculations.

b. Compute the guaranteed dollar proceeds at the time of payment if Vericity decides to hedge using a money market hedge. Show your calculations.

c. List the steps that Vericity needs to take in order to use a money market hedge to eliminate its transaction exposure. Be sure to include the time (t=0 or t=1 year) at which each step must be taken.

d. Suppose that Vericity decides to hedge using an option contract. Assume that the forward rate is the best predictor of the future spot rate. Is Vericity likely to exercise its option contract? Explain using the rates provided. (1 point)

e. Compute the expected dollar proceeds at the time of payment if Vericity decides to hedge using an option contract. Show your calculations. (3 points)

2. After the 2008 Global Financial Crisis (GFC) the Central Bank of the United States and the federal government using fiscal policies both attempted to stimulate the economy.

a. What caused the GFC and what fiscal policy actions did the federal government take to stimulate the economy over the next 15 years? Be sure to define the key terms and the macro models you used to explain the outcomes.

b. Explain what actions the Central Bank took to stimulate the economy. Again, be sure to define key terms and the macro models you used to explain the path to economic growth.

The money supply for the United States is approximately $15 trillion, and average real GDP growth is three percent. If velocity decreases from zero to negative two percent, what value of U.S. Treasury Securities should the Fed buy or sell to target two percent inflation if the reserve ratio is ten percent. Report an open market purchase as a positive number, a sale as a negative number, and round to the nearest billion dollars.

In a survey of 1000 randomly selected adults in the United States, participants were asked what their most favorite and what their least favorite subject was when they were in school (Associated Press, August 17, 2005). In what might seem like a contradiction, math was chosen more often than any other subject in both categories! Math was chosen by 222 of the 1000 as the favorite subject, and it was also chosen by 362 of the 1000 as the least favorite subject.

(a) Construct a 95% confidence interval for the proportion of U.S. adults for whom math was the favorite subject in school. (Give the answers to four decimal places.)
(  ,  )

(b) Construct a 95% confidence interval for the proportion of U.S. adults for whom math was the least favorite subject. (Give the answers to four decimal places.)
(  ,  )

You may need to use the appropriate table in Appendix A to answer this question.

In 2017, the entire fleet of light‑duty vehicles sold in the United States by each manufacturer must emit an average of no more than 86 milligrams per mile (mg/mi) of nitrogen oxides (NOX) and nonmethane organic gas (NMOG) over the useful life (150,000 miles of driving) of the vehicle. NOX + NMOG emissions over the useful life for one car model vary Normally with mean 82 mg/mi and standard deviation 5 mg/mi.

(a) What is the probability that a single car of this model emits more than 86 mg/mi of NOX + NMOG? (Enter your answer rounded to four decimal places.)

(b) A company has 25 cars of this model in its fleet. What is the probability that the average NOX + NMOG level x¯ of these cars is above 86 mg/mi? (Enter your answer rounded to four decimal places.

Red Bull is the most popular energy drink in sales in the United States. Red Bull GmbH (the parent company) has observed that daily sales are normally distributed with an average of 6,284,050 drinks sold with a standard deviation of 8,130.78. What is the probability that on a given day between 6,290,096 and 6,301,996 drinks are sold? Question 9 options: 1) We do not have enough information to calculate the value. 2) 0.0136 3) 0.2149 4) 0.0005 5) 0.7715

Question 10 (1 point) When students use the bus from their dorms, they have an average commute time of 11.13 minutes with standard deviation 3.0876 minutes. Approximately 26.34% of students reported a commute time less than how many minutes? Assume the distribution is approximately normal. Question 10 options: 1) 9.18 2) 13.08 3) 5.1 4) 17.16 5) We do not have enough information to calculate the value.

Question 11 (1 point) Suppose that the distribution of income in a certain tax bracket is approximately normal with a mean of $53,183.88 and a standard deviation of $1,799.608. Approximately 18.56% of households had an income greater than what dollar amount? Question 11 options: 1) We do not have enough information to calculate the value. 2) 54,793.14 3) 51,574.62 4) 2,842,851 5) 2,949,219

Question 12 (1 point) According to a survey conducted by Deloitte in 2017, 0.4609 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 89 randomly selected U.S. smartphone owners, what is the probability that greater than 46 will have attempted to limit their cell phone use in the past? Question 12 options: 1) 0.0241 2) 0.1703 3) 0.8779 4) 0.0483 5) 0.1221

Question 13 (1 point) According to a survey conducted by Deloitte in 2017, 0.4702 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 54 randomly selected U.S. smartphone owners, what is the probability that between 22 and 29 (inclusively) will have attempted to limit their cell phone use in the past? Question 13 options: 1) 0.1383 2) 0.7244 3) 0.2756 4) 1.0844 5) 0.0132

Question 14 (1 point) According to a survey conducted by Deloitte in 2017, 0.44 of U.S. smartphone owners have made an effort to limit their phone use in the past. In a sample of 87 randomly selected U.S. smartphone owners, approximately __________ owners, give or take __________, will have attempted to limit their cell phone use in the past. Assume each pick is independent. Question 14 options: 1) 4.63 , 38.28 2) 38.28 , 21.40 3) 87 , 4.63 4) 38.28 , 0.44 5) 38.28 , 4.63