Problem 5-23

Consider the following time series data.

(a)	Choose the correct time series plot.
	(i) (ii)         (iii) (iv)
	_________________
	What type of pattern exists in the data?
	_________________
(b)	Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if Quarter 1, 0 otherwise; Qtr2 = 1 if Quarter 2, 0 otherwise; Qtr3 = 1 if Quarter 3, 0 otherwise.
	If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
	Value = __________6.667_______ + ___-1______________ Qtr1t + _____-3____________ Qtr2t + __________-2_______ Qtr3t
(c)	Compute the quarterly forecasts for next year based on the model you developed in part (b).
	If required, round your answers to three decimal places.
	Quarter 1 forecast _____5.667____________ Quarter 2 forecast _____3.667____________ Quarter 3 forecast _______4.667__________ Quarter 4 forecast ______6.667___________
(d)	Use a multiple regression model to develop an equation to account for trend and seasonal effects in the data. Use the dummy variables you developed in part (b) to capture seasonal effects and create a variable t such that t = 1 for Quarter 1 in Year 1, t = 2 for Quarter 2 in Year 1,… t = 12 for Quarter 4 in Year 3.
	If required, round your answers to three decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
	Value =   3.4167______________ + __0.2188______________ Qtr1t + _____-2.1875___________ Qtr2t + __-1.5938_______________ Qtr3t + ___0.4063______________ t
(e)	Compute the quarterly forecasts for next year based on the model you developed in part (d).
	Round your interim computations and final answers to three decimal places.
	Quarter 1 forecast _8.9167________________ Quarter 2 forecast ___6.9167______________ Quarter 3 forecast 7.9167_________________ Quarter 4 forecast _9.9167________________
(f)	Is the model you developed in part (b) or the model you developed in part (d) more effective?
	If required, round your intermediate calculations and final answer to three decimal places.
	Model developed in part (b) Model developed in part (d) MSE _________________ _________________
I only need (f) answered
	I only need (f) answered Both MSE needs to be included for part (b) and (d).

Between about December 2007 and June 2009, the United States was considered to be in a recession. The U.S. Gross Domestic Product fell approximately 3% from the third quarter of 2008 to the third quarter of 2009. Also, during December 2007 and June 2009, the Standard and Poor’s 500 index dropped by 38% and the unemployment rate climbed from 5% to 9.5%.

The macroeconomic situation affected almost all companies since higher unemployment affected personal consumption, which dropped from 10,140.3 Billion Dollars in Aug 2008 to 9,807 Billion Dollars in June 2009, a drop of 3.8 percent.

Starbucks is one of the companies affected by the December 2007 recession. The following table shows several ratios for Starbucks corresponding to the years 2006, 2007, and 2008. Use a stock price of 10.9 dollars per share for the year 2009.

By using the financial statements provided, calculate the ratios presented in the table for the year 2009 and answer the following questions:

e-      In what ratio can you see the change in the mix of debt and equity reflected?

g-       Did the quick ratio increase or decrease between the years 2007 and 2009?

h-      Explain why you expect the quick ratio to increase or decrease during a recession?

j-        What areas should Starbucks improve for the years 2010 onwards, if any?

Annual report:

http://media.corporate-ir.net/media_files/irol/99/99518/SBUX_AR.pdf

Expert Answer

3) What factors on the Consumer Spending side of the Y = C + G + I + NX shifts aggregate demand to the left?

4) What factors on the Government Spending side of the Y = C + G + I + NX shifts aggregate demand to the right?

5) What factors on the Investment Spending side of the Y = C + G + I + NX shifts aggregate demand to the left?

Please answer all, thank you.

1. If cats become a more popular pet in the United States than they are now, what can we expect to happen to the market for cat food workers?
   1. wage decreases
   2. MP increases    
   3. MRP decreases
   4. MRP increases

2. Which of the following could be a perfectly competitive market?
   1. the market for patented pharmaceuticals            
   2. the market for restaurants with permits to sell alcohol   
   3. the market for tradable stocks  
   4. the market for licensed electricians

3. Suppose the price of HD televisions decreases. As a result, the
   1. MRP of the workers making HD televisions will increase.
   2. MP of the workers making HD televisions will increase.  
   3. MRP of the workers making HD televisions will decrease.             
   4. MFC of the workers making HD televisions will increase.

4. Suppose the Tidy Laundry Detergent Company, which sells 40% of all detergent, is thinking about raising its price. Before Tidy makes the change, they analyze the likely responses of the All-Clean Detergent Company, which sells 35% of all detergent, and Cheerful Detergent Company, which sells 20% of all detergent. Tidy's behavior shows
   1. nonprice competition.  
   2. collusion.            
   3. mutual interdependence in pricing decisions.     
   4. difficult entry in oligopolies.       

5. If the marginal cost of the 5,000th unit is $0.06 and the average total cost of the 5,000th unit is $0.10:
   1. average total cost is falling.         
   2. total cost is falling.          
   3. average variable cost is falling.  
   4. average fixed cost is rising.

6. What is the largest possible loss that is consistent with a firm producing in a perfectly competitive market in long-run competitive equilibrium?
   1. an amount equal to total fixed cost         
   2. zero      
   3. an amount equal to total variable            
   4. an amount equal to price minus average variable cost

7. Which of the following is not one of the work disincentive criticisms of welfare programs?
   1. Welfare provides income that is easier to obtain than by working, so poor are induced to reduce their work effort.
                     
      b. The more a welfare recipient earns from a job, the fewer the benefits he or she receives.         
   2. Because welfare benefits are paid for with money collected from taxes and these taxes reduce take home pay for those working, the reward for work is reduced.     
   3. Bureaucracy associated with welfare results in more money in the hands of bureaucrats than in the hands of the poor.

8. Suppose there are four buyers all considering purchasing round-trip airfare from Boston to Miami with the following price elasticities of demand for this purchase: Buyer A: 1.5, Buyer B: 0.7, Buyer C: 1.0, Buyer D: 2.3. If the airline knows of these elasticities and practices price discrimination, which buyer will pay the highest price for the airfare?
   1. Buyer C
   2. Buyer D
   3. Buyer A
   4. Buyer B

9. Why do economies of scale and monopoly power exist with network goods?
   1. As the number of people connected to a network increases, the greater the benefits each person gets and the smaller the cost per unit to supply.         
   2. Many small firms must develop to serve all of the consumers willing to pay for access to the network good, so their costs are driven down.     
   3. Network goods require a group of sellers working together and this cooperation reduces the firms' cost per unit.     
   4. Just as the value of a network good decreases to each user as the total number of users increases, so does the long run average cost decrease as output increases.     

10. What happens to the marginal product of labor when the market price of the good produced increases?
    1. Decreases proportional to price.               
    2. Stays the same.
    3. Falls because quantity demanded falls.
    4. Increases proportional to price.

VALERIE: Hi, Shen! Are the basics of aggregate demand and aggregate supply analysis essentially the same as microeconomic demand and supply analysis?

SHEN: There are a lot of similarities but there are some very important differences. A few of the key differences are that, when dealing with aggregate demand (AD) and aggregate supply (AS) curves, the vertical axis measures the price level and not just the price for one good or service and the horizontal axis measures aggregate output, or real GDP, and not just the quantity demanded and supplied for a specific good or service. Let’s see if you understand the fundamentals of aggregate demand and aggregate supply. Why does the aggregate demand (AD) curve slope downward? What could cause it to shift?

VALERIE: The aggregate demand (AD) curve is downward sloping because as price level decreases, buyers tend to purchase (LESS OR MORE)   of all goods and services and the aggregate quantity demanded (INCREASES OR DECREASES) . A decrease in the price level also induces spending via the interest rate effect and the exchange rate effect. AD is simply the summation of all spending in the economy—the total of consumption, investment, government, and net export spending. Moreover, an increase in AD is caused by (AN INCREASE OR A DECREASE)   in consumption, investment, government, and net export spending. An increase in AD means that a quantity of the economy’s goods and services are demanded at every price level. This is represented by the AD curve shifting to the (RIGHT OR LEFT).

SHEN: Why is the long-run aggregate supply curve (LRAS) vertical at the natural rate of unemployment, or potential real GDP level? What could cause it to shift?

VALERIE: The long-run aggregate supply (LRAS) curve is a vertical line at the value of real GDP at the natural rate of unemployment because it is (UNAFFECTED OR AFFECTED) by the price level. This level of real GDP is instead determined by the productive capacity in the economy. If this productive capacity of the economy increases, the vertical (LRAS) curve will shift to the (LEFT OR RIGHT) . The productive capacity of a nation might increase if there are (FEWER OR MORE) resources like human and physical capital, natural resources and technological knowledge or (MORE OR LESS)   productive resources. If the long-run aggregate supply (LRAS) curve shifts to the right, this would illustrate (ECONOMIC GROWTH OR A RECESSION).

SHEN: Why does the short-run aggregate supply (SRAS) curve slope upward? What could cause it to shift to the right?

VALERIE: The short-run aggregate supply (SRAS) curve slopes upward because as the price level increases, firms receive a (HIGHER OR SMALLER) amount for their output and will increase production in the short run. If the SRAS curve shifts to the right, this means (LESS OR MORE) will be produced at any price level. A rightward shift of the SRAS curve could be caused by more (OPTIMISTIC OR PESSIMISTIC) expectations by businesses or (HIGHER OR LOWER) costs of production, (MORE OR FEWER) resources, like human and physical capital, natural resources and technological knowledge, or (MORE OR LESS)   productive resources.

1.When Coca-Cola traded their soft drink for wine in Slovenia, the company was engaged in:

A.Exchange control.

B.Countertrade.

C.Tariff trading.

D.Quota trade.

E.Global bargaining

2. In the global marketplace. Production invention

A. is the most inexpensive solution to production introduction

B. is the most localized solution to production introduction

C. is the most global solution to the production introduction

D. is the least commonly enjoyed option to production introduction

E. is the most commonly employed option to the production introduction

3.Psychographics is the segmentation method that delves into how consumers

A. adjust to demographic changes

B.allocate scarce incomes to a variety of goods and services

C.describe themselves

d.value their livelihoods.

E. all of these

4.the type of global entry expansions that has the greatest risk and yet generally the highest profit potential is

A. a joint venture with a foreign partner

B. a joint venture with a local partner

C. a direct exporting by the firm without an export agent

D.a sales and marketing office in the foreign market

E. franchising but no licensing

F. a direct investment in a Wholly -owend Foreign Enterprise.

5.The wheel of retailing means

A. a retail format or individual competitior should always be scanning the environment for a new,cheaper retailer looming on the horizen that may pre-empt its current success.

B.bricks and mortar stores are endangered with the advent of the online store

C. this is a life cycle to bricks-and-mortar retailer formats that is very predictable

D.that fashions recycle and prices assortment over several years may repeat

E.when a retailer first enters the market, prices will be very competitive, then they will decline just as any other product or service experiences as it moves through PLC.

Francisco Company has 20 employees, each of whom earns $2,900 per month and is paid on the last day of each month. All 20 have been employed continuously at this amount since January 1. On March 1, the following accounts and balances exist in its general ledger:

FICA—Social Security Taxes Payable, $7,192; FICA—Medicare Taxes Payable, $1,682. (The balances of these accounts represent total liabilities for both the employer's and employees' FICA taxes for the February payroll only.)

Employees' Federal Income Taxes Payable, $14,500 (liability for February only).

Federal Unemployment Taxes Payable, $696 (liability for January and February together).

State Unemployment Taxes Payable, $4,640 (liability for January and February together).

During March and April, the company had the following payroll transactions.

* FICA taxes are Social Security and Medicare, respectively.

Required:
Prepare journal entries to record the transactions and events for both March and April. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Journal entry worksheet

Record the cash payment of FICA (employees' and employer's) and employee income taxes of the month of February.

Note: Enter debits before credits.

In accounting does the LIFO method change. Sometimes it means the oldest is first, sometimes it means the most recent?

1. In order for revenue to be recognized, it must be both _______________________ and ________________________.

2. Net sales less cost of goods sold equals ____________________________________.

3. Another term for income from operations is called ____________________________, and is calculated by taking gross profit less operating expenses.

4. Gross sales less sales discounts and sales returns & allowances are called ___________________________, and represent the revenues resulting from selling a product or service.

5. The most significant expense for most manufacturing companies and merchandising companies is called ___________________________________.

6. The calculation for gross margin (profit) ratio is ________________________________.

7. Expenses, other than cost of goods sold, that are incurred in the day-to-day activities of the entity are called ___________________________________.

8. _______________________ is the excess of revenues & gains over expenses & losses.

9. FOB _______________________ means title passes from seller to buyer when the merchandise being shipped arrives at its destination.

10. FOB _______________________ means title passes from seller to buyer when the merchandise being shipped leaves the seller’s premises.