1. The Bungalow Bill Accounting Service, LLC uses computer technology and data-entry operators to provide accounting services in a competitive market. The price for each statement is $200.  Total fixed costs are $1500/week.

1. How many data entry operators would BBAS, LLC hire at a weekly wage of $250 if it were attempting to maximize profits?

2. Determine the firm’s profits.

3. Suppose a decrease in demand reduces the market price to $150 per statement.   
   1. Determine the firm’s profits
   2. Should Bill stay open in the short run? Explain.
   3. What should Bill do in the long run?  Explain.

2. Assume a firm is a monopsonist that can hire its first worker for $6 but must increase the wage rate by $3 to attract each successive worker (so that the second worker must be paid $9, the third $12, and so on). The marginal revenue product of labor is given in the table below.

Units of Labor   Marginal Revenue Product

0

1. $30

2. $24

3. $18

4. $15

5. $12

6. $10

1. Draw the firm’s labor supply, labor demand and marginal resource cost curves.
2. What will be the competitive equilibrium wage rate and the level of employment?
3. What will be the wage rate and the level of employment under monopsonistic conditions?

3.  The following table shows the hourly output per worker in two industries in the United States and Canada.

            Pretzels                        Beer

United States            8                               6  

Canada                    1                                 2

1. Explain which country has an absolute advantage in the production of beer and which country has the absolute advantage in the production of pretzels. Why?
2. Explain which country has a comparative advantage in the production of pretzels and which country has the comparative advantage in the production of beer. Why?
3. What are the terms of trade from the perspective of the United States

American customer satisfaction index: Starbucks in the U.S. 2006-2016

This statistic shows the American customer satisfaction index scores of Starbucks in the United States from 2006 to 2016. Starbucks had an ACSI score of 75 in 2016. Just over 50 percent (around 7,880) of all Starbucks stores were company-operated stores, from which Starbucks generates around 79 percent of its revenue. Around 5,292 stores are licensed stores. Starbucks, which became a publicly traded company on June 26, 1992, generated around 21.32 billion U.S. dollars in revenue in the 2016 fiscal year. In its company-operated stores Starbucks generates 74 percent of revenue from the sale of beverages, 19 percent from food sales and three percent from the sale of packaged and single serve coffees. Another four percent of retail sales are attributable to coffee-making equipment and other merchandise. The United States is Starbucks’ biggest and most important market. In 2016, revenues from Starbucks Americas segment amounted to more than 14 billion U.S. dollars. The Americas segment comprises over 13,000 stores in the U.S., Canada, Mexico, Puerto Rico, Brazil Chile and other American countries with around 86 percent of those stores located in the United States. 1. Plot this set of data as a scatterplot in excel. 2. Find the correlation coefficient. 3. Is it positive or negative? 4. What does the sign tell us? 5. What does the correlation imply about the relationship between the time and the satisfaction? 6. Is the correlation significant? Why or why not? (Answer in 1-2 complete sentences.) (Use the Pearson calculator). 7. Draw the trendline in excel. Can the regression line be used for prediction? No, it is too weak. Insert excel graph here:

1. Gender differences in communication often give rise to stereotypes. One common one in the United States suggests that women never seem to stop talking. This contradicts the research showing that men
   a.   are better able to use language to their advantage.
   b.   adopt linguistic strategies that help them maintain conversational dominance.
   c.   are often reluctant to speak up in mixed-gender settings.
   d.   adopt linguistic strategies that focus on letting women participate in conversation.

2. In 1967, the United States Supreme Court ruled unanimously that laws prohibiting interracial marriage were unconstitutional, which ended the legal practice of
   a.   mixing.
   b.   dilution.
   c.   anti-miscegenation.
   d.   hypodescent.

3. In writing about her findings in a Brazilian shantytown, Nancy Scheper-Hughes’s account of Alto do Cruzeiro provides a window into the terrible toll of nonconsensual organ harvesting among the poor, as well as how she herself changed over time. How might an anthropologist justify the publication of this ethnographic research when considering the problem of ethnographic authority?
   a.   The horrific conditions made it impossible to ignore, and since she obtained informed consent, this is justification.
   b.   Anthropologists are themselves changed in fieldwork, and so honest reflexivity is justification.
   c.   All of the poor must be given an equal voice, thus polyvocality is justification.
   d.   Authoritative writing asks us to consider what right we have to report, thus a moral challenge is justification.

4. About fifteen years ago, the giant Walmart corporation opened a store in Germany. Ten years later, it closed the entire chain there and pulled out of the country. Its approach was to replicate—exactly— the stores found in the United States. For some corporations like McDonalds, such expansion has been successful. These efforts are all part of how globalization tends to
   a.   monopolize.
   b.   cosmopolitanize.
   c.   homogenize.
   d.   dominate.

5. Many people believe that the impact of human activity on the earth is not the major problem that others see today. Such beliefs that one’s own culture or way of life is normal and natural is known as
   a.   normalcy.
   b.   ethnocentrism.
   c.   consensus.
   d.   conventionality.

1. Which of the following statements is (are) correct?
(x) In the open-economy model, the key determinant of net capital outflow is the real interest rate.
(y) When the U.S. real interest rate decreases and is low, owning U.S. assets is less attractive and so U.S. net capital outflow is relatively high.
(z) Ceteris paribus, if the German real interest rate were to increase, German net capital outflow would fall and net capital outflow of other countries would rise.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

In the open economy macroeconomic model of the textbook, which of the following is included in the demand for U.S. dollars in the market for foreign-currency?
(x) A retail outlet in Canada wants to buy computers from a U.S. computer manufacturer.
(y) ABC Securities, a U.S. stock brokerage, wants to purchase stock issued by a French corporation.
(z) A United States bank that has branch offices in Mexico and Canada loans dollars to Tom, a resident of the United States, who wants to purchase a new car that was made in the United States.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only

Which of the following statements is (are) correct?
(x) If at a given real interest rate desired national saving equals $50 billion, domestic investment equals $40 billion, and net capital outflow equals $20 billion, then at that real interest rate in the loanable funds market there would be a shortage and the real interest rate would rise.
(y) As the real interest rate falls, domestic investment rises and net capital outflow falls.
(z) If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a surplus of loanable funds and the interest rate will fall.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

1. Which of the following statements is (are) correct?
(x) In the open-economy model, the key determinant of net capital outflow is the real interest rate.
(y) When the U.S. real interest rate decreases and is low, owning U.S. assets is less attractive and so U.S. net capital outflow is relatively high.
(z) Ceteris paribus, if the German real interest rate were to increase, German net capital outflow would fall and net capital outflow of other countries would rise.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

In the open economy macroeconomic model of the textbook, which of the following is included in the demand for U.S. dollars in the market for foreign-currency?
(x) A retail outlet in Canada wants to buy computers from a U.S. computer manufacturer.
(y) ABC Securities, a U.S. stock brokerage, wants to purchase stock issued by a French corporation.
(z) A United States bank that has branch offices in Mexico and Canada loans dollars to Tom, a resident of the United States, who wants to purchase a new car that was made in the United States.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only

Which of the following statements is (are) correct?
(x) If at a given real interest rate desired national saving equals $50 billion, domestic investment equals $40 billion, and net capital outflow equals $20 billion, then at that real interest rate in the loanable funds market there would be a shortage and the real interest rate would rise.
(y) As the real interest rate falls, domestic investment rises and net capital outflow falls.
(z) If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a surplus of loanable funds and the interest rate will fall.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

^{Exporting Used Batteries to Mexico
Lead is a highly toxic metal. Elevated levels of lead in the human body have been associated with damage to many organs and tissues, including the heart, bones,however, do not prohibit companies from exporting used batteries to other nations where standards are lower and enforcement is lax.}

^{Ethics in International Business   Chapter 4   141
A study conducted by reporters from The New York Times found that about 20 percent of used vehicle and industrial batteries in the United States were exported to Mexico in 2011, up from 6 percent in 2007. The lead is then extracted from these batteries and resold on commodities markets. It's a booming business. Lead scrap prices
typically a Mexican company. Some large companies are also in this business, although they mostly try to adhere to higher standards. One large U.S. battery company, Exide, has five recycling plants in the United States, but it does no recycling in Mexico. According to an Exide official, it was not in the company's.}

^{stood at $0.42 a pound in January 2012, up frolT1 $0.05 a pound a decade earlier. Recycling in Mexico is also a dirty business. While Mexico does have some regulation for smelting and recycling lead, the laws are weak by American standards, allowing plants to release about 20 times as much as their American equivalents. To make matters worse, enforcement is lax due to a lack of funds. A recent government study in Mexico found that 19 out of 20 recycling plants did not have proper authorization for importing dangerous waste, including lead batteries.
At some plants in Mexico, batteries are dismantled by men wielding hammers and their lead smelted in furnaces whose smokestacks vent into the air. A sample of soil collected from a schoolyard next to one such recycling plant showed a lead level of 2,000 parts per million, five times the limit for children's play areas in the United States, as set by the EPA. The New York Times reporters documented several cases of children living close to this plant and who had elevated levels of lead in their bodies. One 4-monthold had 24.8 micrograms of lead per deciliter of blood, almost two and a half times as much as the level typically associated with serious mental retardation.
Much of the exporting of lead batteries to Mexico is done by middle people in the United States who buy up old batteries and then ship them over the border to the cheapest processor,Mexican standards and that its recycling operations in Mexico are well below current U.S. standards for employee blood levels and substantially better than average. 50}

^{Notes
1.   E. Kurtenbach, "The Foreign Factory Factor," Seattle Times, August 31, 2006, pp. Cl, C3; E. Kurtenbach, "Apple Says It's Trying to Resolve Disputc over Labor Conditions at
Chinese iPod Factory," Associated Press Financial Wire, August 30, 2006; and Anonymous, "Chinese iPod Supplier Pù s Suit," Associated Press Financial Wire, September 3, 200 .
2.   S. Greenhouse, "Nike Shoe Plant in Victnam Is Called Unsafc for Workers," The New York Times, November 8, 1997; and V. Dobnik, "Chinese Workers Abused Making Nikes, Rccboks," Seattle Times, September 21, 1997, p. A4.
3.   T. Donaldson, ''Valucs in Tension: Ethics Away from Home, Harvard Business Review, September—October 1996.
4.   R. K. Massie, Loosing the Bonds: The United States and South Africa in the Apartheid Years (New York: Doubleday, 1997).
5.   Not everyone agrees that the divestment trend had much
influence on the South African economy. For a counterview see S. H. Teoh, I. Welch, and C. P. Wazzan, "The Effect of Socially Activist Investment Policies on rhc Financial
interests to skirt regulations. Another large U.S. battery manufacturer, Johnson Controls, does ship a significant number of batteries to Mexico, but it has its own recycling plant there and will open another in 2013. Johnson Controls states that its Mexican facilities abide by the stricter U.S. regulations, rather than Ken Saro Wiwa's Oroniland in Nigeria," The Guardian, November 8, 1995, p. 6.
8.   P. Singer, One World: The Ethics of Globalization (New Haven, CT: Yale University Press, 2002).
9.   G. Hardin, "The Tragedy of the Common," Science 162, 1, pp. 243—48.}

^{Case Discussion Questions
1.   Mexico's weaker environmental regulations and lax legal enforcement allow for higher levels of lead pollution than would be permissible in the United States. Is it ethical for U.S. companies to therefore engage in practices that result in higher levels of lead pollution?
2.   As seen in the case, Exide refuses to export used batteries to Mexico. What ethical principles do you think the company follows?
3.   Johnson Controls, on the other hand, chooses to recycle in Mexico but only under the stringent conditions of its own plants. Which of these two companies (Johnson Controls and Exide) is acting in an ethical manner?}

Question 1 0 / 1 pts Which statement below best defines social darwinism? It based on the idea that there are groups in society that are more evolved than other. The British and the United States used it in order to justify the conquering and subjugation of people all over the world. It is Darwin's theory of evolution where it explains that certain species die off while others survive overtime. It is the theory that says that we are the creation of God(s) and that we are made in his image to this day. It is a theory that expands on Charles Darwin's theory by adding the important of social factors to the evolution of the species in the natural world. It is a theory that proposes the elimiation of certain populations in order to ensure the reproduction of the white race. IncorrectQuestion 2 0 / 1 pts Choose the best defintion for Assimilation. it is a process of how natives adapt to the lives of newly arrived foreigners and learn their customs and tradition and integrate them into their own. It is a process where races are recycled in order to the re-identified according the rules of the government. Is a process in which foreigners learn and adapt to a native's culture while they are letting go of their home country culture. It is a process that determines your racial status in Latin America It is the process that explains the way that people in the United States become Americans Question 3 1 / 1 pts True or false. Robert Park's race relations cycle theory states that foreigners go through a series of steps in order to fully assimilate. They are: Contact, Conflict, Competition, Accommodation, Assimilation. True False IncorrectQuestion 4 0 / 1 pts What is one of the ways that foreigners are viewed by natives throughout the history of the United States? Foreigners are seen as a threat to society because they bring with their their backward culture and traditions, their diseases and social problems. All of the above Foreigners need to go to other countries None of the above Foreigners are seen as a positive force in society who make great contributions in all aspects of social, politica and economic life. IncorrectQuestion 5 0 / 1 pts What have been the two attitudes that have revealed themselves in the public debate about immigration to the United States? contempt and welcoming mistrusts and openness Open generosity vs. nativism and racism closed and approachable IncorrectQuestion 6 0 / 1 pts From the article This Land is Our Land. What was the view of Native Americans who had assimilated during the colonial era in the U.S.? As a people that would become good citizens and excellent enterpreneus As a people who would be able to prosper and succeed in America As a potentially subversive and dangerous force As a people worthy of trust and respect Question 7 1 / 1 pts From the article This Land is Our Land What was the name of the first Immigration Law aimed at excluding a particular population from entering and becoming citizens of the U.S.? The Chinese Exclusion Act of 1882 The Mexican Immigrant Exclusion Act of 1910 The English Exlusion Act of 1882 The German and Irish Exclusion law of 1998 IncorrectQuestion 8 0 / 1 pts In This land is our Land On May 26, 1924, The United States created a permanent limit on immigration by establishing a nationality origins quota system. What immigrant groups did they intend to keep from entering the U.S.? British, Greek, Italian Mexican, Chienese, Filipino Irish, French and German Jews, Slavs and Italians Question 9 1 / 1 pts From Film Race the Power of an Illusion. Is the following statement true or false "Physical Differences don't make race. What makes race are the laws and practices that affect life chances and opportunities based on those differences." True False IncorrectQuestion 10 0 / 1 pts In the Film Race the Power of an Illusion Who were Slavs, Jews and Italian immigrants seen by White American society? promiscuous, lazy, stupic hard workers, quiet, intelligent boisterous, loud and drunkards industrious, entrepreneurial, frugal Question 11 1 / 1 pts In the film Race the Power of an Illusion, is the following statement true or false about Southeastern European Immigrants in the early 20th Century. Eugenicist Charles Davenport wrote: The population of the United States will on account of the great influx of blood from Southeastern Europe, rapidly become darker in pigment smaller in stature, more given to crimes of larceny, kidnapping, assault, murder, rape, sexual immorality. And the ration of the insanity of the population will rapidly increase." True False IncorrectQuestion 12 0 / 1 pts In the film Race the Power of an Illusion How were southern and Eastern Europeans and Jew seen racially. They were seen as belonging to the African and Chinese races They were seen as people who can never reach whiteness They were seen as part of the of the white race They were seen as an "in between group" between the Anglo Saxon and African Americans. Not fully White Question 13 1 / 1 pts In the Film Race the Power of an Illusion. Is the following statement true or false. "Whiteness was not simply a matter of skin color. To be white was to gain the full rewards of American citizenship." True False

On January 1, 2018, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $91,700,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,300,000. Starfruit’s book value was $13,000,000 at the date of acquisition. Starfruit’s assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $25,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $40,000,000 and 5-year life, straight-line, which were capitalized following GAAP.

Additional information: Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $2,000,000 in 2018 and 2019, and by $500,000 in 2020. It is now December 31, 2020, the accounting year-end.

Here is Starfruit Company’s trial balance at December 31, 2020:

Dr (Cr)

Current assets $28,200,000

Plant & equipment, net 188,000,000

Intangibles 2,000,000

Liabilities (180,000,000)

Capital stock (1,000,000)

Retained earnings, January 1 (29,500,000)

Acumulated other comprehensive income, January 1 (500,000)

Dividends 400,000

Sales revenue (24,000,000)

Cost of goods sold 10,000,000

Operating expenses 6,500,000

Other comprehensive income (100,000)

Question:

On the 2020 consolidated income statement, the noncontrolling interest in net income of Starfruit is

$150,000

$175,000

$200,000

$750,000

On January 1, 2018, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $91,700,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,300,000. Starfruit’s book value was $13,000,000 at the date of acquisition. Starfruit’s assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $25,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $40,000,000 and 5-year life, straight-line, which were capitalized following GAAP.

Additional information:

Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $2,000,000 in 2018 and 2019, and by $500,000 in 2020. It is now December 31, 2020, the accounting year-end. Here is Starfruit Company’s trial balance at December 31, 2020:

On the 2020 consolidation working paper, eliminating entry (R) reduces the Investment in Starfruit by

$ 3,600,000

$64,800,000

$68,200,000

$81,000,000

Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $65,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 40 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $70,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $3,000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $110,000 per year, with a $20,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent. The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, one-year program, with a tuition cost of $85,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4,500. Ben thinks that he will receive an offer of $92,000 per year upon graduation, with an $18,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be 29 percent. Both schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $2,000 more per year at both schools than his current expenses, payable at the beginning of each year. The appropriate discount rate is 6.3 percent.

3. Assuming all salaries are paid at the end of each year, what is the best option for Ben— from a strictly financial standpoint?

4. Ben believes that the appropriate analysis is to calculate the future value of each option. How would you evaluate this statement?

5. What initial salary would Ben need to receive to make him indifferent between attending Wilton University and staying in his current position?

6. Suppose, instead of being able to pay cash for his MBA, Ben must borrow the money. The current borrowing rate is 5.4 percent. How would this affect his decision?