• Describe a person or nation who has a particular comparative advantage in something.
• What is the source of this comparative advantage?

Be sure that your example shows that you understand the idea of opportunity cost and how opportunity cost is related to comparative advantage.

Here is the lecture on comparative advantage to use as reference:

The purpose of this lecture is to examine how trade can create economic gains. Trade can take place between individuals or between nations. Regardless of the scope, the potential for economic gains will depend on the same criteria. To set the stage, consider the following basic ideas: • Individuals have limited financial resources (budgets or income) for consumption and limited time and energy for production. We can’t have it all and we can’t do it all. • Nations have limited productive resources (land, labor, capital) to produce goods. • This scarcity forces us to make decisions regarding how to use our financial and productive resources. • Efficient use of time and basic human nature (rationality) often compel us to first produce things that have relatively low opportunity cost. This is known as the low-hanging fruit principle. • In addition to choosing what to buy, individuals and nations must choose what to produce. • A general context for this latter choice is the decision regarding whether to be a specialist or a generalist. That is, we have to choose between making a limited number of goods and making them very well (i.e. being “specialists”), or producing a wide variety of goods, but perhaps sacrificing quality (i.e. being “generalists”). Some interesting economic questions to consider regarding specialization: • Which form of production (specializing or generalizing) leads to greater potential for economic gains? 2 • Does causality flow in both directions? That is, does one’s approach to production lead to their economic status, or does one’s economic status lead to their approach to production? This second question is one that I think about a lot. My research requires that I travel quite a bit in the developing world, mostly in the Caribbean. My wife and I lived in the Caribbean for about 7 months in 2007. We quickly learned that our friends and neighbors were generalists. Just about everyone has multiple talents. Someone who is a good cook might also be an excellent spear fisher and auto mechanic. A seamstress can likely give you a great haircut, grow produce and adeptly slaughter a lamb. Of course, by U.S. standards, these people are quite poor, at least financially speaking. Which way does the causality flow? Does being a generalist lead to lower income? Or does low income force you to be a generalist? I think it’s probably both, but it’s interesting to consider how specialization, trade and well-being are related. Before we get to the notion of comparative advantage and trade, let’s first look at a related principle… The law of increasing opportunity cost (a.k.a. The low-hanging fruit principle) Consider being faced with a household task like doing laundry or cleaning up the yard. Given that you have a limited amount of free time available, how should you approach the task? It makes sense to focus your initial energy on components of the task that can be accomplished relatively easily, that is, those with low opportunity cost (the “low-hanging fruit”). By targeting the relatively easily accomplished goals first, we get more out of our limited resources. There are numerous household and business applications of this principle. When faced with multiple problems and limited resources to solve them, it makes sense to tackle the easy-to-solve problems first. Taking this principle forward to a series of tasks (call it a “to do list”), we see that if we address low-opportunity cost tasks first, then opportunity costs will increase as we spend more time addressing the list of tasks. This is why the low-hanging fruit principle is also called the principle of increasing opportunity costs. This principle can be applied at an individual level or a national level. Textbooks typically cover the latter when discussing the “production possibilities” model of national output. We’re not going to get into that model in this class, but you’ll likely come across it when reading your text. The “bowed-out” (concave to the 3 origin) shape of the production possibilities curve reflects the law of increasing opportunity costs. This model suggests that for a nation to continually increase its production of one good (say cars) it will have to sacrifice more and more production of other goods (say chocolate). That is, the opportunity cost of producing a particular good rises as more of that good is produced. This brings us to the notion of trade. I like to start off by thinking about the motivations for trade, both at the national level and the individual level. Why do we trade with other nations? Why do we import Japanese cars and stereos? Why do we import German beer and French wine? Why do we purchase textile products from Central America? Why do we import all of our cell phones? … Can’t we make these products ourselves? Likewise, why do other nations buy our stuff? Why does Japan buy our corn and beef and wheat? Why do other nations buy U.S. aircraft parts, military equipment and health care equipment? … Can’t they do this stuff themselves? Hopefully, you’re thinking about the fact that certain nations are just better at making some goods than other nations. We import products from other nations because other nations can produce those goods better, cheaper or better and cheaper than we can. Just like people are good at doing some things better than others, nations too are inherently good at doing certain things and bad at doing others. It’s important to consider individual production as an analogy here. You don’t produce everything that you consume. You have clothes, a car, a cell phone, a computer; you consume food and hundreds of other things that you do not produce. You acquired these goods through trade. Obviously, we use the medium of money to first trade our labor for currency and then currency for goods and services, but trade between nations is no different than trade between people. 4 We trade because it’s more efficient. That is, via trade we can have more goods and services and a higher quality of life than we can without trade. Think about it… What would your standard of living be like if you could only consume goods that you produced yourself? What would your life be like if you had to grow 100% of your own food and make 100% of your own clothes and shelter? You’d work a lot more than you do now, and you’d have a meager standard of living at best, assuming you could even survive. But, by specializing in producing one thing and doing it really well, and then trading that one thing with others who are doing something else, we can consume a lot more than we could if we did not specialize and trade. The same holds true for nations. Trade makes us better off. Given that we know certain nations can produce certain goods better than others (that is, better quality for same cost or the same quality for lower cost), we need to consider what this means and why it happens. • What is the US good at producing? → Agricultural products (corn, soybeans, oats, barley), high-tech equipment (air craft, military, medical, telecommunications), semiconductors… • Why are we good at producing these things? → The U.S. is endowed with millions of acres of fertile farmlands, a temperate climate and has developed the physical and human capital for excellence in high-tech industrial production. • What does it mean? → It means we can produce these goods at lower (opportunity) cost than other nations can. We can produce these goods cheaper, or better or better & cheaper. 5 Now consider the same ideas on an individual level… What are YOU good at producing? Why are some people better at producing some goods than others? To be efficient, we should specialize in producing the goods we’re good at and trade for the rest. This idea is known as the principle of comparative advantage: if nations (or individuals) specialize in the production of goods and services that they can produce at lower opportunity cost relative to other nations, then there can be mutual gains from trade. i.e. more efficient production and consumption and higher standards of living. These gains from trade allow nations (and individuals) to consume combinations of goods and services that they could not consume without trade. Let’s explore a simple example to illustrate this point. COMPARATIVE ADVANTAGE EXAMPLE Assume that Al and Sal are trapped on a desert island and can only produce two goods: Fish (F) and Coconuts (C). Assume that the following table shows how much of each task they could accomplish in one day if they spent the whole day doing just that task. ______________________________________________ Al Sal ______________________________________________ Fish caught 20 15 Coconuts collected 5 3 ______________________________________________ To be clear, Al can catch 20 fish or collect 5 coconuts in one day, while Sal can catch 15 fish or collect 3 coconuts in one day. Clearly, Al is more talented at catching fish and collecting coconuts. Perhaps he has some natural talents for these activities or maybe he has some prior experience or training. You might be tempted to conclude that because of these talents, he cannot gain from trade with Sal, but you’d be wrong. 6 To get a better idea of what they are each capable of producing (and consuming) without trades, let’s graphically illustrate each person’s individual production possibilities. Recognizing that Al and Sal do not have to spend their entire day doing one activity, they can each produce different combinations of output depending on how they allocate their time during the day. Al’s production possibilities can be illustrated as: Fish/day 20 16 12 8 4 0 1 2 3 4 5 Coconuts/day Sal’s production possibilities can be illustrated as: Fish/day 15 10 5 0 1 2 3 Coconuts/day Combinations of fish and coconuts are represented by the black dots. Depending on how Sal allocates his time during the day, he can produce any of these combinations of fish and coconuts. e.g.  Spending a full day fishing = 15F + 0C  Spending 1/3 of the day collecting coconuts and 2/3 of the day fishing = 10F + 1C  Etc. Combinations of fish and coconuts are represented by the black dots. Depending on how Al allocates his time during the day, he can produce any of these combinations of fish and coconuts. e.g.  Spending a full day fishing = 20F + 0C  Spending 1/5 of the day collecting coconuts and 4/5 of the day fishing = 16F + 1C  Etc. 7 If the principle of comparative advantage is correct, we should be able to show that via trade, each person can consume beyond their own production possibilities. Recognizing that having a comparative advantage in something means having a lower opportunity cost than your trading partner, our next step is to calculate the opportunity cost of each activity for each person. Al’s opportunity costs For Al, the opportunity cost of catching 20 fish is collecting 5 coconuts. That is, if he spends an entire day fishing, he gives up the chance to collect 5 coconuts. Simplifying, we see: ⇒ The opportunity cost of 1 coconut is 4 fish. ⇒ The opportunity cost of 1 fish is ¼ of a coconut. So, by changing his time allocation between the two activities, Al can trade goods at the rate of 1 coconut for 4 fish (which is equivalent to 1 fish for ¼ of a coconut). Note that these opportunity costs are easily seen in the slope of Al’s production possibilities graph. Sal’s opportunity costs For Sal, the opportunity cost of catching 15 fish is collecting 3 coconuts. That is, if he spends an entire day fishing, he gives up the chance to collect 3 coconuts. Simplifying, we see: ⇒ The opportunity cost of 1 coconut is 5 fish. ⇒ The opportunity cost of 1 fish is 1/5 of a coconut. So, by changing his time allocation between the two activities, Sal can trade goods at the rate of 1 coconut for 5 fish (which is equivalent to 1 fish for 1/5 of a coconut). Note that these opportunity costs are easily seen in the slope of Sal’s production possibilities graph. 8 Next, let’s use these opportunity costs to see who has comparative advantage (i.e. lower opportunity cost) for each good, and therefore who should specialize in each good. Al has a lower opportunity cost for coconuts so he has the comparative advantage in producing coconuts (he gives up only 4 fish per coconut while Sal gives up 5). Sal has a lower opportunity cost for catching fish so he has the comparative advantage in producing fish (he gives up only 1/5 of a coconut per fish while Al gives up ¼). We can conclude that Al should specialize in producing coconuts and Sal should specialize in catching fish. In other words, Al should spend all of his time producing coconuts and Sal should spend all of his time catching fish. They can then trade and have a higher standard of living.

Sora Industries has 66 million outstanding​ shares, $130 million in​ debt, $58 million in​ cash, and the following projected free cash flow for the next four years

A.) Suppose​ Sora's revenue and free cash flow are expected to grow at a 3.8% rate beyond year 4. If​ Sora's weighted average cost of capital is 12.0%​, what is the value of​ Sora's stock based on this​ information?

B.) Sora's cost of goods sold was assumed to be​ 67% of sales. If its cost of goods sold is actually​ 70% of​ sales, how would the estimate of the​ stock's value​ change?

C.) Let's return to the assumptions of part ​(a​) and suppose Sora can maintain its cost of goods sold at​ 67% of sales.​ However, now suppose Sora reduces its​ selling, general, and administrative expenses from​ 20% of sales to​ 16% of sales. What stock price would you estimate​ now? (Assume no other​ expenses, except​ taxes, are​ affected.)

D.) ​Sora's net working capital needs were estimated to be​ 18% of sales​ (which is their current level in year​ 0). If Sora can reduce this requirement to​ 12% of sales starting in year​ 1, but all other assumptions remain as in part ​(a​),what stock price do you estimate for​ Sora? ​(Hint​: This change will have the largest impact on​ Sora's free cash flow in year​ 1.)

LIFO Perpetual Inventory

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31 are as follows:

Required:

1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the last-in, first-out method. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Goods Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column. Round unit cost to two decimal places, if necessary.

2. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost as of March 31.
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Please answer in exact places in order for me to know what I'm checking, if its answer in different table formats, areas etc it would be wrong

thanks

a) What are the main features of the Canadian economy in the second quarter of 2014? Did Canada have a recessionary gap or an inflationary gap in 2014? How do you know?

b) Use the AS - AD model to show the changes in aggregate demand and aggregate supply that occurred in 2013 and 2014 that brought the economy to its situation in mid-2014;

c) Use the AS - AD model to show the changes in aggregate demand and aggregate supply that will have occurred when full employment is restored;

d) Use the AS - AD model to show the changes in aggregate demand and aggregate supply that would occur if the government increased its expenditure on goods and services or cut taxes by enough to restore full employment.

e) Use the AS - AD model to show the changes in aggregate demand and aggregate supply that would occur if the economy moved into an inflationary gap. Show the short-run and the long-run effects.

Below are purchases and sales for Hector retail company for the year 2020.

January 1    purchased    10   UNITS at $20 each

January 2  purchased       20  UNITS at $25 each

January  3  purchased        20 UNITS at $ 30 each

January  4   Sold                    25 UNITS at $ 50 each

(A)

USING FIRST IN FIRST OUT METHOD (FIFO) DETERMINE THE FOLLOWING:

A,.COST OF GOOS SOLD

B. COST OF ENDING INVENTORY

C. GROSS PROFIT

(B)

USING LAST IN FIRST OUT METHOD (LIFO)

1. COST OF ENDING INVENTORY
2. COST OF GOODS SOLD
3. GROSS PROFIT

2. Calculate the value of a periodic inventory using the four cost methods:

          Assume the beginning inventory as of January 1 consisted of 500 units that were purchased for $8.25 each. During the month, three new purchases were made. The first purchase consisted of 700 units costing $8.50 each, the second purchase had 800 units costing $9.00 each, and the third purchase had 600 units costing $9.50 each.  

Units              Cost per Unit                      

Beg. inventory, January 1             500                 @ $8.25

First purchase                                  700                 @ $8.50

Second purchase                             800                 @ $9.00

Third purchase                                 600                 @ $9.50

Total                                               2,600              

At the end of the month, ending inventory shows 700 units.

Compute the following for each of the methods:

1. Cost of goods sold

2. The cost of ending inventory

a. Specific identification: Of the units sold, 300 were from the beginning inventory, 600 from the first purchase, 700 from the second purchase, and 300 from the third purchase.   (Show your work)

b. First-in, first-out (FIFO): (Show your work)

c. Weighted-average: (Show your work)

d. Last-in, first-out (LIFO): (Show your work)

Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Required:

1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

1. 2-a. Of the four methods, which will result in the highest gross profit?

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

1. 2-b. Of the four methods, which will result in the lowest income taxes?

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

Assuming that for Specific identification method (item 1d) the March 14 sale was selected two-fifths from the beginning inventory and three-fifths from the purchase of January 30. Assume that the sale of August 31 was selected from the remainder of the beginning inventory, with the balance from the purchase of May 1.

Required:

1. Compute the amount of goods available for sale, ending inventory, and cost of goods sold at December 31 under each of the following inventory costing methods: (Round intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)

1. 2-a. Of the four methods, which will result in the highest gross profit?

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

1. 2-b. Of the four methods, which will result in the lowest income taxes?

• Last-in, first-out

• Weighted average cost

• First-in, first-out

• Specific identification

Which of the following statements are TRUE for first-order analyses of NMR spectra (the type of analysis most commonly done).

The spin-multiplicity of the proton NMR absorption of the methylene group in ethanol-OD is 4.

The difference in absorption frequency is equal to or less than 6 J.

Equivalent protons do not split each other.

First-order multiplets are symmetrical, and their chemical shift is given by the position of the first peak in the multiplet.

Carbon-13, an NMR-active nucleus, has a nuclear spin quantum number of 0.