A researcher was interested in assessing the prevalence of internet addiction risk (IAR) on a college campus in California. Data was gathered by having students complete a questionnaire on orientation day at the beginning of the school year. 1. What study design was used in this scenario?

Coding for study variables:

IAR – internet addiction risk; 1 = low; 2 = medium; 3 = high

SEX – 1 = male; 2 = female

YEAR – 1 = freshman; 2 = sophomore; 3 = junior; 4 = senior

Researchers were interested in determining whether a new drug could be used to ease post-traumatic stress disorder (PTSD) symptoms among veterans. Three hundred patients were recruited from 10 Veterans Affairs hospitals; half were given the new drug while the other half were given a placebo. The results indicated statistically significant improvements in sleep quality index (SQI) scores for patients taking the new drug as opposed to patients taking the placebo. However, side effects like dizziness (DIZZ) were also greater among patients taking the new drug.

Coding for study variables:

MED— 1 = medication; 2 = placebo

SQI— sleep quality index; overall score 0-21

DIZZ – 0 = no dizziness; 1 = dizziness

A study was conducted to determine the source of an outbreak of influenza A (H5N1) in Hong Kong. A total of 45 cases with fever plus cough or sore throat and 90 matched controls without symptoms were interviewed with a standardized questionnaire. Exposure to live poultry (EXP) in the week before illness was significantly associated with H5N1 infection.  What study design was used in this scenario?

Coding for study variables:

EXP—live poultry exposure; 1 = yes; 2 = no

·          H5N1—Influenza A (H5N1) infection; 1 = yes; 2 = no

The Nurses’ Health Study is one of the largest prospective investigations of risk factors for major chronic diseases in women. Using data from food frequency questionnaires and mortality records collected between 1986-2010, researchers examined the association between long term gluten intake (GLUT) and development of coronary heart disease (CHD). The results indicated that consumption of foods containing gluten was not significantly associated with risk of CHD, even after adjusting for race, body mass index (BMI), and other known risk factors. What study design was used in this scenario?

Coding for study variables:

GLUT—gluten intake; 1 = lowest; 2 = low; 3 = medium; 4 = high; 5 = highest

RACE – 1 = White; 2 = Black; 3 = other

BMI – body mass index (kg/m²)

CHD —coronary heart disease; 1 = yes; 2 = no

It is 2020. The US government has passed a new federal minimum wage of $11.00/ hour. It will go into effect on January 1, 2021. Please follow the instructions, given the background information in items A, B, C, and D below.

Instructions

1. Calculate the immediate financial impact in 2021 (change in hourly wages) on the profitability of the company due to the impending increase in the minimum wage. Ignore tax issues such as employment tax in your calculation.

2. Identify at least three (3) courses of action (options) for the owner of this company that will offset the increase in labor costs from #1 above. Explain why you think these options are viable options for the small company. Your course of action must quickly offset the effect of the increase in wages and the decrease in profitability of the company due to the minimum wage increase.

3. Lastly, recommend the one course of action from among your list of three courses of action that you think is the best option for the small business owner and his or her company. Justify your response.

Background Information

A- The company has 19 employees, which includes two assistant managers. The owner is the only shareholder of the company.

B. 6 employees earn $8.00/ hour which is slightly above the current federal minimum wage, but $3/ per hour below the new federal minimum wage.

C. The other employees earn the following:

ii. 6 earn $13/ hour

iii. 3 earn $18/ hour

iv. 2 earn $22/ hour

v. The 2 managers each earn $50,000 per year

See Table 1 on the next page.

D. The company earned a profit last year of $100,000 based on sales of $1,500,000 that was passed through to the owner as the owner’s only source of income.   This year sales are on track to be approximately $1,500,000 again due to industry conditions. The owner’s family just bought a new house for their growing family and has a mortgage of $141,000 with monthly payments of $1,008 per month.

E. The owner’s spouse does not work and the family cannot justify the spouse getting a job of any kind because the wages from a new job would not cover the weekly cost of day care and after school care for the family’s three young children, ages 2, 5, and 7.

Table 1. Summary of Current Costs of Payroll

Fukui Prefecture is situated on the northwest coast of Japan, over 400 kilometers west of
Tokyo. In 2014, over 95 percent of Japanese-produced eye-glass frames were made in Fukui
Prefecture, principally in the cities of Fukui and Sabae. In the early 20th century, the Fukui
economy was dominated by agriculture. Taking advantage of the seasonal lull in
employment during the winter months, Mr Masunaga Gozaemon and his brother Kohachi
started a business in the village of Shono to manufacture celluloid eye-glass frames.
Initially, the quality of Fukui-made eyeglasses was low. To raise standards, Mr
Gozaemon established a guild like system in which full-fledged craftsmen could set up their
own businesses. Production took off during World War I, and by 1937, the Fukui industry
comprised 70 factories employing 800 workers, and producing 1.5 million pairs of eyeglasses
a year.
In the 1980s, Fukui manufacturers perfected the production of titanium frames. These
are light and sturdy, and cause fewer allergies than conventional metals, but require
considerable skill to make. The strong tradition of craftsmanship in Fukui enabled the
production of titanium frames.
Mr Shoji Gozaemon, great grandson of the pioneer, Masunaga Gozaemon,
emphasized, “One of the characteristics of Japanese craftsmanship is a kind of redundancy of
detail. There is a tendency to pay careful attention to the minutest details. The spirit of
Japanese craftsmanship often involves spending more time and effort over producing
something than is strictly necessary” (Nippon.com 2012).
Besides manufacturers of eye-glass frames, the Fukui industry also includes
manufacturers and suppliers of lenses, sunglasses, reading glasses, parts, materials such as
titanium wire and preformin, and machines and tools.
With the entry of low-cost Chinese manufacturers into the market, the manufacturing
of eye-glasses in Fukui prefecture peaked in 1992. Within twenty years, by 2012, 40 percent
of Fukui eye-glass manufacturers had gone out of business, and employment and production
dropped by one-third. Another challenge is demographic. Japan is a rapidly ageing society.
In just eight years between 2011-17, the working population of Sabae fell by 11 percent to
30,000.
One possible response is automation. Fund manager, Howard Smith, asserts that
“with chronic depopulation challenges in rural areas, most companies must adapt or die. That
involves planning for succession and investing heavily in automation” (Financial Times,
2018).
(c) 2018. I.P.L. Png. This case is based in part on “Sabae, Fukui: A Town with an Eye for Design”,
Nippon.com, 24 April 2012, “Luxottica Group Invests in ‘made in Japan’”, Press Release, Luxottica
Group, 6 March 2018, and “Made in Japan: can handcrafted glasses survive an automated world?”
Financial Times, 4 April 2018.
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Mr Ryozo Takeuchi is chairman of Takeuchi Optical, founded in 1932 and presently
employing 80 persons. Mr Takeuchi is also president of the Fukui Optical Association. He
describes automation as a buzz-word, and maintains that metal frames must be finished by
hand. In his factory, titanium frames pass through the hands of ten different workers and are
then polished for 72 hours in a bath of pulverized walnut shells.
Another response has been to shift away from the previous OEM (original equipment
manufacturing) model, in which Fukui produced eye-glasses and parts for international
brands such as Prada and Dior. In 1996, Fukui manufacturer Boston Club launched its own
brand, Japonism, and followed up in 2002, by opening a retail store in the fashionable
Minami-Aoyama district of Tokyo.
Chief designer of Boston Club, Kasashima Hironobu, remarked, “Traveling to
international fairs overseas … brought home to me that constantly emphasizing the technical
know-how we have built up over the years is not enough to make us internationally
competitive. ... We need to promote the worldview expressed by our brand and appeal to the
consumer by emphasizing the values that lie behind it” (Nippon.com 2012).
Boston Club’s previous strategy had been to design products that could only be made
with Japanese technology. Turning design convention on its head, Boston Club decided to
emphasize durability – to produce eyeglasses which could be used for life. It developed the
new Rudder Hinge which can be detached and replaced when necessary. With replaceable
parts, the frames can be used almost indefinitely.
In 2003, over 20 Sabae manufacturers joined to develop an industry brand, “291.” In
2008, they opened Glass Gallery 291, a retail outlet in the Aoyama district of Tokyo and then
another outlet in the Megane Museum at Sabae. In 2017, Masunaga Optical, the company
founded by pioneer Masunaga Gozaemon, employed 173 workers at its factory, and operated
retail stores in Tokyo, Osaka, Nagoya, and Nara.
However, not all Fukui eye-glass manufacturers have been able to adapt. Some lack
the managerial expertise or capital. Looking out from his factory, Mr Takeuchi pointed to
three businesses that had recently gone bankrupt.
Some owners are selling. Founded in 1966, Fukui Megane presently employs 170
workers and specializes in making titanium and solid gold frames. It pioneered multi-colored
gold frames and is still the only the producer in the world. In March 2018, Fukui Megane
sold a 67 percent stake to multinational eyeware manufacturer, Luxottica, which owns brands
including Ray Ban and Oakley, and manufactures for brands such as Chanel, Prada, and
Giorgio Armani.
Luxottica Group Executive Chairman, Mr Leonardo Del Vecchio, explained that “The
acquisition of Fukui Megane represents a first step for the entry of our Group in the world of
Japanese production. We intend to continue investing to recreate a productive pole of
excellence in Sabae, in line with the Luxottica model. For the first time in the history of
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eyewear, we will have under the same roof two great artisan schools such as the Italian and
the Japanese ones” (Luxoticca 2018).
The aging ownership of other Fukui eye-glass manufacturers without successorship
plans presents an opportunity for mergers and acquisitions. Specialists, Nihon M&A Center,
M&A Capital Partners, and Strike, can help find buyers and consolidate and automate the
industry.
In 2007, former investment banker, Mr Kenzo Matsumura, bought five companies
that were spun off from the merger of Japanese toy manufacturers Tomy and Takara. Among
them was a trading house that sold reading glasses through a television shopping channel. Mr
Matsumura expected that, in a fast ageing society, the demand for reading glasses would
boom. However, the reading glasses were bad and hardly profitable. The cost of production
was 3,300 Yen, the trading house charged a wholesale price of 3700 Yen, while the television
channel priced the glasses at 10,000 Yen.
The condition of the factory in Sabae was parlous. In Mr Matsumura’s words, “The
machinery was battered and looked 40 years old. There were women doing lens coatings by
hand. Everything was manual. The defect rate was 30 percent” (Financial Times, 2018).
Major lens manufacturers like Hoya and Nikon outsourced production to China and
Thailand. Mr Matsumura criticized their strategy, “If you fully automate a factory, you can
be in Japan running that factory more productively and at lower cost than in China”
(Financial Times, 2018).
He set up an automated factory in Chiba prefecture, east of Tokyo, which produces
Hazuki reading glasses at a rate of 20,000 a day. Shrouded in secrecy, with further
automation, the factory is expected to triple the rate of production.
Hazuki has also repositioned the product as a sophisticated fashion item, while
maintaining the retail price at 10,000 Yen. In February 2018, during the Winter Olympics,
Hazuki spent US$5 million on television advertising, which led to a spectacular boost in sales.

Questions:

1. With reference to the Japanese eye-glass manufacturing industry, discuss why productivity differs within an industry.
2. What does a buyer get from acquiring a Fukui manufacturer of eye-glass frames?
Compare the benefits to Luxoticca vis-à-vis a private equity firm.
3. Do you agree with Mr Takeuchi that automation is a buzz-word?
4. If you were Mr Matsumura, where would you locate your factory? Discuss the advantages and disadvantages of locating in a cluster.

In 2009, New York First National Bank acquired New Jersey National Bank. In an exchange, New York First National Bank issued three series of preferred stock for New Jersey National Bank's net assets. Series Senior A (the most senior series), was given to four of New Jersey National Bank's creditors so that the debt could then be retired. The four preferred shareholders are listed as follows: two regional banks, one money center bank, and a non-financial corporation. Senior Series A has a total par value of $20 million, which carries a non-cumulative dividend per the following schedule:

New York First National Bank did not pay dividends in 2010, 2011, or 2013 however, they will start paying dividends annually at the start of 2014 thus, they will pay 20% on the Senior Series A preferred.

The Senior Series A stock may be called at any given time, at par plus dividends cumulated from January 1, 2010. New York First National Bank estimates that it can float a new issue of 10% non-cumulative preferred stock at par, with issuance costs amounting to $1,000,000. The new issue of preferred would be callable at par plus unpaid dividends.

Should New York First National Bank call in the Senior Series A and issue new preferred? (assume that the Senior Series A would be called effective December 31, 2013.)

Contrast the neoclassical economic theory with the new economic theories (new endogenous growth theory, new economic geography, and strategic trade theory)? Do the new economic theories reject the neoclassical economic theory? Substantiate your arguments with real world case(s) and example(s). ( Explain it in detail)

Health Economics quiz

1. The Evanston North acquisition of Highland Park hospital was unusual because:
   1. The FTC opened its investigation after the merger was consummated.
   2. Evanston North alleged substantial efficiencies were only available to the merged firm.
   3. The FTC had actual evidence of post-merger pricing with which to assess the competitive effects of the merger.
   4. The attorneys for ENK hired economists to conduct empirical   analysis of geographic market definition.
2. Did the FTC win the first round at the ALJ in its litigation against ENH?
   1. Yes
   2. No
3. On appeal, ENH’s case was judged by the Commission.
   1. True
   2. False
4. The Commission voted to uphold the FTC case against ENH.
   1. True
   2. False
5. The FTC initially sought to have ENH divest Highland Park but later settled for a provision that EN and Glendale must negotiate with payors such as Blue Cross/Blue Shield independently.
   1. True
   2. False
6. Which was the most dispositive evidence that the merger was anticompetitive:
   1. Concentration in the antitrust market was made substantially more concentrated by the merger.
   2. EN documents referred to Highland Park’s imposition of price discipline on EN.
   3. Price data was analyzed by Commission economists that showed substantial post-merger price increases.
   4. Documentary evidence of collusion among the five hospitals remaining after merger.
7. Following the Commission’s win over the merger defendants private parties filed suit against ENH for damages from price fixing.
   1. True
   2. False
8. Not all hospital patients can afford to pay for their hospital care and, as well, hospitals are not allowed to turn emergency room patients down or divert them to other hospitals. Allegedly, hospitals make up the deficit through cost shifting.
   1. True
   2. False
9. Unlike regulated firms cost shifting by hospitals is essentially price discrimination.
   1. True
   2. False

Q1 Take a typical worker, Jordan. Before the onset of COVID-19, Jordon earned $30 per hour (after taxation) in their job. Assume that Jordan has no other sources of income or savings. Write down the equation of Jordan’s consumption budget constraint (for a single working day). Using a model with consumption on the vertical axis and hours of free time on the horizontal axis, plot Jordan’s budget constraint. Label all relevant elements of this diagram and state the value of the horizontal and vertical intercepts.

Q2 Now, add an indifference curve to the model you developed in Q1 and label it IC1. This indifference curve should be at a utility maximising point and show Jordan’s corresponding choice of consumption and hours of free time. As you have not been given any information regarding Jordan’s preferences, state one assumption that you have made about Jordan’s utility maximising choice and one assumption that you have made about the slope of Jordan’s indifference curve.

Q3 The arrival of COVID-19 brought financial hardship for Jordan’s employer. As a result, Jordan has had their hourly wage cut by 20% (a common occurrence around the world at the moment). Write down a new equation for Jordan’s consumption budget constraint (for a single working day). Using the same model developed in Q1-Q2, plot Jordan’s new budget constraint. Clearly state the value of the horizontal and vertical intercepts. MACQUARIE BUSINESS SCHOOL Department of Economics

Q4 Now, add a second indifference curve to the model you developed in Q1-Q3 and label it IC2. This indifference curve should be at a new utility maximising point and show Jordan’s corresponding choice of consumption and hours of free time. State what has happened to Jordan’s choice of consumption and free time. What can be said about Jordan’s overall level of utility after the onset of COVID-19?

Q5 Using the model created in Q1-Q4, show the income effect, substitution effect and overall effect of Jordan’s wage decrease. Compare the relative size of the income and substitution effects shown on your model. What can be inferred about Jordan’s preferences for free time and consumption from this comparison?

Sarah is a freshman high school student who is also holding down a 20-hour-a-week job. She drinks diet cola several times a day to keep her energized without adding calories, and she has given up all dairy products as part of her newly embraced vegan diet. At a routine checkup, her physician warned against excessive soda consumption and recommended that she add more sources of calcium to her diet. Why?