Research the different nursing care facilities in your community. Discuss the pros and cons of the facility in terms of what they offer. Provide a brief report with the following questions:

• What is the basic rate for room, board, and services (it’s a good idea to get this information in writing)?
• What services are covered by this rate?
• Are there other services available and how much do they cost?
• What are the payment policies?
• What is the refund policy if someone leaves before the end of a month?
• What is the policy for rate increases?
• How long has the current administration been in place?
• Is there enough staff available to meet my needs?
• Is there frequent staff turnover?
• Is some level of nursing care provided (RN, LPN, Nursing
• Assistant)? How often is it available?
• Who will help me with medications if I need it (e.g. reminding me to take them, opening the bottle)?
• Can someone administer medications to me if I can’t take them myself (e.g. applying medication to my skin, putting a pill in my mouth)?
• Can someone help me if I need special care (e.g. caring for a wound)?
• What happens if I have an emergency? Can I get help right away?
• Are staffs suitably dressed, personable, and outgoing?
• Do the staff members treat residents with respect and dignity?
• Do staff members treat each other in a professional manner?
• What language does most of the staff speak?
• What type of help with personal care is available (e.g. bathing, dressing)?
• How flexible is the schedule for receiving help with personal care?
• What, if any, transportation services are available? (e.g. medical appointments, shopping, religious services).
• Will staff arrange for activities (e.g. hair appointment, concert)?
• How does the home support and accommodate personal hobbies?
• Are there regularly planned activities that I will enjoy?
• Will I be able to attend religious services of my choice?
• Can I bring my pet with me when I move?
• When can I have visitors?
• Are there shops, a library, a park, or other amenities within walking distance?
• Is the home close to activities I enjoy?
• Is the home on a bus line?
• Is there an outside area to sit, walk, or garden?
• Are there shops, a library, a park, or other amenities within walking distance?
• Is the home close to activities I enjoy?
• Is the home on a bus line?
• Is there an outside area to sit, walk, or garden?
• Is the floor plan easy to follow?
• Are doorways, hallways, and rooms accommodating to wheelchairs and walkers?
• Are there hand rails to help with walking and in the bathroom?
• Are cupboards and shelves easy to reach?
• Are there nonskid floors and firm carpets to assist walking?
• Does the home have good natural and artificial lighting?
• Is the home clean, free of odors, and well heated and cooled?
• Does the home meet my standards of cleanliness?
• Is the home free from obvious environmental hazards?
• Are the home’s rooms clean, safe, and adequate for my needs?
• Will I have free use of common areas, such as the kitchen, activity rooms, toilet facilities, dining room, or grounds?
• Can I smoke in my room or in common areas?
• What furniture is provided?
• Can I bring along some of my furniture or other personal items?
• Can I adjust the temperature of my room?
• Is there a sit-down shower?
• Can I have my own personal phone line or internet connection?
• Are emergency procedures clearly posted?
• Am I able to lock my room and/or are there locked areas in each room for personal valuables?
• Is the food pleasing, nutritious, adequate, and attractively served?
• What if I don’t like what is being served?
• Can I cook in my room?
• Are snacks available?
• Are there specific meal times or are they flexible?
• Is there a refrigerator available to store my personal food?
• Will the home meet my dietary or cultural food preferences?
• Can I request special foods?
• Do other residents socialize with each other and appear happy and comfortable?
• Do residents speak favorably of the facility?
• Do the residents look like people I want to live with?
• How are room changes and roommate concerns addressed?
• Is there a resident group that meets?
• Do any of the other residents have a history of violent or other problem behaviors? How are these situations handled by staff?

Research the different nursing care facilities in your community. Discuss the pros and cons of the facility in terms of what they offer. Provide a brief report with the following questions: • What is the basic rate for room, board, and services (it’s a good idea to get this information in writing)? • What services are covered by this rate? • Are there other services available and how much do they cost? • What are the payment policies? • What is the refund policy if someone leaves before the end of a month? • What is the policy for rate increases? • How long has the current administration been in place? • Is there enough staff available to meet my needs? • Is there frequent staff turnover? • Is some level of nursing care provided (RN, LPN, Nursing • Assistant)? How often is it available? • Who will help me with medications if I need it (e.g. reminding me to take them, opening the bottle)? • Can someone administer medications to me if I can’t take them myself (e.g. applying medication to my skin, putting a pill in my mouth)? • Can someone help me if I need special care (e.g. caring for a wound)? • What happens if I have an emergency? Can I get help right away? • Are staffs suitably dressed, personable, and outgoing? • Do the staff members treat residents with respect and dignity? • Do staff members treat each other in a professional manner? • What language does most of the staff speak? • What type of help with personal care is available (e.g. bathing, dressing)? • How flexible is the schedule for receiving help with personal care? • What, if any, transportation services are available? (e.g. medical appointments, shopping, religious services). • Will staff arrange for activities (e.g. hair appointment, concert)? • How does the home support and accommodate personal hobbies? • Are there regularly planned activities that I will enjoy? • Will I be able to attend religious services of my choice? • Can I bring my pet with me when I move? • When can I have visitors? • Are there shops, a library, a park, or other amenities within walking distance? • Is the home close to activities I enjoy? • Is the home on a bus line? • Is there an outside area to sit, walk, or garden? • Are there shops, a library, a park, or other amenities within walking distance? • Is the home close to activities I enjoy? • Is the home on a bus line? • Is there an outside area to sit, walk, or garden? • Is the floor plan easy to follow? • Are doorways, hallways, and rooms accommodating to wheelchairs and walkers? • Are there hand rails to help with walking and in the bathroom? • Are cupboards and shelves easy to reach? • Are there nonskid floors and firm carpets to assist walking? • Does the home have good natural and artificial lighting? • Is the home clean, free of odors, and well heated and cooled? • Does the home meet my standards of cleanliness? • Is the home free from obvious environmental hazards? • Are the home’s rooms clean, safe, and adequate for my needs? • Will I have free use of common areas, such as the kitchen, activity rooms, toilet facilities, dining room, or grounds? • Can I smoke in my room or in common areas? • What furniture is provided? • Can I bring along some of my furniture or other personal items? • Can I adjust the temperature of my room? • Is there a sit-down shower? • Can I have my own personal phone line or internet connection? • Are emergency procedures clearly posted? • Am I able to lock my room and/or are there locked areas in each room for personal valuables? • Is the food pleasing, nutritious, adequate, and attractively served? • What if I don’t like what is being served? • Can I cook in my room? • Are snacks available? • Are there specific meal times or are they flexible? • Is there a refrigerator available to store my personal food? • Will the home meet my dietary or cultural food preferences? • Can I request special foods? • Do other residents socialize with each other and appear happy and comfortable? • Do residents speak favorably of the facility? • Do the residents look like people I want to live with? • How are room changes and roommate concerns addressed? • Is there a resident group that meets? • Do any of the other residents have a history of violent or other problem behaviors? How are these situations handled by staff?

Research the different nursing care facilities in your community. Discuss the pros and cons of the facility in terms of what they offer. Provide a brief report with the following questions: • What is the basic rate for room, board, and services (it’s a good idea to get this information in writing)? • What services are covered by this rate? • Are there other services available and how much do they cost? • What are the payment policies? • What is the refund policy if someone leaves before the end of a month? • What is the policy for rate increases? • How long has the current administration been in place? • Is there enough staff available to meet my needs? • Is there frequent staff turnover? • Is some level of nursing care provided (RN, LPN, Nursing • Assistant)? How often is it available? • Who will help me with medications if I need it (e.g. reminding me to take them, opening the bottle)? • Can someone administer medications to me if I can’t take them myself (e.g. applying medication to my skin, putting a pill in my mouth)? • Can someone help me if I need special care (e.g. caring for a wound)? • What happens if I have an emergency? Can I get help right away? • Are staffs suitably dressed, personable, and outgoing? • Do the staff members treat residents with respect and dignity? • Do staff members treat each other in a professional manner? • What language does most of the staff speak? • What type of help with personal care is available (e.g. bathing, dressing)? • How flexible is the schedule for receiving help with personal care? • What, if any, transportation services are available? (e.g. medical appointments, shopping, religious services). • Will staff arrange for activities (e.g. hair appointment, concert)? • How does the home support and accommodate personal hobbies? • Are there regularly planned activities that I will enjoy? • Will I be able to attend religious services of my choice? • Can I bring my pet with me when I move? • When can I have visitors? • Are there shops, a library, a park, or other amenities within walking distance? • Is the home close to activities I enjoy? • Is the home on a bus line? • Is there an outside area to sit, walk, or garden? • Are there shops, a library, a park, or other amenities within walking distance? • Is the home close to activities I enjoy? • Is the home on a bus line? • Is there an outside area to sit, walk, or garden? • Is the floor plan easy to follow? • Are doorways, hallways, and rooms accommodating to wheelchairs and walkers? • Are there hand rails to help with walking and in the bathroom? • Are cupboards and shelves easy to reach? • Are there nonskid floors and firm carpets to assist walking? • Does the home have good natural and artificial lighting? • Is the home clean, free of odors, and well heated and cooled? • Does the home meet my standards of cleanliness? • Is the home free from obvious environmental hazards? • Are the home’s rooms clean, safe, and adequate for my needs? • Will I have free use of common areas, such as the kitchen, activity rooms, toilet facilities, dining room, or grounds? • Can I smoke in my room or in common areas? • What furniture is provided? • Can I bring along some of my furniture or other personal items? • Can I adjust the temperature of my room? • Is there a sit-down shower? • Can I have my own personal phone line or internet connection? • Are emergency procedures clearly posted? • Am I able to lock my room and/or are there locked areas in each room for personal valuables? • Is the food pleasing, nutritious, adequate, and attractively served? • What if I don’t like what is being served? • Can I cook in my room? • Are snacks available? • Are there specific meal times or are they flexible? • Is there a refrigerator available to store my personal food? • Will the home meet my dietary or cultural food preferences? • Can I request special foods? • Do other residents socialize with each other and appear happy and comfortable? • Do residents speak favorably of the facility? • Do the residents look like people I want to live with? • How are room changes and roommate concerns addressed? • Is there a resident group that meets? • Do any of the other residents have a history of violent or other problem behaviors? How are these situations handled by staff?

Research the different nursing care facilities in Miami, FL . Discuss the pros and cons of the facility you find in terms of what they offer. Provide a brief report with the following questions:

• What is the basic rate for room, board, and services (it’s a good idea to get this information in writing)?

• What services are covered by this rate?

• Are there other services available and how much do they cost?

• What are the payment policies?

• What is the refund policy if someone leaves before the end of a month?

• What is the policy for rate increases?

• How long has the current administration been in place?

• Is there enough staff available to meet my needs?

• Is there frequent staff turnover?

• Is some level of nursing care provided (RN, LPN, Nursing • Assistant)?

How often is it available?

• Who will help me with medications if I need it (e.g. reminding me to take them, opening the bottle)?

• Can someone administer medications to me if I can’t take them myself (e.g. applying medication to my skin, putting a pill in my mouth)?

• Can someone help me if I need special care (e.g. caring for a wound)?

• What happens if I have an emergency? Can I get help right away?

• Are staffs suitably dressed, personable, and outgoing?

• Do the staff members treat residents with respect and dignity?

• Do staff members treat each other in a professional manner?

• What language does most of the staff speak?

• What type of help with personal care is available (e.g. bathing, dressing)?

• How flexible is the schedule for receiving help with personal care?

• What, if any, transportation services are available? (e.g. medical appointments, shopping, religious services)

. • Will staff arrange for activities (e.g. hair appointment, concert)?

• How does the home support and accommodate personal hobbies?

• Are there regularly planned activities that I will enjoy?

• Will I be able to attend religious services of my choice?

• Can I bring my pet with me when I move?

• When can I have visitors?

• Are there shops, a library, a park, or other amenities within walking distance?

• Is the home close to activities I enjoy?

• Is the home on a bus line?

• Is there an outside area to sit, walk, or garden?

• Are there shops, a library, a park, or other amenities within walking distance?

• Is the home close to activities I enjoy?

• Is the home on a bus line?

• Is there an outside area to sit, walk, or garden?

• Is the floor plan easy to follow?

• Are doorways, hallways, and rooms accommodating to wheelchairs and walkers?

• Are there hand rails to help with walking and in the bathroom?

• Are cupboards and shelves easy to reach?

• Are there nonskid floors and firm carpets to assist walking?

• Does the home have good natural and artificial lighting?

• Is the home clean, free of odors, and well heated and cooled?

• Does the home meet my standards of cleanliness?

• Is the home free from obvious environmental hazards?

• Are the home’s rooms clean, safe, and adequate for my needs?

• Will I have free use of common areas, such as the kitchen, activity rooms, toilet facilities, dining room, or grounds?

• Can I smoke in my room or in common areas?

• What furniture is provided?

• Can I bring along some of my furniture or other personal items?

• Can I adjust the temperature of my room?

• Is there a sit-down shower?

• Can I have my own personal phone line or internet connection?

• Are emergency procedures clearly posted?

• Am I able to lock my room and/or are there locked areas in each room for personal valuables?

• Is the food pleasing, nutritious, adequate, and attractively served?

• What if I don’t like what is being served?

• Can I cook in my room?

• Are snacks available?

• Are there specific meal times or are they flexible?

• Is there a refrigerator available to store my personal food?

• Will the home meet my dietary or cultural food preferences?

• Can I request special foods?

• Do other residents socialize with each other and appear happy and comfortable?

• Do residents speak favorably of the facility?

• Do the residents look like people I want to live with?

• How are room changes and roommate concerns addressed?

• Is there a resident group that meets?

• Do any of the other residents have a history of violent or other problem behaviors? How are these situations handled by staff?

Research the different nursing care facilities in your community. Discuss the pros and cons of the facility in terms of what they offer. Provide a brief report with the following questions:

• What is the basic rate for room, board, and services (it’s a good idea to get this information in writing)?
• What services are covered by this rate?
• Are there other services available and how much do they cost?
• What are the payment policies?
• What is the refund policy if someone leaves before the end of a month?
• What is the policy for rate increases?
• How long has the current administration been in place?
• Is there enough staff available to meet my needs?
• Is there frequent staff turnover?
• Is some level of nursing care provided (RN, LPN, Nursing
• Assistant)? How often is it available?
• Who will help me with medications if I need it (e.g. reminding me to take them, opening the bottle)?
• Can someone administer medications to me if I can’t take them myself (e.g. applying medication to my skin, putting a pill in my mouth)?
• Can someone help me if I need special care (e.g. caring for a wound)?
• What happens if I have an emergency? Can I get help right away?
• Are staffs suitably dressed, personable, and outgoing?
• Do the staff members treat residents with respect and dignity?
• Do staff members treat each other in a professional manner?
• What language does most of the staff speak?
• What type of help with personal care is available (e.g. bathing, dressing)?
• How flexible is the schedule for receiving help with personal care?
• What, if any, transportation services are available? (e.g. medical appointments, shopping, religious services).
• Will staff arrange for activities (e.g. hair appointment, concert)?
• How does the home support and accommodate personal hobbies?
• Are there regularly planned activities that I will enjoy?
• Will I be able to attend religious services of my choice?
• Can I bring my pet with me when I move?
• When can I have visitors?
• Are there shops, a library, a park, or other amenities within walking distance?
• Is the home close to activities I enjoy?
• Is the home on a bus line?
• Is there an outside area to sit, walk, or garden?
• Are there shops, a library, a park, or other amenities within walking distance?
• Is the home close to activities I enjoy?
• Is the home on a bus line?
• Is there an outside area to sit, walk, or garden?
• Is the floor plan easy to follow?
• Are doorways, hallways, and rooms accommodating to wheelchairs and walkers?
• Are there hand rails to help with walking and in the bathroom?
• Are cupboards and shelves easy to reach?
• Are there nonskid floors and firm carpets to assist walking?
• Does the home have good natural and artificial lighting?
• Is the home clean, free of odors, and well heated and cooled?
• Does the home meet my standards of cleanliness?
• Is the home free from obvious environmental hazards?
• Are the home’s rooms clean, safe, and adequate for my needs?
• Will I have free use of common areas, such as the kitchen, activity rooms, toilet facilities, dining room, or grounds?
• Can I smoke in my room or in common areas?
• What furniture is provided?
• Can I bring along some of my furniture or other personal items?
• Can I adjust the temperature of my room?
• Is there a sit-down shower?
• Can I have my own personal phone line or internet connection?
• Are emergency procedures clearly posted?
• Am I able to lock my room and/or are there locked areas in each room for personal valuables?
• Is the food pleasing, nutritious, adequate, and attractively served?
• What if I don’t like what is being served?
• Can I cook in my room?
• Are snacks available?
• Are there specific meal times or are they flexible?
• Is there a refrigerator available to store my personal food?
• Will the home meet my dietary or cultural food preferences?
• Can I request special foods?
• Do other residents socialize with each other and appear happy and comfortable?
• Do residents speak favorably of the facility?
• Do the residents look like people I want to live with?
• How are room changes and roommate concerns addressed?
• Is there a resident group that meets?
• Do any of the other residents have a history of violent or other problem behaviors? How are these situations handled by staff?

Twin Falls Community Hospital is a 250-bed, not-for-profit hospital located

in the city of Twin Falls, the largest city in Idaho’s Magic Valley region

and the seventh largest in the state. The hospital was founded in 1972 and

today is acknowledged to be one of the leading healthcare providers in the

area.

Twin Falls’ management is currently evaluating a proposed ambulatory

(outpatient) surgery center. Over 80 percent of all outpatient surgery is

performed by specialists in gastroenterology, gynecology, ophthalmology,

otolaryngology, orthopedics, plastic surgery, and urology. Ambulatory surgery

requires an average of about one and one-half hours; minor procedures take

about one hour or less, and major procedures take about two or more hours.

About 60 percent of the procedures are performed under general anesthesia, 30

percent under local anesthesia, and 10 percent under regional or spinal

anesthesia. In general, operating rooms are built in pairs so that a patient

can be prepped in one room while the surgeon is completing a procedure in the

other room.

The outpatient surgery market has experienced significant growth since the

first ambulatory surgery center opened in 1970. This growth has been fueled

by three factors. First, rapid advancements in technology have enabled many

procedures that were historically performed in inpatient surgical suites to

be switched to outpatient settings. This shift was caused mainly by advances

in laser, laparoscopic, endoscopic, and arthroscopic technologies. Second,

Medicare has been aggressive in approving new minimally invasive surgery

techniques, so the number of Medicare patients utilizing outpatient surgery

services has grown substantially. Finally, patients prefer outpatient

surgeries because they are more convenient, and third-party payers prefer

them because they are less costly.

These factors have led to a situation in which the number of inpatient

surgeries has grown little (if at all) in recent years while the number of

outpatient procedures has been growing at over 10 percent annually and now

totals about 22 million a year. Rapid growth in the number of outpatient

surgeries has been accompanied by a corresponding growth in the number of

outpatient surgical facilities. The number currently stands at about 5,000

nationwide, so competition in many areas has become intense. Somewhat

surprisingly, there is no outpatient surgery center in the Twin Falls area,

although there have been rumors that local physicians are exploring the

feasibility of a physician-owned facility.

The hospital currently owns a parcel of land that is a perfect location for

the surgery center. The land was purchased five years ago for $350,000, and

last year the hospital spent (and expensed for tax purposes) $25,000 to clear

the land and put in sewer and utility lines. If sold in today’s market, the

land would bring in $500,000, net of realtor commissions and fees. Land

prices have been extremely volatile, so the hospital’s standard procedure is

to assume a salvage value equal to the current value of the land.

The surgery center building, which will house four operating suites, would

cost $5 million and the equipment would cost an additional $5 million, for a

total of $10 million. The project will probably have a long life, but the

hospital typically assumes a five-year life in its capital budgeting analyses

and then approximates the value of the cash flows beyond Year 5 by including

a terminal, or salvage, value in the analysis. To estimate the terminal

value, the hospital typically uses the market value of the building and

equipment after five years, which for this project is estimated to be $5

million, excluding the land value.

The expected volume at the surgery center is 20 procedures a day. The average

charge per procedure is expected to be $1,500, but charity care, bad debts,

insurer discounts (including Medicare and Medicaid), and other allowances

lower the net revenue amount to $1,000. The center would be open five days a

week, 50 weeks a year, for a total of 250 days a year. Labor costs to run the

surgery center are estimated at $800,000 per year, including fringe benefits.

Supplies costs, on average, would run $400 per procedure, including

anesthetics. Utilities, including hazardous waste disposal, would add another

$50,000 in annual costs. If the surgery center were built, the hospital’s

cash overhead costs would increase by $36,000 annually, primarily for

housekeeping and buildings and grounds maintenance.

One of the most difficult factors to deal with in project analysis is

inflation. Both input costs and charges in the healthcare industry have been

rising at about twice the rate of overall inflation. Furthermore,

inflationary pressures have been highly variable. Because of the difficulties

involved in forecasting inflation rates, the hospital begins each analysis by

assuming that both revenues and costs, except for depreciation, will increase

at a constant rate. Under current conditions, this rate is assumed to be 3

percent. The hospital’s corporate cost of capital is 10 percent.

When the project was mentioned briefly at the last meeting of the hospital’s

board of directors, several questions were raised. In particular, one

director wanted to make sure that a risk analysis was performed prior to

presenting the proposal to the board. Recently, the board was forced to close

a day care center that appeared to be profitable when analyzed but turned out

to be a big money loser. They do not want a repeat of that occurrence.

Another director stated that she thought the hospital was putting too much

faith in the numbers: “After all,” she pointed out, “that is what got us into

trouble on the day care center. We need to start worrying more about how

projects fit into our strategic vision and how they impact the services that

we currently offer.” Another director, who also is the hospital’s chief of

medicine, expressed concern over the impact of the ambulatory surgery center

on the current volume of inpatient surgeries

To develop the data needed for the risk (scenario) analysis, Jules Bergman,

the hospital’s director of capital budgeting, met with department heads of

surgery, marketing, and facilities. After several sessions, they concluded

that only two input variables are highly uncertain: number of procedures per

day and building/equipment salvage value. If another entity entered the local

ambulatory surgery market, the number of procedures could be as low as 15 per

day. Conversely, if acceptance is strong and no competing centers are built,

the number of procedures could be as high as 25 per day, compared to the most

likely value of 20 per day. If real estate and medical equipment values stay

strong, the building/equipment salvage value could be as high as $7 million,

but if the market weakens, the salvage value could be as low as $3 million,

compared to an expected value of $5 million. Jules also discussed the

probabilities of the various scenarios with the medical and marketing staffs,

and after a great deal of discussion reached a consensus of 70 percent for

the most likely case and 15 percent each for the best and worst cases.

Assume that the hospital has hired you as a financial consultant. Your task

is to conduct a complete project analysis on the ambulatory surgery center

and to present your findings and recommendations to the hospital’s board of

directors. To get you started, Table 1 contains the cash flow analysis for

the first three years.

Table 1

Partial Cash Flow Analysis

0 1 2 3

Land opportunity cost ($500,000)

Building/equipment cost (10,000,000)

Net revenues $5,000,000 $5,150,000 $5,304,500

Less: Labor costs 800,000 824,000 848,720

Utilities costs 50,000 51,500 53,045

Supplies 2,000,000 2,060,000 2,121,800

Incremental overhead 36,000 37,080 38,192

Net income $2,114,000 $2,177,420 $2,242,743

Plus: Net land salvage value

Plus: Net building/equipment salvage value

Net cash flow ($10,500,000) $2,114,000 $2,177,420 $2,242,743

5. Conduct a scenario analysis. What is its expected NPV? What is the worst and

best case NPVs? How does the worst case value help in assessing the

hospital’s ability to bear the risk of this investment?

1) If a price that a perfectly competitive firm is able to get is above its average variable cost but below its average total cost then

a. The firm will suffer economic losses and should shut down immediately

b. The firm will be able to earn economic profit as soon as it can increase the size of its factory

c. The firm will suffer economic losses but should continue to operate

d. None of the above

2) In the short run, if price falls, the firm will respond by

a. Shutting down regardless of how high its variable costs are

b. Equating average variable cost to marginal revenue

c. Reducing along its marginal cost curve as long as marginal revenue exceeds average variable cost

d. None of the above

3) Suppose a competitive firm is in equilibrium then the price of one of its inputs falls. What will happen?

a. The firm will hire more of the lower priced input

b. The firm will produce more output

c.The firm cost curves will downward

d. All of the above

4. A competitive industry will be in a long run equilibrium when

a. Each firm in the industry is earning zero economic profit

b. No entry or exit occurs

c.The total quantity produced at the prevailing price equals the total quantity consumers want to purchase

d. All of the above

5. In an increasing cost competitive industry, if prices rises above its long run equilibrium level which of the following will occur as the industry adjusts to a new long equilibrium ?

a. Firms will exit the industry

b. Economic profits will exits

c. Input prices will rise only when firms leave the industry

d. Price will return to its original level

6.The marginal revenue curve of a monopolist lies below the demand curve ( in the absence of price discrimination) becaus

a. The demand curve is unit elastic

b. The monopolist must lower price on all units sold in order to sell additional units

c. The monopolist is a price taker

d. The marginal revenue curve coincides with the average revenue curve

7. The demand curve for a monopolist's slopes downward because

a. Profit per unit declines

b. Demand elasticity is greater than one in the portion of the demand curve where the monopolist operates

c.It price discriminates

d. It faces the market demand curve

8. If a monopolist's is operating in the elastic portion of its demand curve then

a. An increase in price will increase total revenue

b. An increase in price will decrease total revenue

c. Marginal revenue is negative

d. An increase in price will leave total revenue unchanged

9. Marginal revenue is negative when

a. The demand curve is downward sloping

b. Demand curve is elastic

c. Demand curve is inelastic

d. Demand is unit elastic

10. The lerner index

a. Measures the monopoly power as the markup of price over average cost

b. Measures the monopoly power as the markup of price over marginal cost

c. Measures the market share of a firm

d. Measures the market capitalization of a firm

11. Compared to a competitive industry, ceteris paribus a standard monopoly firm

a. Sells more units and charges a higher price

b. Sells the same amount of units but at a higher price

c. Does not try to maximize profits as do firms in competitive industry

d. Restricts output and charges a higher price

12. A monopoly will produce the efficient rate of output if it

a. Engages in perfect price discrimination

b. Engages in no price discrimination

c. Engages in third degree price discrimination

d. Is regulates and average cost pricing is enforced

13. Which of the following types of mergers directly reduces the number of competitors in an industry?

a. Congolomerate

b. Horizontal

c. Vertical

d. Bivariate

14. Why do gas stations near airport often charge more for gasoline ?

a. They have higher costs

b. They are inconvenient

c. They face a smaller elasticity of demand

d. They must pay the airport agency for space

15. The deadweight loss due to monopoly restriction of output occurs over units of output

a. For which the willingness to pay would be greater than MC but don't get produces

b. For which the willingness to pay is greater than MC and do not get produced

c. Up until the profit maximizing level of output

d. For which the willingness to pay is less than MC but don't get produced

16. First degree discrimination

a. Is perfect because consumers benefit the most

b. Is called first degree because it does not apply to resale of products

c. Is also known as perfect price discrimination

d. Is the easiest form of price discrimination

A) Conference Call Transcript Altria Group, Inc. (MO) CFO Billy Gifford Discussing Investment at Juul Labs Inc. Dec. 21, 2018 2:46 PM ET … CFO: Billy Gifford I have to say given the frustration I felt from some of the media coverage before we announced this deal I am not going to corroborate any of the leaked information. But I can give you some perspective on how to think about the economics of Juul compared to cigarettes. You're exactly right that when you look at the retail price of cigarettes that that retail price includes a federal excise tax, a state excise tax and a very significant master settlement agreement payment, and so that average price for a pack of cigarettes is a little above seven dollars today. When you look at a Juul pod, it sells for more like $4.50. And even with that lower price, which actually offers an opportunity for a cigarette smoker to switch and have some retail cost savings. There's the opportunity for high profit margins, because of course at the current moment there isn't a federal excise tax, there are relatively few states with a state excise tax. And of course, there aren't master settlement agreements on this. So we think it's actually quite an attractive profit model both now and into the future. And you could imagine over time that given the advantage it has over cigarettes that can be helpful to drive their growth. Analyst: Judy Hong And just finally just on the guidance. So I just want to make sure that we're clear. There is no equity income built-in in terms of 2019 guidance, that's because it seems like it's really more interest expense impact and doesn’t seem like there's much of an equity income that's built into 2019 guidance. Is that the way to think about 2019? CFO: Billy Gifford Again, I wouldn’t necessarily call it guidance, Judy. We'll be providing that in January. But you're correct in assuming, we're going to carry the asset as an investment and an equity security until post HSR. And we feel like there's high probability for that to clear HSR and then we would convert to equity accounting once we have the voting and the board representation. Analyst: Judy Hong And Billy just final question, I think strategically when you think about big investments now that you have in both year and now Juul equity investments or minority investments, you're still keeping an 80% dividend payout on your EPS, which obviously the cash impact -- cash flow impact is different. So is there any thought to whether the 80% payout policy is the right policy in the context of having a greater EPS that's coming from equity investment? CFO: Billy Gifford No Judy. We remain committed to that 80% dividend payout target ratio. And I think it shows you the nature of the cash generation of our core business. Questions 1) What is HSR? 2) Altria Inc. paid $12.8 billion for 35% of common stock of JUUL Labs, Inc. What is the journal entry for Altria to record the transaction? 3) Look at the Consolidated Statements Cash Flows of the Altria Group in 10-K for year 2018, which was filed on 02/26/2019. Did Altria keep its dividend payout promise? How is the dividend payout financed? 4) Is the dividend payout sustainable? Discuss in light of Statement of Cash Flows and Note 5. 5) Look at the 10-Q of Altria Group for the first quarter of 2019, which was filed on 04/25/2019. Has the HSR cleared? How is Altria accounting for investment in JUUL? At what value?

London Hydro (LH), the electricity provider of London, Ontario, and surrounding areas, is wrapping up a lengthy and costly system upgrade that was sparked by government regulations. Ontario prides itself on using the latest technologies to conserve electricity. In 1998 it passed two regulations that paved the way for smart-metering: the Electricity Act, 1998 and the Ontario Energy Board Act, 1998. Smart-metering uses computerized electric meters on homes and small businesses that can record electricity use on an hourly basis. So, rather than totalling up kilowatt-hours on a monthly basis as traditional meters do, smart meters provide a record of electricity use every hour. Smart meters are able to report usage directly to utility companies over phone lines or the Internet. The benefit of smart meters, in addition to saving the electric company the cost of sending an employee to read meters, is setting time-of-use pricing. Time-of-use pricing charges customers more for electricity during peak hours (11 a.m.– 5 p.m.), less during mid-peak hours (7 a.m.–11 a.m. and 5 p.m.–10 p.m.), and even less during off-peak hours (10 p.m.– 7 a.m.). Time-of-use pricing should encourage consumers to consume less during peak hours, adding up to big savings for Ontario, its citizens, and the environment. Ontario’s smart metering initiatives have power companies across the province scrambling to meet specifications and deadlines. Software and hardware must be purchased and installed to prepare for the arrival of a tidal wave of customer consumption data. London Hydro started to prepare early in hopes of getting a jump on the competition. Rather than adding a new system to accommodate smart metering, London Hydro decided it was time to upgrade all of its systems. London Hydro’s old custom-built system could barely keep up with current usage. The company decided to shop around for a new system that could not only accommodate smart metering but could tie that data in with core business systems. Mridula Sharma, London Hydro’s Director of Information Services, stated that LH was in need of “a more integratable solution that was scalable and flexible.” The company needed to “prepare for future growth as well as enhance business process workflow,” Sharma said. Sharma and her team set to work outlining the details of the new system based on government mandates and internal needs. With a systems analysis report in hand, Sharma began searching for a company that could design and implement the system. Soon, she narrowed the field to three candidates: SPL Solutions (Oracle), another customer-built solution, and SAP for utilities. Sharma chose SAP primarily because the system was designed for use by a utility company and required little customization. London Hydro selected another outside firm, Wipro Technologies, to implement the system because Wipro had extensive experience implementing utility software. The resulting system provides powerful management of smart metering data flowing from the government’s central smart metering data repository. The task of assigning time-of-use prices based on customer consumption is fully automated and will cause London Hydro no additional overhead. BN103 - Platform Technologies - Final Assessment Trimester 2, 2020 Page 6 of 10 [Source: Chapter 12, R. M. Stair and G. W. Reynolds, Principles of Information Systems: A Managerial Approach, 9th ed. Cengage, 2010.] a) Why did London Hydro initiate its smart-metering system development? [5 Marks] b) What benefits did London Hydro enjoy by purchasing an off-the-shelf system and outsourcing the implementation? [5 Marks]