PART 6: True or false and multiple-choice questions

Question 16: True or false, firms in situation of monopolistic competition have deadweight losses associated with monopoly because of barriers to entry.

Question 17: Which of the two demands functions below is most elastic

A) Qa=100-2p

B) Qb=120-p

Question 18: If a buyer values an object for $4 and a seller’s cost is $1, which of the statements below is false!

1. If a transaction takes place, total surplus will be equal to $3
2. For the exchange to occur, the price has to be equal to $2.50, no other prices will allow an exchange to occur.
3. Whenever an exchange takes place, the allocation is efficient.
4. The buyer is ready to pay up to $4 for the object

Question 19: True or false, price discrimination is inefficient.

Question 20: Which of these goods’ demand is likely to be most inelastic

1. An inhaler for asthmatic people
2. A generic soft drink brand
3. Cellphones
4. Airline tickets

Ontario Gateway Airlines’ first-class cabin has 10 seats in each plane. Ontario’s overbooking policy is to sell up to 11 first class tickets since cancellations and no-shows are always possible (and indeed are quite likely).

For a given flight on Ontario Gateway, there were 11 first class tickets sold. Suppose that each of the 11 persons who purchased tickets has a 20% chance of not showing up for the flight and that the likelihood of different persons showing up for the flight is independent. The money for tickets to the passengers who didn't show up is returned.

(a) What is the probability that at most 5 of the 11 persons who purchased first class tickets show up for the flight?

(b) what is the probability that exactly 10 of the persons who purchased first class tickets show up for the flight?

(c) Thus, for example, if 10 of the first class passengers show up for the flight, the airline’s profit is $12,000. If 11 first class passengers show up, the profit is $9,000. What is the expected profit from first-class passengers for this flight?

(d) suppose that only 10 first class tickets had been sold. What would be the expected profit from first-class passengers for this flight?

(e) People often travel in groups of two or more. Does this affect the independence assumption about passenger behaviour? Why or why not?

Ontario Gateway Airlines’ first-class cabin has 10 seats in each plane. Ontario’s overbooking policy is to sell up to 11 first class tickets since cancellations and no-shows are always possible (and indeed are quite likely).

For a given flight on Ontario Gateway, there were 11 first class tickets sold. Suppose that each of the 11 persons who purchased tickets has a 20% chance of not showing up for the flight and that the likelihood of different persons showing up for the flight is independent. The money for tickets to the passengers who didn't show up is returned.

(a) What is the probability that at most 5 of the 11 persons who purchased first class tickets show up for the flight?

(b) what is the probability that exactly 10 of the persons who purchased first class tickets show up for the flight?

(c) Thus, for example, if 10 of the first class passengers show up for the flight, the airline’s profit is $12,000. If 11 first class passengers show up, the profit is $9,000. What is the expected profit from first-class passengers for this flight?

(d) suppose that only 10 first class tickets had been sold. What would be the expected profit from first-class passengers for this flight?

(e) People often travel in groups of two or more. Does this affect the independence assumption about passenger behaviour? Why or why not?

Cellular respiration requires O₂ as one reactant and creates CO₂ as one of the products.

A. Explain how partial pressure differences between the cell and the capillary result in the movement of those gases between the cell and the capillary.

B. Explain how CO₂ and O₂ are carried in the blood (i.e. where in the blood is most of the CO₂? Where in the blood is most of the O₂?)

C. Deoxygenated blood leaves the capillary on the venule end and then enters into veins> Veins ultimately lead back to the heart. Blood enters the human heart going first to right atrium, then the right ventricle, and then through the pulmonary artery to the lungs.Explain what happens to CO₂ and O₂ where the capillaries and alveoli meet in the lungs.

A Bloomberg BusinessWeek subscriber study asked, "In the past 12 months, when traveling for business, what type of airline ticket did you purchase most often?" A second question asked if the type of airline ticket purchased most often was for domestic or international travel. Sample data obtained are shown in the following table.

a. Using a .05 level of significance, is the type of ticket purchased independent of the type of flight? Use Table 12.4.

Compute the value of the  2 test statistic (to 2 decimals). ????

Question 2
Many development plans have been implemented in Ghana since the first development plan was launched by Sir Gordon Guggisberg in 1919. Most recently, Ghana launched a 40-year development plan by the Mahama- led administration and also a 7 – year development plan was launched by the Akuffo Addo-led administration. Most of these development plans have however failed to live up to their billing.
Required:
a. Discuss five major reasons why development plans have performed poorly over the post-independence era in Ghana.
b. Suggest any five practical measures that are needed to ensure the smooth operation of development plans in Ghana in the future.

Absorption vs. Variable

Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing.

Select whether the following characteristics are most often associated with absorption costing or variable costing.

Absorption Statement

Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold.

Variable Statement

Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin.

Method Comparison

Review the income statements on the Absorption Statement and Variable Statement, then complete the following table. The company’s sales price per unit is $75, and the number of units in ending inventory is 5,000. There was no beginning inventory.

Manufacturing Decisions

Whenever the units manufactured differ from the units sold, finished goods inventory is affected. In analyzing operating income, such increases and decreases could be misinterpreted as operating efficiencies or inefficiencies. Each decision-making situation should be carefully analyzed in deciding whether absorption or variable costing reporting would be more useful.

All costs are controllable in the long run by someone within a business. For a given level of management, costs may be controllable costs or noncontrollable costs.

The production manager for Saxon, Inc. is worried because the company is not showing a high enough profit. Looking at the income statements on the Absorption Statement and the Variable Statement, he notices that the operating income is higher on the absorption cost income statement. He is considering manufacturing another 10,000 units, up to the company’s capacity for manufacturing, in the coming year. He reasons that this will boost operating income and satisfy the company’s owner that the company is sufficiently profitable. Although the total units manufactured changes, assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same. Complete questions (1)-(4) that follow. If the answer is zero, enter "0".

1. Use the income statements on the Absorption Statement and Variable Statement to complete the following table for the original production level. Then prepare similar income statements at a production level 10,000 units higher and add that information to the table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both production levels.

2. What is the change in operating income from producing 10,000 additional units under absorption costing?

$______________

3. What is the change in operating income from producing 10,000 additional units under variable costing?

$______________

Read this Paragraph and Answer the three question thanks

The nation's final employment report before Tuesday's presidential election showed the economy has gained momentum recently but is still growing far below its potential, helping both candidates frame their closing arguments to voters. The Labor Department said Friday that employers added a seasonally adjusted 171,000 jobs in October. Figures for previous months were revised higher, showing the economy has added an average 173,000 jobs a month since July--more than double the pace in the spring. The unemployment rate rose to 7.9% last month from 7.8% in September, largely because more Americans began searching for jobs. Even though the report was better than many investors had anticipated, the Dow Jones Industrial Average fell 139.46 points to close at 13093.16. No president since Franklin Delano Roosevelt has run for re-election with unemployment so high. Since 1948, only four presidents--Gerald Ford, Jimmy Carter, Ronald Reagan and George H.W. Bush--have sought re-election with joblessness above 7%. Mr. Reagan was the only one to succeed. For President Obama, Friday's report reinforced his argument that the job market is on the mend, with employers adding jobs for 25 consecutive months after eliminating hundreds of thousands a month at the start of his term. The number of nonfarm payroll jobs is higher now than when the president took office in January 2009. The report adds another detail to the broader picture of an economy picking up. Home sales, prices and construction are rising. Consumer confidence is at its highest level in 41?2 years, and Americans are stepping up their spending at restaurants, shops and other retail establishments. Manufacturing activity is growing again, albeit very slowly, after three months of decline during the summer. However, unemployment is up from its 7.8% level when Mr. Obama took office. Republican nominee Mitt Romney cites this as evidence that the president's policies have failed. More than 12 million people remain out of work--a figure that rises to 23 million when taking into account those stuck in part-time jobs who would prefer to have full-time ones and those too discouraged to search for work. The pace of job growth in 2012 is roughly the same as it was last year. The economy grew at an annual rate of just 2% in the third quarter, below the roughly 3% pace notched during healthier times. Mr. Obama, campaigning in central Ohio Friday, pointed to the jobs report as a reason to grant him a second term. "In 2008 we were in the middle of two wars and the worst economic crisis since the Great Depression, and today our businesses have created nearly 5.5 million new jobs," the president said at an event in Hilliard, Ohio, referring roughly to the number of private-sector jobs added since early 2010. "And this morning we learned that companies hired more workers in October than at any time in the last eight months." Friday's report provided relief to the president's aides who feared that a negative reading could give Mr. Romney a final burst of momentum. But Mr. Romney portrayed the figures as evidence of a lackluster recovery burdened by the president's policies. Mr. Romney has repeatedly noted that the unemployment rate failed to fall as quickly as the president predicted when urging passage of his 2009 stimulus package, and that the recovery has been very slow compared with previous ones. "We've almost forgotten what a real recovery looks like--what Americans can achieve when we limit government instead of limiting the dreams of our fellow Americans," Mr. Romney told a crowd in West Allis, Wis. With national polls tight, voters tend to give Mr. Romney a more favorable score on the economy. About 45% of registered voters said he would be better prepared to create jobs and improve the 14 December 2012 Page 1 of 3 ProQuest economy in the next four years, compared with 41% who said the same of Mr. Obama, in a late-October Wall Street Journal/NBC News poll. With the economy improving recently, Mr. Romney has broadened his argument beyond joblessness, saying the president's policies and spending could put the nation at risk of falling back into recession. Mr. Obama has criticized Mr. Romney's economic policies and highlighted his opponent's conservative positions on women's issues and immigration in a bid to appeal to some voters. An average of national polls by website Real Clear Politics showed Mr. Obama with 47.5% of the vote on Friday, compared with 47.2% for Mr. Romney. Yale University economist Ray Fair has developed a mathematical model that uses data from previous races to assess a president's re-election prospects, focusing on growth in gross domestic product (a measure of the economy's output of goods and services), inflation and jobs in the final year of a president's first term. Mr. Fair said his model currently shows the race evenly split between Messrs. Obama and Romney. "The bottom line of my work, given what the economy has done, is that it's a very close election and I really cannot with any confidence predict the winner," Mr. Fair said. The dueling campaigns agreed that voters' perceptions of the economy were mostly set before Friday's report. Some political observers also played down the importance of the latest data, saying voters are typically influenced more by how the economy has performed over a number of months than a single month. "I don't think it changes the game very much one direction or another. There's good news for both parties in this," said David King, a senior lecturer in public policy at Harvard's Kennedy School of Government. "It's most likely going to confirm peoples' predispositions." For some investors, the recent stream of positive economic news has become a matter of concern for stocks. They worry it could help bolster President Barack Obama's re-election chances, something that has been viewed as weighing on stocks. Also, an improving economy could encourage the Federal Reserve to lighten up on its stimulus. Colleen McCain Nelson, Jonathan Cheng and Carol E. Lee contributed to this article. Write to Jeffrey Sparshott at and Eric Morath at Credit: By Josh Mitchell and Sara Murray

1. Give two reasons why the unemployment rose even though the economy created a significant number of new jobs.

2. What policy actions have been taken by the Obama administration since January 2009 to help lower the unemployment rate? Have these actions been successful in lowering unemployment?

3. What is the likely long-term impact of these fiscal policy actions on unemployment? On inflation? On the public debt? If fiscal policymakers focused just on long-run consequences, what actions should they have taken in 2009?

Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $373,700 of manufacturing overhead for an estimated allocation base of 1,010 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account):

a. Raw materials purchased for use in production, $255,000.

b. Raw materials requisitioned for use in production (all direct materials), $240,000.

c. Utility bills were incurred, $70,000 (95% related to factory operations, and the remainder related to selling and administrative activities).

d. Salary and wage costs were incurred:

Direct labor (1,085 hours) $285,000

Indirect labor $101,000

Selling and administrative salaries $165,000

e. Maintenance costs were incurred in the factory, $65,000.

f. Advertising costs were incurred, $147,000.

g. Depreciation was recorded for the year, $83,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).

h. Rental cost incurred on buildings, $108,000 (85% related to factory operations, and the remainder related to selling and administrative facilities).

i. Manufacturing overhead cost was applied to jobs, $ ?.

j. Cost of goods manufactured for the year, $880,000.

k. Sales for the year (all on account) totaled $1,750,000. These goods cost $910,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Raw materials $41,000

Work in process $32,000

Finished Goods $71,000

Required:

1.Prepare journal entries to record the above data. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2.Post your entries to T-accounts. (Don’t forget to enter the opening inventory balances below.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.

3. Prepare a schedule of cost of goods manufactured

4a. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4b. Prepare a schedule of cost of goods sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

5. Prepare an income statement for the year.

Suppose a professor of probability is tired of reading the depressing news and so he decides that he will quickly scan the first 5 headlines in the New Yorks Times and the first 5 headlines in the Boston Globe and if at most 3 of the articles in each are depressing, he will read the news that day. Further suppose that the probability of a NYTs headline being depressing is 0.6 and for the Globe the probability of a headline being depressing is 0.55.

(a) What is the probability that he will read the news the first day he tries this?

(b) In order to be "well-informed" he needs to read the news at least half the time; what is the probability that he will be well-informed after doing this for a week?

Hint: This is another problem where there are two independent parts of the random experiment. You might want to phrase it as three different random variables, all three binomial.