One of the concerns of labor economists is that in economic recessions, older people may be more likely to be laid off than workers under the age of 40. Federal and state laws prohibit this from happening, but does it anyway? The Federal government collects data on what they call “reductions in force” (RFI); for a recent company that experienced a layoff, 42 of the 50 employees who were “released” were over 40 while 764 of the 1267 who were not released were over 40.

What is your impression of the data? Then perform the chi-square test for (how many??) degrees of freedom. What can you say with 95% confidence about the possibility of age discrimination in RIFs?

A website that sells movie tickets can tell what devices are used to access their site and make purchases. The manager of the website is approached by members of a movie production company who want to partner in the development of a phone app. To estimate what proportion of ticket buyers make purchases using their smart phones, 400 users of the website were randomly sampled from the existing database and 180 were found to have used their smart phones.

   Assuming the true proportion were thought to be 0.45, what would be the probability that a majority of the purchases were made using a smart phone?

   What would be an 85% confidence interval for the proportion of website visitors who purchased tickets using a smart phone?

2. This problem asks you to work through the partial equilibrium analysis of some scenarios involving trade, consumer and producer welfare, and government tariff revenue. (a) Assume that the US does not participate in the international trade of kumquats (a small, citrus fruit) and therefore the kumquats market in the US clears domestically. Use a digram to show how the price (pa) and quantity (qa) traded are determined, and identify consumers’ surplus and producers’ surplus. (b) Assume that now the US opens to international trade to kumquats. The world price of kumquats is lower than the autarky price in the US, prior to trade (pW < pa). Will the US become an importer or an exporter of kumquats? Draw a diagram of the US market consistent with this assumption and discuss the welfare implications for each side of the market. Identify areas representing the welfare change. Is the US better or worse off, as a whole? (c) Redo (b), on a new diagram, but now under the assumption that the world price is higher than US’s autarky one (pW > pa). (d) Go back to the pW < pa case. The US government is considering a tariff on kumquats. Use a diagram for the equilibrium in world markets (hint: MD and XS*) to show the consequences of such a tariff for: i) the volume of international trade, ii) the price in the US market, iii) the price in the World market. Assume that the US is large relative to the rest of the world, when it comes to the demand for kumquats. (e) Redo (d), on a new diagram, under the assumption that the US is small relative to the rest of the world, when it comes to the demand for kumquats. (f) Go back to the large US case. Use a digram for the foreign/RoW market to show which side of the market is better-off and which is worse-off with the US tariff in place. Identify key areas representing welfare changes. (g) Use either a diagram for the US market or for world markets to show that the US can be, overall, better off with an unilateral tariff on kumquats, assuming that the governments in kumquat-exporting countries do not react to this policy. Be sure to identify the tariff revenue that gets collected by the US government. (h) The US is an importer of kumquats and the US government does impose the tariff we previously analyzed. On the other hand, the US is a big exporter of high-tech medical devices. How could foreigns governments react to the US tariff, in order to improve their terms of trade with respect to the US? How would US consumers and producers of medical devices feel about that reaction?

You have spent the past four weeks away from work serving as a juror in a case deciding whether a pharmaceutical company should be held liable for the heart attack of a woman who took its painkiller, Oxxy-1. The lengthy case has taken a toll on your professional career, and you have many unanswered questions as jury deliberations begin.

• Where does your duty lie in serving on a jury?
• Are you protected against adverse employment action by your firm for missing work to serve on a jury.
• How do you reconcile the woman’s prior heart palpitations from years ago with her recent heart attack. Was her heart already compromised before she began taking the painkiller Oxxy-1.
• Why didn’t the pharmaceutical company withdraw the painkiller from the market at the first sign of a problem.

he Roosevelt Company presently makes 27,000 units of a certain component each year for use on its production line.  The cost per unit for the component at this level of activity is as follows

Direct materials.................................$4.20

Direct Labor.....................................$12.00

Variable factory overhead................. $5.80

Fixed factory overhead......................$6.50

Roosevelt has received an offer from an outside supplier who is willing to provide 27,000 units of this component at a price of $25 per component.  Assume that if the component is purchased from the outside supplier, $35,100 of annual fixed factory overhead could be avoided and the facilities now being used to make the component could be rented to another company for $64,800 per year. If Roosevelt chooses to buy the component from the outside supplier under these circumstances, how much would annual net income increase or decrease by?

There is a bias in the political process against free trade because

A.the gains from free trade cannot be measured.

B.foreign governments make large donations to U.S. political campaigns.

C.those who gain from free trade can't compensate those who lose.

D.those who lose from free trade are better organized than those who gain.

E.there is a high correlation between the volume of imports and the unemployment rate.

FACTS:

Sheldon and Victoria were married last year and live in England.

• Sheldon is a U.S. citizen and has a valid Social Security number. Victoria is a citizen of England.

• During the interview, Victoria mentions that she has never filed a joint return with Sheldon. She asks the volunteer what is required to file a joint return with Sheldon. Based on the information provided, Victoria decides she does not want to be treated as a resident alien for U.S. tax filing purposes this year.

• Sheldon worked for a U.S.-based company and earned $55,000. Victoria worked part-time and earned the equivalent of $12,000 in U.S. dollars.

• Sheldon and Victoria’s daughter, Riley, lives with them. Riley is eight months old, a U.S. citizen, and has a valid Social Security number.

• Victoria has another child from a previous marriage; Adam is five years old and is a citizen of England. Sheldon has not adopted Adam.

• Sheldon and Victoria provided all the financial support for Riley and Adam.

1. Victoria does not want to elect to file a joint return with Sheldon. What is the most advantageous filing status for Sheldon?

a. Married Filing Separately

b. Single

c. Head of Household

d. Qualifying Widower

2. On his U.S. tax return, how should Sheldon treat Victoria’s income?

a. Because Victoria did not choose to file a joint return, Sheldon should report her income as his own on a separate return.

b. Victoria’s income is not included on the return because she does not choose to be treated as a resident alien.

c. Because their combined income is less than the foreign earned income exclusion limit, Sheldon doesn’t need to file a return.

d. Victoria’s worldwide income must be reported on Sheldon’s return.

3. In the future, if Victoria and Sheldon choose to file Married Filing Jointly and treat Victoria as a resident alien for tax purposes, this election will continue each year unless suspended or ended.

a. True

b. False

Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:

1. Rebuilt and delivered five pianos in January to customers who paid $18,700 in cash.
2. Received a $550 deposit from a customer who wanted her piano rebuilt.
3. Rented a part of the building to a bicycle repair shop; received $910 for rent in January.
4. Received $7,900 from customers as payment on their accounts.
5. Received an electric and gas utility bill for $480 to be paid in February.
6. Ordered $900 in supplies.
7. Paid $2,140 on account in January.
8. Received from the home of Stacey Eddy, the major shareholder, a $900 tool (equipment) to use in the business in exchange for 110 shares of $1 par value stock.
9. Paid $14,100 in wages to employees who worked in January.
10. Declared and paid a $2,300 dividend (reduce Retained Earnings and Cash).
11. Received and paid cash for the supplies in (f).

Required:

Prepare an unadjusted classified income statement for January of the second year (ignore income taxes).

Suppose you are a nurse working with a 75 year old patient who has a terminal illness: her condition will slowly destroy her muscle function until she is unable to swallow and becomes paralyzed. She is very close to becoming totally dependent on others now, and (because her mind is not affected) the patient requests that you inject her with overdose of pain medication to help her have a peaceful death and avoid the suffering and slow death the disease will otherwise give her.

You ask the doctor about this, and the doctor says: "It would be morally wrong for us to intentionally kill her like that. It would, however, be morally permissible for us to withhold food and water to help her die if she wants to do that."

In 2 to 6 short paragraphs, explain how James Rachels would respond to the doctor's ideas. Be sure to explain fully whether and why Rachels would agree with the doctor's ideas. (You don't have to explain whether you agree with Rachels - just explain what he would say in response to the doctor.)

There are two people in an economy, Sayah (S) and Jaki (J), who consume two goods, apples (A) and bananas (B), with utility functions: US(A, B) = 2A0.5B0.5 and UJ(A, B) = A0.4B0.6 The current market prices for A and B are PA=1 and PB=2. Sayah’s income is YS = $60 and Jaki’s is YJ = $70. There are 58 units of A produced and 36 units of B produced

. a. Find the Sayah’s and Jaki’s marginal rates of substitution of A for B. (Remember, first find the marginal utilities of each good, for each person, by taking the derivative of the utility functions with respect to one good holding constant the other good. For example, Sayah’s MU of A is the derivative of US(A, B) = 2A0.5B0.5 treating B as a constant.)

b. Find the amounts of A and B that both people will consume given these prices and incomes.

c. Do Sayah and Jaki consumption amounts achieve an efficient exchange? Explain. d. Do the consumption demands and current supplies achieve and equilibrium in this economy? Explain. If not, what would need to adjust to achieve an equilibrium? e. Are the three efficiency conditions satisfied? Explain.