1. Answer the following questions for each of the three situations outlined below:
   1. What is the good or service being consumed? Does its consumption create externalities? If so, what they are and are they positive or negative?
   2. If the example involves externalities, identify who creates the externality and who benefits or suffers from it.

#1--Antibiotics are becoming less effective as bacteria evolve, a process accelerated by overuse of antibiotics by doctors. Nevertheless, a “survey of physicians showed they were most likely to choose the broadest spectrum [antibiotic] to treat pneumonia, despite guidelines to the contrary; contributing to resistance rated lowest among seven determinants of their choices. (The Milken Institute Review, Third Quarter 2012)”

#2--An AP article (Yabba Dabba Don’t, AP, April 7, 2019) reported on a house built by a rich retiree in Hillsborough, a posh suburb of San Francisco. The house is “…an elaborate homage to “The Flintstones” family…The bold, bulbous house is surrounded by Stone Age sculptures inspired by the 1960s cartoon, along with aliens and other oddities...” The town says the property is “an eyesore.” The resulting controversy “has sparked…an online petition signed by thousands to preserve the attention-grabbing property, visible from a nearby highway….”

#3--Avocados have become increasingly popular in China, Japan, and Canada, and some avocadoes that used to be exported to the United States are now sent to these other countries.   Prices for avocadoes in the US have increased dramatically as a result, causing some restaurants to add a surcharge on orders of guacamole.

GENERAL BUSINESS COURSE QUESTION:

Joe and Jill were talking about the role played by the Federal Reserve System in the United States. Joe seemed to be quite well informed about the functions and activities of our central bank. "You see, Jill, the Fed is the main guardian of our nation's economic stability," Joe declared. "In America, we don't want inflation and we don't want recession. To stretch the situation just a bit, we are frightened, absolutely terrified, by thoughts of hyperinflation and depression. So, the Fed maintains the right to alter the situation and protect us from these two monsters. And you ask, how they do that? The answer is the discount rate. That is the device that the Federal Reserve System uses to keep us safe."

Jill was enjoying listening to her friend explain it all. Joe continued, "Now the discount rate is the interest rate that the twelve Federal Reserve Banks around the country charge their member banks on a loan. So, when the discount rate goes up, all interest rates tend to go up. And, happy to say, when interest rates go up all over America, this tends to slow down any inflationary tendencies." Jill asked, "Does the Fed have other tools for stopping inflation?" "No," said Joe.

2) Joe probably can't answer this question, but you can. What happens in the Fed's open market operations?

In general, high school and college students are the most pathologically sleep-deprived segment of the population. Their alertness during the day is on par with that of untreated narcoleptics and those with untreated sleep apnea. Not surprisingly, teens are also 71 percent more likely to drive drowsy and/or fall asleep at the wheel compared to other age groups. (Males under the age of twenty-six are particularly at risk.)

The accompanying data set represents the number of hours 25 college students at a small college in the northeastern United States slept and is from a random sample. Enter this data into C1 of Minitab Express.

6 9 7 7 6 7 7 5 8 6 6 6 8 8 8 5 4 6 7 8 5 8 7 6 7

For the analyses that follow, we shall use

·         90%, 95%, and 99% as the confidence levels for the confidence interval.

·      5% as the level of significance ( ) for the hypothesis test.

·         7 hours sleep as the null hypothesis (according to The Sleep Foundation).

a.    List the three (3) assumptions for a valid confidence interval and hypothesis test. Provide an explanation as to whether or not each one is met - more than just a simple “yes” or “no” – and refer to the boxplot and normal probability plot, as necessary, in your assessment.

b.    What degrees of freedom will you use for the t distribution? Show your calculation.

(Hint: degrees of freedom is n-1.)

You are a junior sales associate working for Chicago BMW Motorcycle. Because of the economic crises, sales of motorcycles have taken a huge hit across the board. When money is tight, people tend to cut back on luxurious "toys" such as expensive bikes. BMW relies on a well-heeled clientele, much of it composed of middle-aged men. However, the German motorcycle manufacturer has been trying to capture a share of the market larger than the 2 percent it has occupied in the United States. Even the ever-popular Harley-Davidson bikes have suffered a decrease in sales of about 30 percent in the last two years. A recent article about the industry in BusinessWeek stated the Harley-Davidson is now trying to appeal to women riders. You bring the piece to the attention of your boss, Dale Bell, and he asks you to find out what exactly Harley-Davidson is doing.

YOUR TASK

Visit the Harley-Davidson USA Website and study how the legendary motorcycle manufacturer is targeting female riders. Write an informational report in memo form addressed to Dale Bell. Which of its motorcycles does your competitor promote as ideal for women and why? How about apparel? What other ways has Harley-Davidson found to attract female riders?

Expert Answer

Boeing just signed a contract to sell a Boeing 737 aircraft to Air France and will receive €200 million in six months. The current spot exchange rate is $1.2400/€ and the six-month forward rate is $1.26000/€. Boeing can buy a six-month put option on the Euro with an exercise price of $1.2500/€ for a premium of $0.030/€. Currently, the six-month interest rate is 2.40% per annum in the United States. Boeing believes that the Euro would likely appreciate from its current level, but would still like to hedge its foreign exchange exposure.

1. Explain how Boeing should do a forward hedge. Compute the guaranteed dollar proceeds from the Air France sales if Boeing decides to hedge using a forward contract.

2. If Boeing decides to hedge using put options on the Euro, what would be the “expected” net dollar proceeds from the Air France sale? Assume that Boeing regards the current forward exchange rate as an unbiased predictor of the future spot exchange rate.

3. At what future spot exchange rate do you think Boeing will be indifferent between the option hedge and forward hedge?

4. Illustrate your answers with the appropriate post-hedging net $ proceed charts, labeling your foreign exchange rates and net proceeds properly.

Energy Management Corporation (EMC) must decide its level of capital investment in the six energy ventures described below. EMC wishes to maximize its total expected return on a maximum total investment of $10,000,000. At least half of this must be in the United States, including Alaska. No more than 20% can be in sour crude and coal investments. In addition, allocations must at least meet the minimums specified in column three below. For example, investment in Wyoming Coal must be at least $1,000,000.

1. Formulate the linear programming model. Clearly state your decision variables, objective function and all constraints. Use fractions rather than percentages in your formulation of the objective function.

2. Solve the model using Microsoft Excel Solver. Attach the Microsoft Excel file as part of your submission.

3. Interpret the results from Microsoft Excel Solver, including the Sensitivity Report. What aspects of the computer-generated strategy are you in agreement with (based on a consideration of the sensitivity data)? What aspects of it would you disagree with? Why?

Al Qadea

create an effective and efficient terrorist group profile, you must be sure to include the following information:

• Aliases
• Bases of Operation
• Date Formed
• Strength/Number of members
• Organizational Structure
• Classification (i.e. Religious, Nationalist, etc.)
• Is there a leader?
  • Provide a photo of the group leader
  • Group Leader Demographics (i.e. DOB, Place of Birth, Citizenship Height, Weight, Eyes, Languages, etc.)
  • Is there a reward for the capture of the group leader? If so, how much is the reward?
• Financial Sources
• Founding Philosophy
• Brief History of the Terrorist Group
• Current Short Term & Long Term Goals
• Current Model and Trend of Terrorism (i.e. Rural, Urban, Insurgent)
  • Note: These three models represent general trends from 1945-Present. Since terrorism is dynamic, the models are generalizations. They illustrate shifts in strategy and specific tactics of terrorism. These models help to explain the evolution and practice of contemporary and modern terrorism.
  • How are law enforcement entities and government agencies using this information to track and catch these networks using counter-terrorist operational tactics?
• Methods or Tactics of Attack
• If applicable: Related Groups
• Has the United States designated this group as a foreign or terrorist organization? If so, in what year was this group designated?
• Have other international governments’ designated this group at all? If so, in what year was this group designated?

1. Assume these facts as true: Sen. Burr chaired the Senate Intelligence Committee. At a closed confidential hearing in late January, he heard dramatic evidence that the corona virus was likely to heavily impact the United States and its economy (which is what happened). The following day, Sen. Burr called his stockbroker and told him to sell all of his $2 million worth of stock holdings. Two weeks later, the danger of the corona virus became known to the public, and the stock market lost much value. Sen Burr saved $400,000. By selling his stock when he did. Was Sen Burr an “insider”. Did he violate the insider trading laws? Argue one way or the other but support your argument.

Assume these facts as true. Sen Loeffler attended the above described hearing chaired by Sen. Burr. When she returned home that evening, she told her husband about the hearing. Her husband is Chairman of the New York Stock Exchange. The next day, without telling his wife, he sold $3.5 million worth of stock jointly owned with his wife. He saved $600,000.00 in losses by selling his stock then. Was Sen Loeffler or her husband an “insider”? Did either of them violate the insider trading laws? Argue one way or the other.

GENERAL BUSINESS COURSE QUESTION:

Joe and Jill were talking about the role played by the Federal Reserve System in the United States. Joe seemed to be quite well informed about the functions and activities of our central bank. "You see, Jill, the Fed is the main guardian of our nation's economic stability," Joe declared. "In America, we don't want inflation and we don't want recession. To stretch the situation just a bit, we are frightened, absolutely terrified, by thoughts of hyperinflation and depression. So, the Fed maintains the right to alter the situation and protect us from these two monsters. And you ask, how they do that? The answer is the discount rate. That is the device that the Federal Reserve System uses to keep us safe."

Jill was enjoying listening to her friend explain it all. Joe continued, "Now the discount rate is the interest rate that the twelve Federal Reserve Banks around the country charge their member banks on a loan. So, when the discount rate goes up, all interest rates tend to go up. And, happy to say, when interest rates go up all over America, this tends to slow down any inflationary tendencies." Jill asked, "Does the Fed have other tools for stopping inflation?" "No," said Joe.

4) Judging from Joe's remarks, which do we as a nation fear the most - inflation or recession?

GENERAL BUSINESS COURSE QUESTION:

Joe and Jill were talking about the role played by the Federal Reserve System in the United States. Joe seemed to be quite well informed about the functions and activities of our central bank. "You see, Jill, the Fed is the main guardian of our nation's economic stability," Joe declared. "In America, we don't want inflation and we don't want recession. To stretch the situation just a bit, we are frightened, absolutely terrified, by thoughts of hyperinflation and depression. So, the Fed maintains the right to alter the situation and protect us from these two monsters. And you ask, how they do that? The answer is the discount rate. That is the device that the Federal Reserve System uses to keep us safe."

Jill was enjoying listening to her friend explain it all. Joe continued, "Now the discount rate is the interest rate that the twelve Federal Reserve Banks around the country charge their member banks on a loan. So, when the discount rate goes up, all interest rates tend to go up. And, happy to say, when interest rates go up all over America, this tends to slow down any inflationary tendencies." Jill asked, "Does the Fed have other tools for stopping inflation?" "No," said Joe.

3) If tomorrow morning the Fed ordered that the reserve requirements for all banks would be raised significantly, what effect would that have on the money supply?