"Assume that a binding minimum wage does NOT shift the labour demand for unskilled labour. If it is fairly easy to replace workers with machinery, then a rise in minimum wage will lead to an increase in the total wage bill (total revenue of all workers), all else equal." Do you agree? For full marks, you need to supply a graph.

(a) A graph carries 2.5 marks. The usual deductions for missing and incorrect labels apply.

(b) An explanation carries 2.5 marks. Your explanation must clearly relate to the relevant features of your graph - in other words, it must support your answer.

Draw a supply and demand graph for gasoline. Consider whether supply or demand for gasoline is more inelastic, and draw the curves accordingly. Label the original equilibrium price $3. In California, the federal, state and local excise and sales taxes total about 77 cents per gallon. Assuming the government taxes the seller directly, draw the impact of this tax on the supply and demand diagram. Label the new price the consumer pays (Pc), the price the seller receives after taxes (Ps), and the tax revenue received by the government. Does the consumer or the seller bear more of the burden of this tax? Explain.

Lant Company has provided the following information:

• Cash sales totaled $220,000.
• Credit sales totaled $482,000.
• Cash collections from customers for services yet to be provided totaled $82,000.
• A $18,000 loss from the sale of property and equipment occurred.
• Interest income was $8,000.
• Interest expense was $18,200.
• Supplies expense was $320,000.
• Rent expense for the store was $32,000.
• Wages expense was $42,000.
• Other operating expenses totaled $72,000.
• Unearned revenue was $4,900.

What is the amount of Lant’s income before income taxes?

Multiple Choice

A)$207,800

B)$218,000

C)$382,000

D)$289,800

Answer separately:
1. The adjusted trial balance of Miller Company at December 31, 2020, includes the following accounts: Owner’s Capital $16,400, Owner’s Drawings $7,000, Service Revenue $39,000, Salaries and Wages Expense $16,000, Insurance Expense $2,000, Rent Expense $4,000, Supplies Expense $1,500, and Depreciation Expense $1,300. Prepare an income statement for the year.

2. Partial adjusted trial balance data for Miller Company is presented in the previous exercise. The balance in Owner’s Capital is the balance as of January 1. Prepare an owner’s equity statement for the year assuming net income is $14,200 for the year.

Andorra is a small country, incapable of affecting world prices. It imports peanuts at the world price of 10 cents per sack. Andorra’s demand for peanuts is given by: D = 400−10P. Andorra’s supply curve for peanuts is: S = −20 + 5P. Determine the equilibrium under free trade.

a) Calculate and show in a diagram the following effects of a quota that limits the import of peanuts to 60 sacks. The increase in the domestic price. The quota revenue. The loss due to production distortion. The loss due to consumption distortion. b) Could the Government of Andorra have achieved the same trade result using a tariff?

The government has decided that the free market price of tabacco is too low.

a.Suppose the government imposes a binding price floor in the tobacco market. Use a supply and demand diagram to show the effect of this policy on the price of tobacco and the quantity to tobacco sold. Is there a shortage or surplus of tobacco? What does the market outcome depend on?

b.Tobacco producers complain that the price floor has reduced their total revenue . Is this possible? Exlpain.

c- In response to producers' complaints, the government agrees to purchase all of the surplus tobacco at the price floor. Compared to the basic price floor, who benefits from this new policy? Who loses?

1 - Setting transfer prices can be especially problematic when:

a) Managers are evaluated based on non-financial factors

b) Compensation is tied to the financial performance of responsibility centres

c) Centralized decision-making is the organizational norm

d) Compensation is tied to the financial performance of the organization as a whole

2. A transfer pricing policy based on market price:

a) Maximizes total organizational profit

b) Is best because the market price is always objective and easily obtainable

c) May result in suboptimal decision-making for the company as a whole

d) Is the only alternative accepted by the Canada Revenue Agency

Markets are separated into two broad categories based on their level of competition. On the one hand there are perfectly competitive markets and on the other hand, there are all other market structures which are grouped under imperfect competition. Markets under imperfect competition are generally described by fewer firms with each firm having some degree of market power depending on the number of firms in the market. Discuss the fundamental differences between perfect competition and imperfect competition (include a discussion of marginal revenue). In addition, discuss how the degree of market power effects the welfare of producers, consumers, and society. 20 Points

Suppose Natasha currently makes $50,000 per year working as a manager at a cable TV company. She then develops two possible entrepreneurial business opportunities. In one, she will quit her job to start an organic soap company. In the other, she will try to develop an Internet-based competitor to the local cable company. For the soap-making opportunity, she anticipates annual revenue of $465,000 and costs for the necessary land, labor, and capital of $435,000 per year. For the Internet opportunity, she anticipates costs for land, labor, and capital of $3,200,000 per year as compared to revenues of $3,275,000 per year.