7. Problems and Applications Q7

Two towns, each with three members, are deciding whether to put on a fireworks display to celebrate the New Year. Fireworks cost $300. In each town, some people enjoy fireworks more than others.

In the town of Bayport, each of the residents values the public good as follows:

The total benefit of the fireworks display to the town of Bayport is ($ ).

Therefore, fireworks (would/would not) pass the cost-benefit analysis in the town of Bayport.

The mayor of Bayport proposes to decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents.

Who would vote in favor of the fireworks referendum? Check all that apply.

Darnell

Eleanor

Jacques

The vote (would/would not) yield the same answer as the cost-benefit analysis.

In the town of River Heights, each of the residents values the public good as follows:

The total benefit of the fireworks display to the town of River Heights is ($ ).

Therefore, fireworks (would/would not)   pass the cost-benefit analysis in the town of River Heights.

The mayor of River Heights also proposes to decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents.

Who would vote in favor of the fireworks referendum? Check all that apply.

Kyoko

Musashi

Rina

The vote (would/would not) yield the same answer as the cost-benefit analysis.

Which of the following statements is correct about the provision of public goods? Check all that apply.

Majority rule is the most efficient way to determine the amount of public goods a society should produce.

It is hard for the government to decide the appropriate amount of public goods to produce because people have differing preferences regarding such goods.

The government always provides the exact types of public goods that everyone in the society wants.

Testing the Difference Between Two Proportions. In Exercises 7–12, (a) identify the claim and state H0 and Ha, (b) find the critical value(s) and identify the rejection region(s), (c) find the standardized test statistic z, (d) decide whether to reject or fail to reject the null hypothesis and (e) interpret the decision in the context of the original claim. Assume the samples are random and independent.

11. Seat Belt Use In a survey of 1000 drivers from the West, 934 wear a seat belt. In a survey of 1000 drivers from the Northeast, 909 wear a seat belt. At a = 0.05, can you support the claim that the proportion of drivers who wear seat belts is greater in the West than in the Northeast?

After reading Chapter 7, in 500 words or more, explain the following two concepts:

-The coupon rate depends on the risk characteristics of the bond when issued.

-The impact of inflation rate on interest rates.

QUESTION 7

1. Use the following information to answer the next two questions: (Question 1 of 2)

   Higgins Company purchased specialized equipment on July 1, 2019, that cost $300,000, has a residual value of $40,000, and a useful life of four years.

   The amount of depreciation expense for 2020, under the double declining balance method is:

   	A.	$112,500.
   	B.	None of the above
   	C.	$97,500.
   	D.	$75,000.
   	E.	$125,000.

2 points   

QUESTION 7

B

1. Use the following information to answer the next two questions: (Question 2 of 2)

   Higgins Company purchased specialized equipment on July 1, 2019, that cost $300,000, has a residual value of $40,000, and a useful life of four years.

   The net book value of the equipment at the end of 2021 (after recording depreciation for 2021) using the straight-line method would be

   	A.	$ 97,500.
   	B.	$202,500.
   	C.	None of the above.
   	D.	$137,500.
   	E.	$162,500.

Consider two populations A = f3; 5; 7; 9; 10; 16g and B = f8; 10; 11; 15; 18; 25; 28g.

a) Using R, draw random samples (without replacement) of size 3 from each population, and simulate

the sampling distribution of the sum of their maximum. Describe the distribution.

b) Use your simulation to estimate the probability that the sum of the maximums is less than 20.

c) Draw random samples of size 3 from each population, and find the maximum of the union of

these two sets. Simulate the sampling dis- tribution of the maximum of this union. Compare

the distribution to part (a). In R, max(union(a, b)) returns the maximum of the union of

sets a and b.

d) Use simulation to find the probability that the maximum of the union is less than 20.

Nine experts rated two brands of coffee in a​ taste-testing experiment. A rating on a​ 7-point scale ​(1equals extremely ​unpleasing, 7equals extremely ​pleasing) is given for each of four​ characteristics: taste,​ aroma, richness, and acidity. The accompanying data table contains the ratings accumulated over all four characteristics. Complete parts​ (a) through​ (d) below.

Expert Brand A Brand B

C.C. 25 26

S.E. 26 26

E.G. 19 22

B.I. 22 24

C.M. 19 21

C.N. 25 26

G.N. 27 26

R.M. 24 26

P.V. 19 21

a. The test statistic is

​(Type an integer or a decimal. Round to two decimal places as​ needed.)

b. What assumption is necessary about the population distribution in order to perform this​ test?

c. Determine the​ p-value in​ (a) and interpret its meaning.

d.Construct a 95​% confidence interval estimate of the difference in the mean ratings between the two brands. Recall that mu Subscript Upper DμDequals=mu 1 minus mu 2μ1−μ2​, where mu 1μ1 is the mean rating for brand A and mu 2μ2 is the mean rating for brand B.

Given are five observations for two variables, and . xi1 2 3 4 5 yi4 7 6 12 14 The estimated regression equation for these data is . a. Compute SSE, SST, and SSR using the following equations (to 1 decimal). SSE SST SSR b. Compute the coefficient of determination (to 3 decimals). Does this least squares line provide a good fit? c. Compute the sample correlation coefficient (to 4 decimals).

Assignment Task Two (300 words - 7 marks)

The coronavirus intervened Australia in early 2020.

On 12 May, the Morrison government issued an unprecedented progress report on the delayed budget, outlining the coronavirus pounding to the national economy and the huge outlay to deal with the pandemic.

What were the main issues presented? How do you think they would affect the economy, social and employment situation in the near future?

Given are five observations for two variables, and . xi2 15 7 22 19 yi50 48 58 11 23 d. Develop the estimated regression equation by computing the values of and using equations: (Enter negative values as negative figure) (to 2 decimals) e. Use the estimated regression equation to predict the value of y when . (to 2 decimals)

Consider the following two bonds: a 5-year and a 10-year bond, each with a 7% coupon. Both bonds currently sell at par and coupon payments are made annually (i.e., one coupon payment per year).

(a) What is the current price of each bond?

Hint: answer does not require calculations; read description of bonds carefully to determine what price must be (10 points) Suppose you buy the 10-year bond. One year later, interest rates decrease to 5%.

(b) What will be the new price of the bond? (30 points)

(c) What rate of return would you have earned on the bond over the one-year period? (20 points)

(d) Which bond will have a higher rate of return over the year, the 5-year bond or the 10-year bond? Why? (5 points).

You don’t need calculations for this one and will not be given any points for a numerical answer; respond based on your understanding of interest rate risk (price sensitivity) in bonds.