(1) At this very moment, in Norfolk, VA there is a Famous Burger restaurant franchise for sale. The asking price is $389,000. The store's gross 2021 revenue is reported to be $1,000,000, while annual cash flow (something close to profit) is said to be $150,000, and this includes the lease payment on the store facility. Office furniture and store fixtures will remain. (a) Assume initially that you or your heirs could run this business forever. What is your estimate of the value of this business? Explain your answer and any assumptions you have made, especially relating to your rate of discount. (b) Now, suppose instead that this level of profit will continue for 5 years, but no longer. What is your estimated value of the business under these circumstances? Explain your answer and make explicit any assumptions underpinning your answer.

(2) Indicate whether the following statements are True (T), False (F), or Uncertain (U) and (most important) explain why. (a) The United States has a persistent trade deficit with Mexico. "This is evidence that the U.S. is getting ripped off and taken advantage of by the Mexicans." (b) "It is plan common sense. Virginia's legislature (the General Assembly) should pass a law requiring all Virginia government agencies and office to buy only from Virginia-based firms." (c) Back in the 1990s, Luther Vandross and Janet Jackson sang, "The best things in life are free." Critique this statement from the standpoint of economics. (d) "The American stock market is a relatively efficient market; real estate markets for residential homes are less efficient than the stock market; markets for boyfriends, girlfriends, husbands, and wives are even less efficient than housing markets." (e) Many restaurants and bars have "Happy Hours" in which drinks are sold at lower than usual prices, e.g., beers for $4.00 rather than $6.00.

(3) The United States Government could save lives if it devoted more funding to dealing with problems such as infectious diseases and Alzheimer's. It could also save lives if it required states to pay for the health care of pregnant women and recent mothers. Indeed, there are lots of ways Uncle Sam could spend money to save lives. What is the economically most efficient way for the U.S. Government to deal with such choice situations --- assuming that available sources of funding to support these efforts are limited? Describe in detail.

(4) Headcount enrollments in American higher education have fallen eleven years in a row. (a) If this pattern of falling demand were to in a typical American industry, then what reactions and results would we expect to observe in that industry as a consequence? (b) Has your answer to (a) occurred to any large extent in American higher education? Cite evidence. If so, why? If not, why not?