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Ram's Furniture Company makes only three kinds of furnitures (chairs, desks and tables). Each product requires some labor in the parts fabrication department, the assembly department and the shipping department. The furniture is sold through a local distributor who has Estimated the maximum potential sales for each product in the next quarter. Finally, the accounting department has provided some data showing the profit contributions on each product. The decision problem is to determine the product mix, that is, to maximise Ram's Furniture Company's profit for the quarter by choosing production quantities for the chairs, desks and tables. The table below summarises the parameters of the problems. Hours per Unit Department Chairs Desks Tables Hours Available Fabrication 4 6 2 1,850 Assembly 3 5 7 2,400 Shipping 3 2 4 1,500 Demand Potential 360 300 100 Profit $15 $24 $18

Q1: Using a spreadsheet model, determine the optimal solution that will generate maximum profits from current production. [10 marks]

Q2: From your answers in (ii), you realise that fabrication time limits your ability to increase profits. Maybe we should acquire more of it. How much should we pay for additional time? [10 marks]

Solow Model:

Suppose that both are identical except that in country A, k_A

suppose the two economies are governed by the Solow model with technology. They are identical in all ways except, possibly, in the rate at which technology grows in each one. True or false, and explain briefly: The fact that there is convergence or not will depend on the rate of growth of technology in each country. *

[3:21 AM, 10/29/2021] Fridah: 1. Assume an economy is made up of the following groups:

100,000 full-time employees

20,000 retirees

10,000 people without jobs and looking for work

30,000 part-time employees

5,000 children under the age of 16

15,000 people without jobs but not looking for work

a) What is the unemployment rate? Show your work.

b) What is the labor force participation rate? Show your work.

2. Assume the unemployment rate in an economy is 8% and the labor force participation rate is 50%. If this economy has 500,000 unemployed people, what is the size of the labor force and the civilian population?

3. Suppose the labor force is made up of 1,000,000 people and the unemployment rate is 9%. If the natural rate of unemployment is 5%, how many people are frictionally and structurally unemployed (combined) and how many people are cyclically unemployed?

4. Suppose the civilian population of an economy is made up of 150 million people. If the unemployment rate is 5% and the labor force participation rate is 65%, how many people are employed, unemployed, and not in the labor force?

5. Of the 3 following individuals, which is structurally unemployed, frictionally unemployed, and cyclically unemployed?

i. During the Great Recession, John lost his job as a construction worker.

ii. Billy has decided he does not like his job and has quit in order to look for another.

iii. Because of the internet, Jimmy has lost his job as a door to door Encyclopedia salesman.

Paper 2: Multiple Choices

1

The point after an economy has finished going through a contraction and before it begins to go through an expansion is called a:

a) Recessionary trough

b) Business peak

c) Negative trend point

d) Growth inflection

2

After not having a job and searching for one for 6 months, Tingles grows frustrated and decides to stop looking in order to return to college. Tingles decision will cause the unemployment rate to

a) Increase, and the labor-force participation rate to increase

b) Decrease, and the labor-force participation rate to decrease

c) Increase, and the labor-force participation rate to decrease

d) Decrease, and the labor-force participation rate to increase

3

Gill is newly hired but waiting for his job to begin, Rosco has a full time job, Kenny is in the 5th grade and therefore not working, and Zed has no job but is currently looking for work. What is the unemployment rate amongst these 4 people?

a) 25%

b) 33%

c) 66%

d) 50%

e) 75%

4

Calculate the unemployment rate for the following economy. Assume all individuals are at least 16 years old.

Without jobs, but actively searching for work

20 million people

Working part-time jobs (20 hours per week)

50 million people

Retired from the work force

50 million people

Working full-time jobs

150 million people

Do not have jobs and would take jobs if offered, but are not actively searching

10 million people

a) 10%

b) 04%

c) 91%

d) 09%

5

Suppose there are 500,000 people that are employed, 100,000 that are unemployed, and 800,000 in the civilian population. What is the unemployment rate?

a) 6%

b) 1%

c) 5%

d) 20%

6

Suppose an economy has 100,000 full-time workers, 50,000 part-time workers, 20,000 without jobs but looking for work, and 30,000 retirees. What is the labor force participation rate?

a) 15%

b) 85%

c) 2%

d) 75%

7

Which of the following best describes frictional unemployment?

a) unemployment caused by business cycles

b) unemployment caused by outdated skills

c) unemployment caused by a lack of information

8

Timmy has been unemployed for 2 months. He currently has a job offer from an accounting firm and another job offer from a consulting firm. He plans on going to another job interview next week before making a decision about where to work. Timmy is best described as

a) Structurally unemployed

b) Cyclically unemployed

c) Frictionally unemployed

9

Which of the following unemployed people best represents someone structurally unemployed?

a) Chuck has lost his job as a translator due to advances in translation software

b) Zeke has found himself unhappy in his job and has quit in order to look for another job

c) Due to a failing economy, Susan was laid off, along with 500 other employees at her firm

d) Tim has lost his job due to his inability to work well with his co-workers

10

The natural rate of unemployment is composed of:

a) Frictional and structural unemployment

b) Frictional and cyclical unemployment

c) Structural and cyclical unemployment

d) Frictional, structural, and cyclical unemployment [3:24 AM, 10/29/2021] Fridah: 1. A standardized test given to all new applicants is normally distributed with a mean of 75 and a standard deviation of 15. A random sample of 30 applicants is selected for further study.

A) What is the shape, mean(expected value) and standard deviation of the sampling distribution of the sample mean for samples of size 30?

B) What is the probability that the sample mean will be larger than 80?

C) What is the probability that the sample mean will fall within 7 points of the population mean?

D) What is the probability that the sample mean will be less than 69?

2. Assume that the population proportion of adults who smoke cigarettes is 0.39. A random sample of 300 adults is to be selected to test this claim.

A) What is the shape, mean, and standard de... [3:26 AM, 10/29/2021] Fridah: Your Uncle Nick has agreed to sell you his supermarket where you have worked for seven years since graduating from college. Uncle Nick is 72 years old and is ready to step down from day-to-day management.

After operating the Crest Supermarket on your own for six months, you begin to analyze how you can increase store traffic and, consequently, annual sales and profitability. During a recent trip to the Food Marketing Institute convention, you ran across several successful grocers. Some of them competed largely on price, while others competed more on promotion and advertising.

You decide to pursue a heavy promotion-oriented strategy. Consequently, you budget to increase advertising by $20,000 monthly or $240,000 annually and to also have a weekly contest where you give away $100 in groceries to 25 families. This will cost you $130,000 (52 $100 25) annually.

Currently, Crest Supermarket serves a trade area with a 2-mile radius and a household density of 171 per square mile. Seventy percent of these households shop at Crest an average of 45 times per year. Of those that visit Crest, 98 percent make a purchase that averages $24.45. Crest operates on a 25-percent gross margin.

You estimate that with your new promotion program, the radius of Crest's trade area will increase to 2.5 miles. Assuming that all other relevant factors remain constant (171 households per square mile, 70 percent of households shop Crest, 98-percent closure rate, $24.45 average transaction size, 25-percent gross margin percent), is the planned promotion program and investment of an additional $370,000 (annually) a profitable strategy?

(Hint: Assume the trade area is circular and thus its size in square miles can be computed as pi (3.142) times the radius of the circle squared. The total square miles of the trade area can be multiplied by the number of households per square mile to obtain total households in the trade area. This in turn can be multiplied by the percentage that shop at Crest, which in turn can be multiplied by the average number of trips annually to Crest, which will yield total traffic. This traffic statistic can be multiplied by the percent of visitors that make a purchase, which will yield total transactions. You should be able to figure out on your own the rest of the computations that are needed to determine if the promotional strategy is profitable.