An investor is analyzing the costs of two-year, European options for aluminum and zinc at a particular strike price. For each ton of aluminum, the two-year forward price is 1400, a call option costs 700, and a put option costs 550. For each ton of zinc, the two-year forward price is 1600 and a put option costs 550. The annual effective risk-free interest rate is 6%. Calculate the cost of a call option per ton of zinc.

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At the beginning of each year, Larry chooses how many weeks he will work. Factoring out holidays, Larry's total time endowment T is 50 weeks. He earns a wage w of $400 per week, the price of consumption p is $10 per unit of consumption, and he has no nonlabor income V . Throughout this question we will build and graph Larry's budget line.

3a. Normalize the prices in this question. What are they now? (NOTE: If you cannot or are unsure, feel free to use the listed numbers in the rest of the problem).

3b. What is Larry's real wage? Explain what this means in words. (HINT: Think about interpreting ratios.)

3c. Suppose Larry doesn't work at all. What would his consumption and leisure bundle be? On the graph, label this point E.

3d. Now suppose Larry is a workaholic and works all 50 weeks. What would his consumption and leisure bundle be now? On the graph, label this point F.

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Firm A produces widgets. The market for widgets is perfectly competitive and there are a large number of small scale firms including Firm A. All the firms operating in the market use the same production technology, which is represented by the production function = , where x is the output (in units of widgets). The production of widgets requires a workshop, material, and electricity, apart from labour. Each firm, including Firm A, owns one workshop. Production of one unit of widgets require material of value USD 20 and 4 units of electricity. Wage rate is USD 100 / day, opportunity cost of a workshop is USD 220 / day, and electricity charges are USD 1.25 per unit. The daily market demand function for widgets is: = 2445 - 5, where X is the number of units of widgets demanded in the market per day, and P is the price of widgets per unit. Firm A and all other firms in the market are profit maximisers. 1.A. The market for widgets is in short-run equilibrium, and Firm A is making a loss of 90 USD per unit of widget. How many firms are there in the industry? [5] 1.B. How many firms must leave the industry to bring the market to a long-run equilibrium?

Suppose that electricity is generated by burning coal, and that the mining, processing, and burning of coal have considerable environmental and health costs associated that are not reflected in the market price. Suppose that the market demand for electricity can be represented by the equation QD = 14 - 0.2P (or P = 70 - 5QD), where the quantity demanded represents marginal benefit, and that the market supply can be represented by QS = 4 + 0.8P (or P = -5 + 1.25QS) where the quantity supplied represents private marginal cost. The price is in cents per kilowatt hour and the quantity is in terms of millions of kilowatt hours per month.

a. Show the demand (marginal benefit) and supply (private marginal cost) curves on a diagram. Make sure to label your axes, curves, and intercepts.

b. Use algebra to solve for the private equilibrium price and quantity, and show the equilibrium price and quantity on your diagram.

c. Suppose that the external cost associated with producing one kilowatt hour (kwh) of electricity is $0.25. What is the equation for the social marginal cost curve? Add the social marginal cost curve to your diagram.

d. Use algebra to solve for the socially optimal price and quantity consumed of electricity. Explain.

Question 2 Consider the Specific Factors Model for a small open economy that produces only agricultural goods and manufacturing goods. Assuming that the economy initially exports agricultural goods, a. Use the labor allocation diagram to analyze the effects of a fall in the price of manufacturing goods on the allocation of labor between the two sectors as well as the effect on the nominal wage of labor. (10 points) b. Use the PPF diagram and the budget line to analyze the effects of this fall in the price of manufacturing goods on the level of outputs for both sectors. Can you conclude how the level of consumption and export of agricultural goods can get affected as a result of this change in the international trade market? (assume no information on the consumer preferences and substitution effects) (10 points) c. Assume that due to immigration, the total size of labor force in the country has decreased. Show the effect of this change on the nominal wages using the labor allocation diagram (Hint: Impose the change from one side of the labor allocation diagram to make the analysis easier). (20 points) d. Use the PPF diagram and the budget line to analyze the effects of this fall in the size of labor force on the level of output and consumption.

1. Which of the following is a type of intangible business property that is protected by law: A. Acreage B. Inventory C. Trademark D. Equipment 2. Basic torts relating to businesses often involve disputes concerning A. emotional stress. B. assaults. C. defamation. D. contracts. 3. Which of the following is a characteristic of a business-format franchise: A. The name of the business is chosen by the franchisee. B. Products are bought directly from the supplier. C. It is the least popular franchise arrangement. D. Continuous assistance is provided by the franchisor. 4. Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are considered advantages of a A. sole proprietorship. B. partnership. C. trade union. D. corporation. 5. Channels of distribution benefit consumers by A. increasing profits for businesses. B. lowering the prices of all consumer products. C. raising the quality of all consumer products. D. making a variety of products available to them. 6. For which of the following markets would producers use a short channel of distribution: A. Local consumers B. Generation X C. Baby boomers D. Senior citizens 7. If a business considers where the consumers are and who they are before selecting a channel of distribution, the business is considering the __ factor. A. human B. promotion C. market D. sales 8. What do business employees often need to do before they are able to write proposals? A. Research the problem B. Analyze personal biases C. Contact the customer D. Evaluate technical skills 9. Which of the following is an example of a manager developing a policy that impacts customer relations: A. Increasing use of security devices B. Extending business hours on weekends C. Revising bookkeeping procedures D. Scheduling employees' work hours

1) At the start of the movie we meet Ray Kroc (Michael Keaton) who is a struggling traveling salesman for Prince Castle Sales. The year is 1954. The movie is opening with him delivering a sales pitch directly to the camera. What is Kroc selling that nobody wants?

Kroc is selling a milkshake mixer.

2) While traveling around, trying to sell his product, what does Kroc observe about the many fast food/drive-in restaurants that he stops at?

Kroc observes that many fast food establishments take very long to prepare food.

3) When Kroc calls June, who is the secretary of the sales division of the company he works for, Prince Castle Sales, he finds out an order has been placed for six milkshake mixers from a restaurant drive-in out in California. He thinks this is an error so he calls the restaurant which he finds out is McDonald's. He talks to Dick, one of the owners and finds out it was a mistake. How many do they really want?

4) The ordering of so many milkshake mixer machines by McDonald's piques Kroc's curiosity and he makes a drive to San Bernardino to see the restaurant in person. What does Kroc find out about this restaurant that is so different than the other fast-food/drive-ins he has been to? What does he observe/experience?

5) Kroc introduced himself to one of the ownersMac McDonald and tells him he has some operation and that he was the one who sold him the milkshake mixer. Mac tells him he can give him a tour and Kroc happily agrees. Kroc gets a behind-the-scenes look at how McDonald's operates. What are they doing that makes them so much better than their competition?

6) After the initial kitchen tour, Kroc wants to take the McDonalds brothers out to dinner because he says he is impressed with how the restaurant runs and that it is so remarkable. Wanting to hear their story/the history of McDonald's, he takes them out to dinner. Answer the following questions:

a) When the restaurant first opened they were selling multiple items and sales were down. They also realized a drive-in restaurant had a host of problems like attracting teenagers, slow service, etc. They also realized that most of their profits came from hamburgers, fries, and milkshakes. With this realization, what did they decide to do?

b) What was the purpose of the drawings out on the tennis court?

7) Kroc tells the McDonalds brothers he wants to franchise the restaurant. The brothers tell him they already tried and are against itthey already have five restaurants set upfour around California and one in Phoenix, Arizona. They say that is all there will ever be. Why are they against franchising?

8) Kroc makes note of a picture on the wall in the brothers' office. It is of a McDonald's with two golden arches on either side of the building. Who came up with the concept/design?

In an experiment run by researchers recently, subjects were randomly given either a mug or a pen, and were told that they owned the item they were given and could take it home at the end of the experiment.

Then, independently of whether they had a mug or a pen, half of the subjects (Group 1) were told that they would have a 90% probability of being able to exchange their object for the other one at the end of the experiment (with the researcher), and the rest (Group 2) were told that they would have a 10% chance of being able to exchange their object (with the researcher).

Then, subjects filled out a time-consuming survey, the purpose of which was to give subjects time to form an attachment to the item they had.

Finally, subjects were asked whether they want to exchange if given the chance.

a) [5 points] In a neoclassical model (with no reference dependence), approximately what percentage of subjects should want to exchange in Group 1 and Group 2?

[Hint: what percentage of subjects would want to trade in the group endowed with mugs; in the group endowed with pens? Note that mugs could be valued much higher on average than pens, or vice versa.]

(b) [5 points] In a prospect-theory model where the reference point is the status quo, in which group should a larger percentage of subjects want to exchange?

10. What should a successful brand promise be able to do? A. Customize the product for each customer B. Clarify the company's processes C. Communicate an appealing benefit D. Convey a high-quality image 11. Which of the following is one way that freedom in a private enterprise system is limited by laws: A. Certain occupations must be licensed. B. All workers must take ability tests. C. Specific pay scales are regulated. D. Employees must register with the state. 12. During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025. The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over represents the owner's A. net profit. B. gross profit. C. sales income. D. operating expenses. 13. Non-corporations are taxed as pass-through entities, meaning that A. profits and losses are claimed on owners' personal tax returns. B. they do not have to pay payroll taxes. C. their income tax rates are lower than those of corporations. D. they pay only state and local taxes. 14. Which of the following activities is an example of preparing before attempting to sell an idea: A. Explaining solutions to audience needs B. Determining the details of your idea C. Overcoming objections from the audience D. Affirming the audience's decision to "buy" 15. Managers are more likely to be able to persuade employees to follow new procedures if the managers have A. organizational skills. B. credibility. C. enthusiasm. D. self-motivation. 16. Ali wants to negotiate with her boss to take on more job responsibilities. Before approaching her boss, Ali needs to determine her boss's position and A. abilities. B. interests. C. standards. D. procedures. 17. After writing your personal vision, what must you do to achieve it? A. Commit to your vision through hard work and dedication. B. Put your vision in a safe space and look at it again in five years. C. Get the highest-paying job that you can find out of high school. D. Spend all of your free time working on self-improvement. 18. Ryan keeps a list of his goals to remind himself of what he's working toward. Which tip for smart goal setting is Ryan following? A. Putting goals in writing B. Tying goals to a timetable C. Making goals specific D. Making goals difficult but possible