Analyze the following questions and answer all.

Scenario: Imagine you are a business consultant to a firm of your choice. You have been asked to analyze, advise, and create recommendations on how the firm can ensure its future success in its current market.

Work with your instructor to choose a firm that matches the following criteria: a publicly-traded company operating in the U.S. market. Note: A publicly-traded company is a private-sector firm owned by its shareholders/stock holders.

Give analysis of economic data and business data to explain how the core economic principles impact the sustainability of the firm and what actions the firm can take to ensure success.

Address the following: Identify the market structure your chosen firm operates in, analyze your chosen firm's current market share, and identify the firm's local/global competitors.

Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on your firm's future in the market. Hints: Be sure you review the barriers to entry discussed in the course text.

You might consider presenting the data graphically. Identify and explain trends in current macroeconomic indicators for last three years including: Current stage of the business cycle. Real gross domestic product (GDP). Inflation as measured by the consumer price index (CPI). Unemployment rate. Federal funds rate. Current rate for borrowing funds such as the so-called "prime rate."

Note: A requirement of the Week 1 Influence of Economics on Household Decision Making report was to gather data on the CPI, GDP, and interest rates, so you should consider reviewing the feedback you received on the Week 1 report.

Evaluate trends in demand over last three years and explain their impact on the industry and the firm. Include quarterly (last two quarters) and annual sales (last three years) figures for the product your firm sells.

Create business strategies by analyzing information and data related to the demand for and supply of your firm's product(s) to support your recommendation for the firm's actions. Remember to include a graphical representation of the data and information used in your analysis. Examine available, current data and information, such as pricing and the availability of substitutes, and explain how you could determine the price elasticity of demand for your firm's product.

Assess how the price elasticity of demand impacts the firm's pricing decisions and revenue growth. Apply the concepts of variable and fixed costs to your firm for informing its output decisions. For instance, analyze how different kinds of costs (labor, research and development, raw materials) affect the firm's level of output.

Based on the data gathered and analysis performed for this report, give a conclusion in which you: Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations. Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.

Propose how the firm's position within the market and among its competitors will allow it to take your recommended action. Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government policies...

Question 3 (20 points) Consider the standard growth model in discrete time. There is a large number of identical households normalized to 1. Each household maximizea life-time discounted utility V((G)EO) = >Bu(a). BE (0, 1). Each household has an initial capital ko > 0 at time 0, and one unit of productive time in each period that can be devoted to work. Final output is produced using capital and labor, according to a production function, F, which has the standard properties discussed in class, most notably, it is increasing in both arguments and exhibits CRS. This technology is owned by firms (whose measure does not really matter because of the CRS assumption). Output can be consumed (c) or invested (i,). Households own the capital (so they make the investment decision), and they rent it out to firms. Let 6 E (0, 1) denote the depreciation rate of capital. Households own the firms, i.e., they are claimants to the firms' profits, but these profits will be zero in equilibrium. The function it also has the usual nice properties, which I will not spell out here since you will not need them explicitly. In this economy there is a government that collects taxes and (for simplicity ) throws the tax revenues into the ocean. The government can implement one of the follwoing two alternative taxation systems, let us call them System A and System B. System A is a proportional tax, 7 6 0, 1), on agents' capital income. In other words, if the government implements System A, it collects a fraction 7 of all the income that agents earn by renting out their capital to firms. System B is a proportional tax, T E [0, 1), on agents' investment. In other words, if the government implements System B, it collects a fraction + of all the resources that agents choose to allocate into investment. a) Write down the problem of the household recursively, under both taxation systems. Pay special attention to the budget constraints. These constraints will not be the same under the two specifications. Also, notice that I am not asking you to define a RCE in detail; just state the representative agent's problem within a RCE environment. b) Describe the steady state equilibrium capital stock under taxation System A, for any given 7 E [0, 1). Denote this object by KA(T). c) Describe the steady state equilibrium capital stock under taxation System B, for any given T e [0, 1). Denote this object by K;(T). d) Assume that F(K, N) = Ko Ni-s, a E (0, 1). Provide closed form solutions for the terms KA(T), KB(T), described in parts (b),(c)." e) Plot the terms KA, KB, calculated in part (d), against + 6 [0, 1] and in the same graph. Discuss shortly. "Here, the firms face a static problem. I am not asking you to explicitly spell it out, but this problem is critical for the determination of the various prices. `Hint: Here, it is more convenient to work directly with F, i.e., do not work with the auxiliary function f that we introduced in the lectures. 5 f) Describe the governemnt's total tax revenue in steady state under System B, Ts. Plot To as a function of the tax rate 7 (this is the so-called Laffer curve). Discuss the shape (i.e., the monotonicity) of the Laffer curve for the various values of a and T.KORVER SUPPLY COMPANY Balance Sheet At December 31, 2016 Assets Current assets Cash Accounts receivable Inventories Total current assets 0 Property, plant, and equipment Furniture and fixtures Accumulated depreciation Net property, plant, and equipment 0 Total assets 0 Liabilities and Shareholders' Equity Current liabilities Accounts payable Interest payable Note payable Total current liabilities 0 Shareholders' equity Common stock Retained earnings Total shareholders' equity C Total liabilities and shareholders' equity 0The following is the balance sheet of Korver Supply Company at December 31, 2015. KORVER SUPPLY COMPANY Balance Sheet At December 31, 2015 Assets Cash $180,000 Accounts receivable 310,000 Inventories 260,000 Furniture and fixtures, net 200,000 Total assets $950,000 Liabilities and Shareholders' Equity Accounts payable (for merchandise) $310,000 Note payable 320,000 Interest payable 8.000 Common stock 150,000 Retained earnings 162,000 Total liabilities and shareholders' equity $950,000 Transactions during 2016 were as follows: 1. Sales to customers on account $970,000 2. Cash collected from customers 950,000 3. Purchase of merchandise on account 660,000 4. Cash payment to suppliers 670,000 5. Cost of merchandise sold 610,000 6. Cash paid for operating expenses 330,000 7. Cash paid for interest on note 16,000 The note payable is dated June 30, 2015 and is due on June 30, 2017. Interest at 5% is payable annually on June 30. Depreciation on the furniture and fixtures for the year is $37,000. The furniture and fixtures originally cost $470,000. Required: Prepare a classified balance sheet at December 31, 2016 (ignore income taxes). (Amounts to be deducted should be indicated by a minus sign.)