Answer the following questions correctly.,,,

1. A country's economy is described by the production function Y=F(K,L), where Y stands for output, K stands for capital and L stands labor. If the function F( ) has constant returns to scale, which of the following is true?

a. Doubling capital without changing labor will double output

b. Doubling labor without changing capital will double output

c. Doubling capital and labor will increase output, but by less than one for one

d. Doubling capital and labor together will double output

2. What is true of an economy in a spatial equilibrium:

a. The marginal person has the same utility in every location

b. People have the same marginal utility of consumption in every location

c. People are happier in wealthier locations

d. Housing prices are higher in locations with lower amenity values

3. Suppose the federal government levies a tax on cigarettes. Vertical tax externalities mean that local governments now want to:

a. Increase local taxes on cigarettes

b. Decrease local taxes on cigarettes

c. Align their cigarette tax rates with tax rates of neighboring jurisdictions

d. None of the above

4. The deadweight loss associated with a tax grows with:

a. The budget share of the good

b. The square of the tax rate

c. The elasticities of supply and demand

d. All of the above

5. The federal government provides a block grant to a town of $50M, which must be allocated entirely to education. What forces might lead to an increase the town's total spending on education? Provide the best answer.

a. Income and Substitution Effects

b. Income Effect, Flypaper Effect, Town Initially Spending Below $50M

c. Income Effect, Substitution Effect, Flypaper Effect, Town Initially Spending Below $50M

d. Flypaper Effect, Town Initially Spending Below $50M

6. A funnel graph is used to assess:

a.Publication Bias

b.Omitted Variable Bias

c.Causality

d. Differences in Difference

7. A researcher has data on childhood obesity rates and local government spending for all towns in Ohio. He would like to see if a town spending more dollars on parks leads to lower obesity rates. He proposes to instrument for town spending on parks using each towns' average household income. What is the best objection to this approach?

a. This instrument is not relevant

b. The instrument is not exogenous/random

c. The instrument is neither relevant nor exogenous/random

d. This is a weak instrument

8. The change in housing prices is a good measure of the net benefits of a program when:

a. Geographic mobility is limited

b. The program targets the housing market

c. Housing supply is inelastic

d. Housing supply is elastic

Dr. Pepper Snapple Group (DPSG) acquired the assets and liabilities of Turquoise Water Inc. on September 30, 2020, in a merger. The acquisition involves the following payments:

Cash paid to Turquoise Water shareholders

$85,000,000

Cash paid to Morgan Stanley for consulting services

12,000,000

New stock issued, 100,000 shares, $0.50 par, fair value at acquisition

5,000,000

Stock registration fees, paid in cash

600,000

Earnings contingency, to be paid in three years, present value

2,000,000

Turquoise Water's balance sheet just prior to the acquisition appears below. Fair value information on Turquoise Water's assets and liabilities is also provided.

Turquoise Water, Inc.

Book Value

Fair Value

Assets

Current assets

$1,000,000

$800,000

Plant and equipment, net

41,000,000

10,000,000

Patents and trademarks

3,400,000

20,000,000

Total assets

$ 45,400,000

Liabilities & Equity

Current liabilities

$400,000

400,000

Long-term liabilities

40,000,000

41,000,000

Common stock, par value

500,000

Additional paid-in capital

8,500,000

Retained earnings

(2,000,000)

Accumulated OCI

(1,400,000)

Treasury stock

(600,000)

Total liabilities & equity

$ 45,400,000

In addition to the assets reported on Turquoise Water's balance sheet, the following previously unreported intangible assets are identified:

Fair Value

Bottlers' franchise rights

$ 10,400,000

Skilled workforce

15,000,000

Non-competition agreements

4,000,000

Expected expansion into new product lines

5,000,000

Order backlogs

2,000,000

Required

Prepare the journal entry DPSG makes to record this acquisition as a merger.

Now assume DPSG acquires all of the stock of Turquoise Water.

Prepare the journal entry DPSG makes to record this acquisition as a stock acquisition.

The Role of Function Space Function space provides a significant revenue stream for most hotels. Function space demand consists of both groups who both rent space and guest rooms (typically conferences and meetings) and groups who rent only space (usually social events). Generally, function space is managed by the Sales and marketing department and is broken into four or more groups, including weddings, conventions/exhibitions, meetings and social, each with its own director and team of sales managers. PROBLEM FOR CASE STUDY The Director of Marketing of a large convention hotel was looking at the financial aspects and noticed that the revenue from social catering had dropped from $5,1 16, 174 (2018) to $5,021,195 (2019). Occupancy was slightly up (2019, 59.64%; 2018, 59.57%) but the average rate (2019, $0.597 per square foot, 2018, $0.609 per square foot) and the revenue per available square foot (2019, $0.356; 2018, $0.363) were down. What was even more surprising was that the average guest room rate had increased by 8 per cent and RevPAR had increased by 12 per cent. How could they be making less money when there were more weddings this year? What was going on? Currently the sales managers are given a set of dates to book weddings (some dates are not available because other events require the use of the ballroom). The sales managers can book one large wedding in the whole ballroom or have two smaller weddings in each half. The whole ballroom can fit 500 covers while each half can fit only 220 covers. Sales managers have two sets of menus with a low budget option and a high budget option. The sales manager is expected to get $21,000 in revenue for Saturday nights for the ballroom or $12,500 for half the ballroom. The sales manager can discount all other time periods. Demand varies by month with most weddings occurring May through October. Saturday nights are the most popular time to hold a wedding followed by Saturday afternoons. Upon careful study, the Director of Marketing found that many clients were having difficulty in meeting minimum revenue requirements and that sales managers were offering expensive (but unprofitable) upgrades such as ice carvings and sweets tables in an attempt to qualify the client and meet their monthly revenue quota. In addition, sales managers were booking the weddings far out. About half of all weddings were booked more than a year before the event. The staff has been noticing that they have been turning away many unexpected short-term weddings. In fact, turndown and lost revenue far exceeds the amount of revenue booked. A turndown is counted when there is no space to offer the guest or when the guest does not meet the hotel's criteria. Lost business refers to when the client chooses not to book the hotel. In addition, groups which wanted to use guest rooms have been turned down when the ballroom was needed but was already booked for a wedding. The reasons for turndown and lost business vary, with some clients simply 'shopping' and others not meeting the hotel's criteria.The Director of Marketing has asked you to analyze the current situation and develop a revenue management strategy for weddings. Be specific on how she can take your recommendations and implement the suggested policies in her hotel. Specifically: 1) What is causing this problem? 2) What pricing and duration control management strategies do you suggest? 3) What implementation issues will she face? How should she handle them? How will she be able to measure her success with her revenue management program