carefully consider answering all the questions with good diagrams where applicable

In this activity we study the topic of Franchising and explore it as an opportunity for business growth (franchisor) and for entrepreneurship (franchisees). Review Provide an answer each of the following questions. Make effort to write in this rather than copy verbatim from the textbook (this is how you learn). 1. What are the differences between a product and trademark franchise and a business format franchise?" 2. What are the differences among an individual franchise agreement, an area franchise agreement, and a master franchise agreement? 3. Which types of businesses would best be suitable for growth through franchise? 4. What are the main advantages and disadvantages of buying a franchise (becoming a franchisor)? 5. What isagency theory in context of franchise relationship? Discuss Read Case 15.1: Quiznos: Will It Regain a Leadership Position in the Sandwich and Sub Shop Franchise Industry? (pp. 564, ff.) 1. A. Why do you think Quiznos established the policies that caused so much angst among its franchisees? B. At one time, Quiznos' major source of competitive advantage was the fact that it toasted its subs. What was the inherent danger in promoting toasted subs as the franchise chain's primary source of competitive advantage? Explain. C. Of the four factors that caused Quiznos to lose market share, including identity crises, being at odds with franchisees, inconsistent advertising, and leadership changes, which factor do you think was the most damaging? Explain your answer.

Consider an economy described by the following equations: YCIGT=C+I+G=100+0.75(YT)=50050r=125=100Y=C+I+GC=100+0.75(YT)I=50050rG=125T=100

Some economists believe that the U.S. economy as a whole can be modeled with the following production function, called the CobbDouglas production functionCobbDouglas production function:

Y=AK1/3L2/3,Y=AK1/3L2/3,where YY is the amount of output, KK is the amount of capital, LL is the amount of labor, and AA is a parameter that measures the state of technology. For this production function, the marginal product of labor isMPL=(2/3)A(K/L)1/3.MPL=(2/3)A(K/L)1/3.Suppose that the price of output PP is 2, AA is 3, KK is 1,000,000, and LL is 1,000. The labor market is competitive, so labor is paid the value of its marginal product.

a. Calculate the amount of output produced YY and the dollar value of output PYPY. b. Calculate the wage WW and the real wage W/PW/P. (Note: The wage is labor compensation measured in dollars, whereas the real wage is labor compensation measured in units of output.) c. Calculate the labor share (the fraction of the value of output that is paid to labor), which is (WL)/(PY)(WL)/(PY). d. Calculate what happens to output YY, the wage WW, the real wage W/PW/P, and the labor share (WL)/(PY)(WL)/(PY) in each of the following scenarios: i. Inflation increases PP from 2 to 3. ii. Technological progress increases AA from 3 to 9. iii. Capital accumulation increases KK from 1,000,000 to 8,000,000. iv. A plague decreases LL from 1,000 to 125. e. Despite many changes in the U.S. economy over time, the labor share has been relatively stable. Is this observation consistent with the CobbDouglas production function? Explain.

Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Let's consider the effects of such a policy on the labor market. a. Suppose that a law required firms to give each worker $3 of fringe benefits for every hour that the worker is employed by the firm. How does this law affect the marginal profit that a firm earns from each worker at a given cash wage? How does the law affect the demand curve for labor? Draw your answer on a graph with the cash wage on the vertical axis. b. If there is no change in labor supply, how would this law affect employment and wages? c. Why might the labor-supply curve shift in response to this law? Would this shift in labor supply raise or lower the impact of the law on wages and employment? d. As discussed in Chapter 6, the wages of some workers, particularly the unskilled and inexperienced, are kept above the equilibrium level by minimum-wage laws. What effect would a fringe-benefit mandate have for these workers?

Leadbelly Co. sells pencils in a perfectly competitive product market and hires workers in a perfectly competitive labor market. Assume that the market wage rate for workers is $150 per day.

a. What rule should Leadbelly follow to hire the profit-maximizing amount of labor? b. At the profit-maximizing level of output, the marginal product of the last worker hired is 30 boxes of pencils per day. Calculate the price of a box of pencils. c. Draw a diagram of the labor market for pencil workers (as in Figure 4 of this chapter) next to a diagram of the labor supply and demand for Leadbelly Co. (as in Figure 3). Label the equilibrium wage and quantity of labor for both the market and the firm. How are these diagrams related? d. Suppose some pencil workers switch to jobs in the growing computer industry. On the side-by-side diagrams from part (c), show how this change affects the equilibrium wage and quantity of labor for both the pencil market and for Leadbelly. How does this change affect the marginal product of labor at Leadbelly?

The nation of Ectenia has 20 competitive apple orchards, all of which sell apples at the world price of $2 per apple. The following equations describe the production function and the marginal product of labor in each orchard:Q=100L2L2Q=100L2L2MPL=1002L,MPL=1002L,where Q is the number of apples produced in a day, L is the number of workers, and MPL is the marginal product of labor. a. What is each orchard's labor demand as a function of the daily wage W? What is the market's labor demand? b. Ectenia has 200 workers who supply their labor inelastically. Solve for the wage W. How many workers does each orchard hire? How much profit does each orchard owner make? c. Calculate what happens to the income of workers and orchard owners if the world price doubles to $4 per apple. d. Now suppose the price is back at $2 per apple, but a hurricane destroys half the orchards. Calculate how the hurricane affects the income of each worker and of each remaining orchard owner. What happens to the income of Ectenia as a whole?

Suppose that labor is the only input used by a perfectly competitive firm. The firm's production function is as follows:

a. Calculate the marginal product for each additional worker. b. Each unit of output sells for $10. Calculate the value of the marginal product of each worker. c. Compute the demand schedule showing the number of workers hired for all wages from zero to $100 a day. d. Graph the firm's demand curve. e. What happens to this demand curve if the price of output rises from $10 to $12 per unit?

Smiling Cow Dairy can sell all the milk it wants for $$4 a gallon, and it can rent all the robots it wants to milk the cows at a capital rental price of $$100 a day. It faces the following production schedule:

a. In what kind of market structure does the firm sell its output? How can you tell? b. In what kind of market structure does the firm rent robots? How can you tell? c. Calculate the marginal product and the value of the marginal product for each additional robot. d. How many robots should the firm rent? Explain.

A market is described by the following supply and demand curves: QS=2PQS=2PQD=300PQD=300P a. Solve for the equilibrium price and quantity. b. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? c. If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? d. Instead of a price control, the government levies a tax on producers of $30. As a result, the new supply curve is: QS=2(P30).QS=2(P30). Does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus?

A case study in this chapter discusses the federal minimum-wage law. a. Suppose the minimum wage is above the equilibrium wage in the market for unskilled labor. Using a supply-and-demand diagram of the market for unskilled labor, show the market wage, the number of workers who are employed, and the number of workers who are unemployed. Also show the total wage payments to unskilled workers. b. Now suppose the secretary of labor proposes an increase in the minimum wage. What effect would this increase have on employment? Does the change in employment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? c. What effect would this increase in the minimum wage have on unemployment? Does the change in unemployment depend on the elasticity of demand, the elasticity of supply, both elasticities, or neither? d. If the demand for unskilled labor were inelastic, would the proposed increase in the minimum wage raise or lower total wage payments to unskilled workers? Would your answer change if the demand for unskilled labor were elastic?

Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.) a. Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? b. Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased?

As described in the chapter, the Federal Reserve in 2008 faced a decrease in aggregate demand caused by the housing and financial crises and a decrease in short-run aggregate supply caused by rising commodity prices. a. Starting from a long-run equilibrium, illustrate the effects of these two changes using both an aggregate-supply/aggregate-demand diagram and a Phillips-curve diagram. On both diagrams, label the initial long-run equilibrium as point A and the resulting short-run equilibrium as point B. For each of the following variables, state whether it rises or falls or whether the impact is ambiguous: output, unemployment, the price level, the inflation rate. b. Suppose the Fed responds quickly to these shocks and adjusts monetary policy to keep unemployment and output at their natural rates. What action would it take? On the same set of graphs from part aa, show the results. Label the new equilibrium as point C. c. Why might the Fed choose not to pursue the course of action described in part bb?

Suppose the economy is in a long-run equilibrium. a. Draw the economy's short-run and long-run Phillips curves. b. Suppose a wave of business pessimism reduces aggregate demand. Show the effect of this shock on your diagram from part aa. If the Fed under-takes expansionary monetary policy, can it return the economy to its original inflation rate and original unemployment rate? c. Now suppose the economy is back in long-run equilibrium and then the price of imported oil rises. Show the effect of this shock with a new diagram like that in part aa. If the Fed undertakes expansionary monetary policy, can it return the economy to its original inflation rate and original unemployment rate? If the Fed undertakes contractionary monetary policy, can it return the economy to its original inflation rate and original unemployment rate? Explain why this situation differs from that in part bb.

In the early 1980s, new legislation allowed banks to pay interest on checking deposits, which they could not do previously. a. If we define money to include checking deposits,what effect did this legislation have on money demand? Explain. b. If the Federal Reserve had maintained a constant money supply in the face of this change, what would have happened to the interest rate? What would have happened to aggregate demand and aggregate output? c. If the Federal Reserve had maintained a constant market interest rate (the interest rate on nonmonetary assets) in the face of this change, what change in the money supply would have been necessary? What would have happened to aggregate demand and aggregate output?

The economy is in a recession with high unemployment and low output. a. Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. Be sure to include the aggregate-demand curve, the short-run aggregate-supply curve, and the long-run aggregate-supply curve. b. Identify an open-market operation that would restore the economy to its natural rate. c. Draw a graph of the money market to illustrate the effect of this open-market operation. Show the resulting change in the interest rate. d. Draw a graph similar to the one in part a to show the effect of the open-market operation on output and the price level. Explain in words why the policy has the effect that you have shown in the graph.