,Questions.

Please answer the following questions.

a.) Do you think globalization leads to cultural imperialism? Why or why not?

b.) Compare and contrast the social impacts of television and social media.

4. Option pricing model - Binomial approach eam Corp. (Ticker: LC), an education technology company, is considered to be one of the least risky companies in the education sector. Investors trade call options for Learn Corp., whose stock is currently trading at $72.00. Suppose you are interested in buying a call option with a strike price of $90.00 that expires in 6 months. (Assume that you get the option for free!) Based on speculations and probability analysis, you compute and collect the following information for your price analysis of the option: For LC's options, time until expiration (t) is taken as 0.50 year (6 months / 12 months). LC's stock could go up by a factor of 1.70 (u). . LC's stock could deline by a factor of 0.60 (d) At this time, LC's stock price is , and if you exercised the option, your payoff would be Therefore, if the option is out of-the-money, you exercise the option. Calculate the ending stock price of Learn Corp, for both possible outcomes and the payoff in both situations Price Increases Price Decreases Stock price Pru) Stock price P(d) Payoff C Payoff Ca Investors use options and stocks, based on the range in which a stock is likely to go up or go down, to create portfolios that help them generate riskless payoffs. This is called creating a hedge portfolio. Suppose you sell one call option on Leam Corp.'s stock to create a riskless hedged portlelia! your hedge portfolle will have a certain number of sharesAll problems are from Mankiw's Macroeconomics (6" Ed.) unless otherwise noted. 1. (Chap 12, problem 1) Use the open economy IS/LM model to predict what would happen to aggregate income (Y), the exchange rate (e), and the trade balance (NX) under both floating and fixed exchange rates in response to each of the following shocks: a. A fall in consumer confidence about the future induces consumers to spend less and save more. (The MPC falls) b. The introduction of a stylish line of Toyotas makes some consumers prefer foreign cars over domestic cars (NX demand falls) c. The introduction of ATMs reduces the demand for money (L falls) 2. (Chap 12, problem 3) The open economy IS/LM model takes the world interest rate (r) as given. Consider what happens when this world rate changes. a. What might cause world interest rates to rise? b. In the open economy IS/LM model with a floating exchange rate, what happens to aggregate income (Y), the exchange rate (e), and the trade balance (NX) when the world interest rate rises? C. Answer part b again, except now with a fixed exchange rate. 3. (Chap 12, problem 4) Business executives and policymakers are often concerned about the "competitiveness" of American industry (the ability of U.S. industries to sell their goods profitably in world markets). a. How would a change in the exchange rate affect competitiveness? b. Suppose you wanted to make domestic industry more competitive but did not want to alter aggregate income (Y). According to the open economy IS/LM model, what combination of monetary and fiscal policies should you pursue? 4. (Based on Chap 11, problem 3 - with my own extensions) The economy is a described by a closed economy IS/LM model. a. Consumption is C = 200 + 0.75(Y - T) and investment is I = 200 - 25r. G = T = 0. Solve for the IS curve (i.e. an equation for Y in terms of r). b. Money demand is given by L = Y- 100r, the money supply is 1000 and the price level is P. Solve for the LM curve (i.e. an equation for Y in terms of r and P). c. Find the equilibrium interest rate of r and the equilibrium level of income (i.e. solve for where the IS and LM curves cross) d. The LRAS curve is Y* = 975. What is the price level at which output is exactly equal to this? e. Now the money supply increases to 1200. What is the new equilibrium level of income (i.e. solve the IS/LM problem again with M = 1200). f. If prices remain at exactly the level you found in d), what is the new level of income? Does the increase in money supply cause an expansion or contraction in income? g. What would prices have to be so that income is exactly equal to Y* = 975 again?1) If a firm earns normal profit, then it has generated revenues a. equal to the sum of implicit and explicit costs. b. greater than total opportunity costs. c. sufficient to cover explicit costs, but not implicit costs. d. sufficient to cover implicit costs, but not explicit costs. 2) The law of diminishing marginal utility states that a. the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases. b. the more of a particular good one consumes, the greater is the utility received from the consumption of that good. c. the marginal utility gained by consuming equal successive units of a good will increase as the amount consumed increases. d. the more of a particular product one sells, the less utility one receives from selling. 3) The marginal rate of substitution is illustrated by the a. slope of the indifference curve. b. slope of the budget line. c. ratio of the marginal utility of the good on the vertical axis to the marginal utility of the good on the horizontal axis. d. distance between the indifference curves 4) Suppose a consumer is purchasing chocolate tablets and pizzas in quantities such that she is achieving consumer equilibrium. Then the price of chocolate decreases. The consumer will likely her consumption of chocolate and the marginal utility of chocolate will while the total utility from chocolate will a. increase; increase; increase b. increase; decrease; decrease C. increase; decrease; increase d. decrease; increase; increase 5) Assuming only two goods X and Y, if MUy/Px = MUy/Py, then a. the consumer is in equilibrium. b. the consumer cannot be made better off by redirecting his purchases. c. the consumer is deriving the same marginal utility per dollar for all goods. d. all of the above 6) Indifference curves are downward sloping (convex to the origin) curves if a. a person's marginal rate of substitution declines as he or she consumes more o b. a person's marginal rate of substitution increases as he or she consumes more C. the law of diminishing marginal utility holds.Problem 5: A student consumes two goods. books {B} and coffee {C} each month. Her utility function is: mac} = 5 so\" Her montth budget for books and coffee Is $90. A. If books cost $15 and coffee costs $3. What is her optimal consumption bundle per month? {Use the Lagrangian method]. B. Graph her budget line. indifference curve and optimal bundle of books and coffee. E. Find and interpret the value of it. D. Conrm that MRS = MRT: Problem 6: Burger Patch customers see some items as substitutes and others as complements. Given the scenarios below. give the utilitg.f function and derive the demand function. Use income = Y. A. The secret menu has a myriad of loaded fry options. In winter, customers perfeo:::t|1_n,.f substituted between the chili patdt spuds (C) and the loaded shovel [L] in a Hot ratio. assume pc = pL=p. B. A shake {S} is the perfect complement to a Burger Patch burger {B}. In fact. every two burgers are complemented with one shake. C. The price of a BP shake ls $5.90 and 3 Patch Burger is $1913. What Is the income elasticity of demand for shakes atY = $1130? Plot the Engel curve for shakes. Problem 1\": Each week, Marie stocks up on her favorite snacks: dark chocolate {D} and popcorn {P}. Her snack budget is $20hveek. Her consumption the rst week of June was D1 = 5 and P1 = 5. The initial prices of Marie's snacks are on = $1 and FF = During the second week of June. the price of popcom increased to $4. In response to this, Marie decreased her consumption of popcorn in week 2 to P2 = 3 and spent the rest of her budget on chocolate. How much would Maria need to increase her snack budgetto continue to consume the same amount of chocolate and popcorn as in week 1? Illustrate on a graph the total effect, income effect and substitution effectof the price increase in popcorn {no specic values needed}