Is it ever possible for an increase in pollution to make society better off?

Briefly explain, using a

graph like Figure 5.3 on page 154.

Can economic analysis provide a final answer to the question of whether the government should
intervene in markets by imposing price ceilings and price floors? Briefly explain.

A student writes the following: "Increased production leads to a lower price, which in turn
increases demand." Do you agree with his reasoning? Briefly explain.

Both smart-watches and smart-phones use applications, or "apps," which are software that
consumers can download and use to play games, check stock market prices, and read news
stories, among many other activities. Particularly useful apps are called "killer apps." One
industry analyst remarked, "There is no one killer

The following graph shows the market for tickets to a concert that will be held in a local arena
that seats 15,000 people. What is the producer surplus in this market? How does it differ from
the producer surplus in the markets you have studied up to this point?

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According to an article in the Wall Street Journal in 2015, "Apple Inc.'s surging smart-phone
sales in China may have busted a myth: that many Chinese consumers couldn't, or wouldn't, shell
out for an iPhone." The article noted that iPhone sales were growing faster in China than in the
United States, Europe, or other h

Discuss the factors that determine the marginal cost of reducing crime. Discuss the factors that
determine the marginal benefit of reducing crime. Would it be economically efficient to reduce
the amount of crime to zero? Briefly explain.

An editorial in the Economist magazine discusses the fact that in most countries-including the
United States-it is illegal for individuals to buy or sell body parts, such as kidneys. a. Draw a
demand and supply graph for the market for kidneys. Show on your graph the legal maximum
price of zero and indicate the quanti

On a shopping trip, Melanie decided to buy a light blue coat made from woven fabric. A tag on
the coat stated that the price was $79.95. When she brought the coat to the store's sales clerk,
Melanie was told that the coat was on sale, and she would pay 20 percent less than the price on
the tag. After the discount was a

Suppose that the following table shows the quantity supplied of UGG boots at five different
prices in 2016 and 2017: ___________________________ Quantity Supplied
_____________________ (Thousands of pairs of boots) Price _____________ 2016
_____________ 2017 $160 .................... 3,000 .................... 2,00

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Ira Goldman invented the Knee Defender, which keeps the airline seat in front of you from
reclining. He argues that airlines have sold the space between two seats to the person occupying
the seat but also to the person in the seat in front of that seat by allowing the occupant of that seat
to recline it. Assume that Go

Suppose that the government sets a price floor for milk that is above the competitive equilibrium
price and that the government does not purchase any surplus milk. a. Draw a graph showing this
situation. Be sure your graph shows the competitive equilibrium price, the price floor, the
quantity that would be sold in com

According to one observer of the lobster market: After Labor Day, when the vacationers have
gone home, the lobstermen usually have a month or more of good fishing conditions, except for
the occasional hurricane. Use a demand and supply graph to explain whether lobster prices are
likely to be higher or lower during the

If, over time, the demand curve for a product shifts to the right more than the supply curve does,
what will happen to the equilibrium price? What will happen to the equilibrium price if the
supply curve shifts to the right more than the demand curve? For each case, draw a demand and
supply graph to illustrate your ans

A neighbor's barking dog can be both a positive externality and a negative externality. Under
what circumstances would a dog's bark be a positive externality? Under what circumstances
would a dog's bark be a negative externality?

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The demand for watermelons is highest during summer and lowest during winter. Yet
watermelon prices are normally lower in summer than in winter. Use a demand and supply graph
to demonstrate how this is possible. Be sure to carefully label the curves in your graph and to
clearly indicate the equilibrium summer price and

What is a black market? Under what circumstances do black markets arise?

Suppose that the curves in the following graph represent two demand curves for traditional
chicken wings (basket of six) at Buffalo Wild Wings. What would cause a movement from point
A to point B on D1? Name two variables that if their values were to change would cause a
movement from point A to point C.

The following graph shows the market for apples. Assume that the government has imposed a
price floor of $10 per crate. a. How many crates of apples will be sold to consumers after the
price floor has been imposed? b. Will there be a shortage or a surplus of apples? If there is a
shortage or a surplus, how large will
Suppose the federal government decides to impose a sales tax of $1.00 per pizza. Briefly explain
whether you agree with the following statement, made by a representative of the pizza industry:
The pizza industry is very competitive. As a result, pizza sellers will have to pay the whole tax
because they are unable to p

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What is consumer surplus? How does consumer surplus change as the equilibrium price of a
good rises or falls?

In Allentown, Pennsylvania, in the summer of 2014, the average price of a gallon of gasoline
was $3.68-a 22-cent increase from the year before. Many consumers were upset by the increase.
One consumer was quoted in a local newspaper as saying, "It's crazy. The government should
step in." Suppose the government had stepp

Suppose the government imposes a payroll tax of $1 per hour of work and collects the tax from
employers. Use a graph for the market for labor to show the effect of the payroll tax, assuming
the special case of a vertical supply curve of labor. By how much does the new equilibrium wage
that employers pay workers fall?

Years ago, an apple producer argued that the United States should enact a tariff, or a tax, on
imports of bananas. His reasoning was that "the enormous imports of cheap bananas into the
United States tend to curtail the domestic consumption of fresh fruits produced in the United
States." a. Was the apple producer ass

A Wall Street Journal article about a drought in California indicated that one result would be a
smaller tomato crop. Use a demand and supply graph of the tomato market to illustrate the effect
of the drought. Is economic efficiency affected? Briefly explain.

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Proposals have been made to increase government regulation of firms providing childcare
services by, for instance, setting education requirements for childcare workers. Suppose that
these regulations increase the quality of childcare and cause the demand for childcare services to
increase. At the same time, assume that

In the first years following the passage of the Clean Air Act in 1970, air pollution declined
sharply, and there were important health benefits, including a decline in infant mortality.
According to an article in the Economist, however, recently some policymakers "worry that the
EPA is constantly tightening restriction

The following graphs illustrate the markets for two different types of labor. Suppose an identical
minimum wage is imposed in both markets. In which market will the minimum wage have the
largest impact on employment? Why?
An article in the Economist discussing the struggle among airline passengers over reclining seats
offered the following observation: "Given that airlines are unlikely to increase the [distance
between] their seats any time soon, better that all planes come with fixed, non-reclining chairs in
the first place." Would the

What is an externality? Give an example of a positive externality, and give an example of a

negative externality.

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Suppose that the curves in the following graph represent two supply curves for traditional
chicken wings (basket of six) at Buffalo Wild Wings. What would cause a movement from point
A to point B on S1? Name two variables that if their values were to change would cause a
movement from point A to point C.

Historically, the production of many perishable foods, such as dairy products, was highly
seasonal. As the supply of those products fluctuated, prices tended to fluctuate tremendously-
typically by 25 to 50 percent or more- over the course of the year. One effect of mechanical
refrigeration, which was commercialized on

What are transactions costs? When are we likely to see private solutions to the problem of
externalities?

Using the following graph, show the effects on consumer surplus and producer surplus of an
increase in supply from S1 to S2. By how much does economic surplus increase?

According to a New York Times article, the Venezuelan government "imposes strict price
controls that are intended to make a range of foods and other goods more affordable for the poor.
They are often the very products that are the hardest to find." a. Why would imposing price
controls on goods make them hard to find?

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What is the law of supply? What are the main variables that cause a supply curve to shift? Give
an example of each.

When will the private cost of producing a good differ from the social cost? Give an example.
When will the private benefit from consuming a good differ from the social benefit? Give an
example.

Assume that the following graph illustrates the market for a breast cancer-fighting drug, without
which breast cancer patients cannot survive. What is the consumer surplus in this market? How
does it differ from the consumer surplus in the markets you have studied up to this point?
Suppose the current equilibrium price of a quarter-pound hamburger is $5, and 10 million
quarter-pound hamburgers are sold per month. After the federal government imposes a tax of
$0.50 per hamburger, the equilibrium price of hamburgers rises to $5.20 and the equilibrium
quantity falls to 9 million. Illustrate this sit

1. How distorted was the final version of the phrase when compared to the original? 2. What
would the likely consequences be if this were an important business communication? 3. How can
you prevent this kind of communication from happening at work?

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Under what conditions would the Cuban embargo be removed? Who stands to benefit from such
a decision?

a. In what ways do employees, customers and shareholders benefit from the flexible work
environment at Alpine Access? b. Some corporate executives worry that home-based customer
service agents will have too many distractions and too little supervision. Are those valid
concerns? Why or why not? c. What steps would a

Why do some consumers tend to favor price controls while others tend to oppose them?

What is a Pigovian tax? How large should a Pigovian tax be to achieve efficiency?

Free trade agreements, such as the North American Free Trade Agreement and the General
Agreement on Tariffs and Trade (GATT), may reduce trade restrictions within a designated
region, as well as allow increased sales and lower-priced goods. However, much criticism has
also been voiced by consumer, labor, health and env

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a. Describe the traditional model of patient care in health care b. Why would doctors be resistant
to a switch to digital medical records? c. Should hard data be enough to change doctors’
minds? Why or why not? d. As a new hospital administrator, how would you initiate the
discussion of greater physician involveme

Consider your current job or a job you held in the past. How often does your company plan?
How are those plans communicated to employees? How often do you track performance against
that plan?

What is the difference between actively affecting rather than passively accepting the future?

1. Summarize the work styles of the three key players here, and show how the differences
contributed to the apparent communication breakdown. 2. What could David Walker have done
differently to prevent this from happening?
Examine your work e-mails from the last month. How many of them were truly effective in
contributing to your productivity in your job?

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As a manager, would you prefer a relatively large (more than seven subordinates) or small (seven
or fewer subordinates) span of management? Why? What are the implications of your choice?

What factors might prompt an organization to reverse a decision to outsource a business task?

a. Why would Best Buy and Gap Outlet consider such a radical employment policy? b. What are
the potential benefits and drawbacks of a ROWE program? c. Consider your current job (or one
you have held in the past). Would this kind of program work there? Why or why not? d. Do you
think such employment flexibility would

You plan to start a consulting company that will meet the criteria of a truly virtual organization.
You plan to avoid hiring any employees and to work exclusively with independent contractors
around the globe on a project basis. Everyone, including you, will work out of home offices. Use
Internet research to identify t

What criticisms can be made concerning the optimizing approach to decision making?

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Management has often been described as a universal process, meaning that basic management
skills are transferable and applicable to almost any work environment. Do you believe that a
good manager in an insurance company could be equally as effective in a restaurant? Explain
your reasoning.

What are the advantages and disadvantages of a line and staff structure?

Outline the conditions under which individual members of a group tend to conform to group
norms.

Provide four reasons why effective communication is an important management skill.

In the position you hold in your company, what are you responsible for? How much power and
authority do you have to meet that responsibility?

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Research the term skills inventory on the Web. Identify tools, templates and/or vendor
organizations that could be utilized to help your organization implement a comprehensive
employee skills assessment as part of an overall strategic HR plan.
You are a project manager in a large enterprise and have detected considerable political activity.
Can you suggest any antidotes (besides resigning)?

Which should come first, the objectives or the strategy? Why?

The halo effect can come into play for lots of reasons: a pleasant personality, a shared work
history (i.e., you both worked for the same company in the past) or a shared network of business
colleagues. When there is an urgent need to fill the position, other factors can start to come into
play: a local candidate vers

You are offered a promotion with the choice of a three-year posting to an overseas division of
your company or a U.S.-based position with 50 percent international travel. Which position
would you take and why?

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Discuss two approaches to viewing the sources of authority.

A positive view of politics is to ‘use influence as an exchange’. Describe 5 influence

‘currencies’ and give an example of how as an IT project manager you could use each one.
Explain the Fisher and Ury 4 step approach for negotiating with difficult stakeholders. When this
approach fails, it’s important to

Why should a U.S.-based manager be concerned with globalization?

Visit the website of the National Academies (comprised of four organizations: the National
Academy of Sciences, the National Academy of Engineering, the Institute of Medicine and the
National Research Council) at www.nationalacademies.org. A. Describe the history of the
National Academy of Sciences and its expansion i

a. What is Toastmasters International, and how did it start? b. What are the vision and mission of
Toastmasters International? c. Read the “Top 10 Tips for Public Speaking,” and select the
three tips that you found most useful. d. Would you ever consider joining the Toastmasters
program? Why or why not?

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How would an organization make the transition to a virtual structure?

a. Which criteria did you use for ranking the employees? b. What implications does your ranking
have in the area of affirmative action? c. How hard was it to reach a consensus as a group in this
exercise? d. How would you feel if you were ranked in your organization in the same manner?

How does technology affect the structure of an organization?

a. Why are these new collaboration tools “good for innovation and growth”? b. What are
the potential benefits of “unleashing the power of human capital”? c. Is there a downside to
so much openness and self-organization? d. Would blogs, wikis and Twitter work at your
company? Why or why not?

a. Which data were utilized to justify the creation of these rapid response teams? b. Which data
were offered as evidence to question the value of the rapid response teams? c. Are there other
factors that should be considered when making this decision? Or is the data-driven approach
appropriate? d. As a hospital adm

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Under the law of comparative advantage, just because a company can produce a certain good
doesn’t mean that it should. Companies should focus on producing goods that reflect the
most efficient use of the resources available to them.

Divide into groups of four. Divide the four phases of team development — forming, storming,
norming, and performing—between the group. Decide on a project for the team to work on.
Based on that project, develop a plan to minimize the amount of productive time lost in the first
three phases so that the team can st

a. How would you describe the culture of Siemens before Kleinfeld’s appointment as CEO?
b. Kleinfeld’s leadership style was criticized as being “brash” and “American.” Is
that a fair assessment? Why or why not? c. Do you think the decision to “clean house” in
the Siemens’ executive offices was the r

The cost advantage of outsourcing organizational functions to overseas vendors — referred to
as offshoring — is achieved by leveraging the available technology (satellites and thousands of
miles of fiber-optic cable strung across the world’s oceans) combined with lower labor costs
in the vendor country. Failure t

How often do you receive a performance appraisal in your job? Does that appraisal include
performance objectives from the previous appraisal? Do you agree on future performance
objectives? If you don’t, what do you think the reaction would be if you suggested it?

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The less time that a manager devotes to staffing a team and preparing its members to complete
the project to which they are assigned, the more time gets used up in the forming and storming
phases of development. The performing phase is the most productive stage of a team project, but
without adequate training and prepa

Divide into two groups, one taking the Theory X perspective and one taking the Theory Y
perspective, and prepare a response to the following scenario: (available in the text).
a. Why would the use of “exact statistical analysis” reduce creativity? b. Is it appropriate to
expect a researcher to document the potential commercial application and market size of every
breakthrough? c. Would 3M’s Post-it Note have ever been created under a Six Sigma
management process? Why or why not? d.

a. Why would insularity prove fatal to General Motors? b. Alfred Sloan believed that “the job
of a professional manager is not to like people.” How should that perspective affect how
decisions are made in an organization? c. Why would “a dearth of open debate among top
managers” be so damaging to General Moto

1. Why would Fairview want employees to “take a greater role in assessing and using their
benefits”? 2. How important was the initial workplace assessment to the success of the
communication campaign? What do you think would have happened if it had skipped that step of
the process? 3. Which message do you think c

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Have you ever made a decision based purely on “gut instinct”? What prompted you to
make that decision? What was the outcome? Did you tell your boss that it was a gut instinct
decision? If not, why not? Do you think you put the company at risk by acting in that manner?

Why are communication skills so critical to a manager’s success?

a. Why should a country be concerned about getting old before it gets rich? b. What is a
dependency ratio, and why is it significant?

1. How is communication “across divisions and silos” different from communication

“up and down the hierarchy”? 2. Define the term boundaryless corporation. You may want
to do some research on Jack Welch and General Electric here. 3. If human networks “speed
knowledge laterally through companies faster and b

a. What factors led to Sony’s current financial issues? b. Why is Howard K. Stringer’s
appointment as chairman of Sony Corporation significant? c. Why is outsourcing seen as a
critical component of Sony’s revival? d. Do you think Stringer’s strategy will work?
Why or why not?

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The concept of groupthink represents a negative outcome from a highly insular culture. It may
begin with a perceived peer pressure, with no one wanting to speak out against the group, and
descend as far as a perceived infallibility, with a track record of success prompting the group to
think that it has all the answers

A span of five or six subordinates is a rule of thumb at best. How many people report directly to
you? How many people, including you, report directly to your manager?
a. Having just purchased Countrywide Mortgage, why would Bank of America want to take on
another large acquisition at a time of such financial turmoil? b. Why was an all-share deal rather
than an all-cash deal for Merrill Lynch better for Bank of America? c. Did Ken Lewis look out
for the best interests of BoA’s sh

What is your company’s strategy? How is it kept current?

Numerous political tactics are used by corporate executives. List and describe 3 tactics you
would be prepared to use and 3 you would not use.

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When would it be appropriate to “shortcut” the chain of command when seeking approval
for a decision?

Search the Web for a generic template that would guide your organization in the development of
a policy for the delegation of authority. 1. What types of templates are out there? 2. To which
industries do most of these templates apply? 3. How applicable are they to general management
policies? 4. Based on these tem

Lines on an organization chart can be solid, to reflect a direct reporting relationship, or dotted, to
reflect an indirect reporting relationship to another manager. For example, in the human resource
department of a regionally structured organization, you might report directly to your office or
store manager but also

The recruitment process should not be initiated with an employee resignation or termination. An
effective company should always be looking for strong candidates, both internally and
externally. A comprehensive training and development program, combined with a detailed
succession plan, should help you identify and nurt

Why is it necessary to plan? How is planning conducted?

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It can be said that complex IS projects commonly fail because organizations not only fail to
learn, but also learn to fail. Explain how this happens. What should an organization do to avoid
this problem?

If strategic planning is an activity that originates from senior management, why should a front-
line or middle manager be concerned with strategic planning?

Using multiple sources, research the Centers for Disease Control (CDC) response to the swine
flu or H1N1 flu virus. From a management perspective, answer the following questions: 1. Did
the CDC have a plan in place for an event such as this? 2. Should a business have a plan for an
event such as this? Why? 3. Given t
a. Summarize the arguments for and against the use of a clinical decision support system. b.
Should the doctor be required to disclose the use of a CDSS in making a health care decision?
Why or why not? c. How should the use of a CDSS be presented to a patient? d. Who do you
think should be held responsible if a di

a. Assembly lines are commonly found in the automotive industry. Provide examples of two
other industries that use the same manufacturing process. b. What kind of face time does your
boss expect at your current job (or a job you have held in the past)? c. Have you ever felt
pressure to put in more face time to keep u

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Suppose you have been assigned the simple task of stuffing 1,000 two-page flyers (8½″ ×
11″) into a normal-size envelope (4″ × 9½″). The envelopes come in boxes of 250,
and the flyer pages are in stacks of 1,000 each. The flyers must first be stapled together, folded,
and then placed into the envelopes.

Does your company have a blog on its website? How about a Facebook page? Do you use
Twitter? If these tools form a part of your company’s communication strategy, research and
document how each one contributes to your overall strategic plan. If your company doesn’t
use any of these tools, write a proposal showing yo

As part of its long-term growth plan, your organization is contemplating global expansion.
Divide into teams of two or three, and research the business culture of a country of your choice.
Pay particular attention to its economy, political system, language, cultural issues, religious
practices and any other information

Maintaining a global standard of ethical business practices is much easier said than done. The
norms of ethical behavior continue to vary widely around the world. Practices such as bribes and
“finder’s fees” are common in some countries, even though they are considered illegal
under the Foreign Corrupt Practices

Stop and consider your body language right now—your posture and your facial expression.
What non-verbal messages are you sending?

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Under what circumstances would a company have a defensive strategy?

a. If the dealer network was indeed a relic from five decades ago, why wait until now to fix it? b.
What is meant by the statement that “the car business is now a commodity business”? c.
How will these actions affect relations with the surviving dealerships? d. Could this restructuring
have been handled differe
a. What is the stated purpose of the organizational communication division? b. Follow the
resources link, and explain what a “community of practice” is. c. Provide an example of a
community of practice in a business environment. d. How would a business manager make use
of the resources offered by this associatio

Divide the class into two or three teams. Each team should select a company whose product is
being sold in a highly competitive marketplace. On the assumption that the product has not been
selling well against its competition, despite clear design and functionality advantages, it has been
decided to reorganize the sale

a. If telecommuting equates to hard real estate cost savings, why don’t all companies do it? b.
Do you think companies would be as supportive if there weren’t a real estate cost savings?
Why or why not? c. What problems does a home-based workforce present for a manager? d.
Assume that your job would allow you t

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How is your company organized? Would you say there is evidence of synergism? Why?

a. What is the argument against a single provider system? b. Is health care reform just a business
management problem? c. Assuming a hospital system is convinced of the cost savings of an HIT
software package, how would you propose that it implements the technology? d. Why would the
subject of health care generate s

Discuss the advantages and disadvantages of virtual teams.

Visit the website of the Telework Coalition at www.telcoa.org. What is the mission and vision of
TelCoa?

a. Why would Cisco be referred to as “the gatekeeper of the Internet”? b. What is the
significance of networking gear becoming “a commodity”? c. How does Cisco define a
“market adjacency”? d. Why would a collaborative managerial model cause such a large
departure of Cisco’s leadership?

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a. What evidence of groupthink at NASA is offered in this article? b. Why would managers be
unwilling to listen to engineers? c. Explain the phrase “adherence to political pressure.” d.
What lessons should NASA managers seek to learn from these two tragic events?

What are the benefits of understanding how management theory and practice has changed over
the past 100 years? How could you use this information as a manager?

Which is more valuable to a national organization with regional offices — flexibility to respond
to local market issues or standardized controls based at headquarters? Why?
a. Why would a new “outside” perspective help Andrea Jung manage the turnaround of
Avon? b. Is it always better for managers to make decisions based on fact rather than intuition?
c. What are the potential advantages for an organization becoming more data-centric? d. Do you
think that Andrea Jung has managed a s

Document the purpose of either Alliance for Democracy or the Fair Trade Network. Review the
website of Transparency International (TI) at www.transparency.org, and answer the following
questions: a. When was TI founded, and what does the organization do? b. How does TI define
corruption? c. Explain the differences b

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Should a manager make planning decisions on the basis of gut instinct? Why or why not?

Research an example of an ad valorem tariff, and defend the reason for its implementation.

Trade embargoes are politically driven. The Cuban embargo originated during the Cold War as a
result of Fidel Castro’s willingness to work with the communist Soviet Union. Over time, the
emphasis of that embargo has changed. In 1992, the law prohibiting trade with Cuba was
renamed the Cuban Democracy Act to reflect t

a. CEO Jim Goodnight is adamant that remaining privately held rather than going public gives
SAS a strategic advantage. In what way? b. SAS’s employee costs are obviously at the top
end of the range for technology companies based on such an impressive benefits package. How
can the company justify this expense in suc

“The expectations of shareholders for continued growth make the risks of doing business in
politically unstable countries a necessary cost of operating effectively.” Do you agree with this
statement? Why or why not?

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Visit the website for the American Management Association (www.amanet.org). Find a course
on supervisory skills, and summarize the content of that course: What does the training include?
What will it do for the skills of the course participants?

Consider your current job or a job you held in the past. What is the company’s mission
statement? How easy is it to find? Does it reflect the business that you are in, or is it a generic
statement?

Describe the differences between objectives, policies, procedures and rules.

The Standish Group published their Extreme Chaos report and quoted a high rate of IT project
failure. How did they define failure? Do you agree with their definition? Is on budget a reliable
metric given the tendency of IT Managers to overstate budgets? Does an experienced PM
increase project success?

Which is better, a structured interview or an unstructured one? Why?

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Consider an enterprise strategic plan. Should they seek to use IT to obtain a competitive
advantage? Consider the views of Nicholas Carr, the response from Michael Schrage and the
research of Bhatt and Grover.

Do you think management can be learned through books and study or only through experience?

Consider your own personality, skills and work experience. What makes you (or will make you)
a good manager?

An organization’s board of directors carries the responsibility of corporate governance —

that is, oversight on the leadership team to ensure that the interests of the organization’s
stakeholders (investors, customers, employees and vendor partners) are represented in all
business decisions. The recent failure of

Briefly explain whether you agree with the following statement: "The reluctance of healthy
young adults to buy health insurance creates a moral hazard problem for insurance companies."

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On most days, the price of a rose is $1, and 8,000 roses are purchased. On Valentine's Day, the
price of a rose jumps to $2, and 30,000 roses are purchased. a. Draw a demand and supply graph
that shows why the price jumps. b. Based on this information, what do we know about the price
elasticity of demand for roses? W

The late Nobel Laureate Robert Fogel of the University of Chicago argued, "Expenditures on
health care are driven by demand, which is spurred by income and by advances in biotechnology
that make health interventions increasingly effective." a. If Fogel was correct, should
policymakers be concerned by projected increas

What do you see as the most challenging part of being a manager? Explain your reasoning

Your company is moving to a new state to take advantage of growth opportunities and attractive
tax incentives. You have been asked to work with HR to research the advantages and
disadvantages of offering employee relocation packages. You must determine which options are
available to offer to key personnel. Use Web-base

Briefly describe changes over time in the health of the average person in the United States.

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The entrance fee into Yellowstone National Park in northwestern Wyoming is "$50 for a private,
noncommercial vehicle; $40 for a motorcycle; or $20 for each visitor 16 and older entering by
foot, bike, ski, etc." The fee provides the visitor with a seven-day entrance permit into
Yellowstone and nearby Grand Teton Nation

The demand for agricultural products is inelastic, and the income elasticity of demand for
agricultural products is low. How do these facts help explain the decline of the family farm in the
United States?

Writing in the New York Times, Michael Lewis argued, "Good new technologies are a bit like
good new roads: Their social benefits its far exceed what any one person or company can get
paid for creating them." Does this observation justify the government subsidizing the production
of new technologies? If so, how might th

According to a news story about the bus system in the Lehigh Valley in Pennsylvania, Ridership
fell 14 percent in 2012 after a 33 percent increase in bus fares. Based on this information, is the
demand for bus trips price elastic or price inelastic? Explain your answer in terms of the five
determinants of price elastic

How can improvements in health increase a country's total income? How can increases in a
country's total income improve health?

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Rank the following four goods from lowest income elasticity of demand to highest income
elasticity of demand. Briefly explain your ranking. a. Bread b. Pepsi c. Mercedes-Benz
automobiles d. Laptop computers?

What is the lemons problem? Is there a lemons problem in the market for health insurance?
Briefly explain.

Michael Kinsley, a political columnist, observes: "The idea of insurance is to share the risks of
bad outcomes." In what sense does insurance involve sharing risks? How does the problem of
adverse selection affect the ability of insurance to provide the benefit of sharing risk?

Corruption has been a significant problem in Iraq. Opening and running a business in Iraq
usually requires paying multiple bribes to government officials. We can think of there being a
demand and supply for bribes, with the curves having the usual shapes: The demand for bribes
will be downward sloping because the small

What is free riding? How is free riding related to the need for public goods?

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Write the formula for the price elasticity of supply. If an increase of 10 percent in the price of
frozen pizzas results in a 9 percent increase in the quantity of frozen pizzas supplied, what is the
price elasticity of supply for frozen pizzas? Is the supply of pizzas elastic or inelastic?

In the following graph, the demand for hot dog buns has shifted to the right because the price of
hot dogs has fallen from $2.20 to $1.80 per package. Calculate the cross-price elasticity of
demand between hot dogs and hot dog buns.

An article in the Economist on evaluating health outcomes is subtitled "To Improve Health Care,
Governments Need to Use the Right Data." Among the data not currently being collected in most
countries, the article mentions "how soon after surgery patients get back to work." Why don't
governments currently collect such d

The merry-go-round in Ross Park, a public park in Binghamton, New York, was first installed in
1920 and has been periodically refurbished by the city in the years since. There is no entry fee to
visit the park or to ride the merry-go-round. Is the merry-go-round a public good? Briefly
explain.

Put each of the following goods or services into one of the categories shown in Figure 5.7 on
page 166. That is, categorize them as private goods, public goods, quasi-public goods, or
common resources. Figure 5.7: Four Categories of Goods a. A television broadcast of baseball's
World Series b. Home mail delivery c.

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Consider firms selling three goods: One firm sells a good with an income elasticity of demand
less than zero, one firm sells a good with an income elasticity of demand greater than zero but
less than one, and one firm sells a good with an income elasticity of demand greater than one. In
a recession when incomes fall, w

In 1916, the Ford Motor Company sold 500,000 Model T Fords at a price of $440 each. Henry
Ford believed that he could increase sales of the Model T by 1,000 cars for every dollar he cut
the price. Use this information to calculate the price elasticity of demand for Model T Fords. Use
the midpoint formula in your calcul

Explain whether you agree with the following statement: Providing health care is obviously a
public good. If one person becomes ill and doesn't receive treatment, that person may infect
many other people. If many people become ill, then the output of the economy will be negatively
affected. Therefore, providing health

Briefly compare the health care systems in Canada, Japan, and the United Kingdom with the
health care system in the United States.

What are the asymmetric information problems in the market for health insurance?
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How do health insurance companies deal with asymmetric information problems?

According to a news story, during the summer of 2015, gasoline prices were expected to decline
by 32 percent, while "U.S. drivers are expected to consume slightly more gasoline, a 1.6 percent
increase, during the summer." Given this information, calculate the price elasticity of demand for
gasoline. Is demand price ela

According to a company news release, during the third quarter of 2014, the Coca-Cola Company
sold 1 percent less soda in North America while earning more revenue. a. Did Coke increase or
decrease its soda prices during this period? Briefly explain. b. Based on this information, is the
demand for the soda Coke sells p

To legally operate a taxi in New York City, a driver must have a medallion issued by the New
York City Taxi and Limousine Commission, an agency of the city's government. In 2015 the
number of medallions was 13,605. In recent years the taxi industry in New York and other large
cities has encountered competition from co

Former Massachusetts Governor Deval Patrick once proposed that criminals would have to pay a
"safety fee" to the government. The size of the fee would be based on the seriousness of the
crime (that is, the fee would be larger for more serious crimes). a. Is there an economically
efficient amount of crime? Briefly expl

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What is an externality? Are there externalities in the market for health care? Briefly explain.

According to an article on the Boston Globe's Web site, during the last three months of 2014,
gasoline prices dropped 33 percent at the same time as ridership on mass transit, such as subways
and trains, increased by 1 percent. According to a spokesperson for the American Public
Transportation Association, a group tha

Suppose that the following table gives data on the price of rye and the number of bushels of rye
sold in 2015 and 2016: Year ___________ Price (dollars per bushel) __________ Quantity
(bushels) 2015 ........................... $3.00 ................................... 8 million 2016 ...........................
2.00

Briefly explain whether the demand for each of the following products is likely to be elastic or
inelastic: a. Milk b. Frozen cheese pizza c. Cola d. Prescription medicine?

Define the cross-price elasticity of demand. What does it mean if the cross-price elasticity of
demand is negative? What does it mean if the cross-price elasticity of demand is positive?

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Nancy Folbre, an economist at the University of Massachusetts, Amherst, argued, "We must take
responsibility for governing the commons-not just the quaint old-fashioned village green, but
things that cannot easily be privatized-[such as] clean air." Do you agree that clean air is like a
common pasture in England in the

Two health care analysts argue that in the United States, "we have arrived at a moment where we
are making little headway in defeating various kinds of diseases. Instead, our main achievements
today consist of devising ways to marginally extend the lives of the very sick." a. Should
"marginally extending the lives of

Define rivalry and excludability and use these terms to discuss the four categories of goods?

An article in the Economist argues that the real problem with health insurance is: The healthy
people who decide not to buy insurance out of rational self-interest, and who turn out to be right.
By not buying insurance, those (largely young) healthy people will be failing to subsidize the
people insurance is meant for:

You own a hot dog stand that you set up outside the student union every day at lunchtime.
Currently, you are selling hot dogs for a price of $3 each, and you sell 30 hot dogs a day. You are
considering cutting the price to $2. The graph on the next page shows two possible increases in
the quantity sold as a result of y

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Vaccines don't provide immunity from disease for some people. But if most people get
vaccinated against a disease, such as measles, then the population achieves "herd immunity,"
which means that there are so few cases of the disease that even people for whom vaccinations
are ineffective are unlikely to contract the dis

Review the concept of economic efficiency from Chapter 4, before answering the following
question: Will there be a greater loss of economic efficiency from a price ceiling when demand is
elastic or inelastic? Illustrate your answer with a demand and supply graph.

As readers of Herman Melville's 1851 novel Moby Dick know, at one time oil made from whale
blubber was an important source of energy that was widely used by households and firms in oil
lamps. Other sources of energy supplanted whale oil in the second half of the nineteenth century,
and today many Americans consider wha

The widespread realization in the late nineteenth century that bacteria causes diseases helped
lead to a public health movement. This movement eventually brought sewers, clean drinking
water, and garbage removal to all U.S. cities. What effect did the public health movement in the
United States in the late nineteenth a
In what sense have improvements in the health of the average American caused the U.S.
production possibilities frontier to shift out? Panel (a) in Figure 7.1 on page 220 indicates that
life expectancy in the United States declined in 1918. What effect did this decline in life
expectancy likely have on the U.S. producti

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Suppose you see a 2013 Volkswagen Jetta GLS Turbo Sedan advertised in the campus
newspaper for $9,000. If you knew the car was reliable, you would be willing to pay $10,000 for
it. If you knew the car was unreliable, you would be willing to pay $5,000 for it. Under what
circumstances should you buy the car?

When lettuce prices doubled, from about $1.50 per head to about $3.00, the reaction of one
consumer was quoted in a newspaper article: "I will not buy [lettuce] when it's $3 a head," she
said, adding that other green vegetables can fill in for lettuce. "If bread were $5 a loaf we'd still
have to buy it. But lettuce is

Use the following graph of the market for basketball tickets at State University to answer the
questions. a. What is the price elasticity of supply? b. Suppose the basketball team at State
University goes undefeated in the first half of the season, and the demand for basketball tickets
increases. Show the effects of

An article in the Los Angeles Times describes a healthy 23-year-old woman who has decided not
to buy health insurance as "exactly the type of person insurance plans, states and the federal
government are counting on to make health reform work." Why are healthy 23-year-olds needed
to make health reform work?

A column in the New York Times notes that many economists "support Pigovian taxes because,
in some sense, we are already paying them." In what sense might consumers in a market be
"paying" a Pigovian tax even if the government hasn't imposed an explicit tax?

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Economists' estimates of price elasticities can differ somewhat, depending on the time period and
on the markets in which the price and quantity data used in the estimates were gathered. An
article in the New York Times contained the following statement from the Centers for Disease
Control and Prevention: "A 10 percent

An article in the Economist notes that about 10 percent of people in the United States work in
health care and that "these workers have the crucial job of making American health care more
efficient, probably the country's top domestic challenge." a. How might we measure the
efficiency of a country's health care sector

What is the Patient Protection and Affordable Care Act (ACA)? Briefly list its major provisions.
Between 1830 and 1890, the height of the average adult male in the United States declined by
about 2 inches at the same time that average incomes more than tripled. Did the standard of
living in the United States increase during this period? What insight into the health and well-
being of the U.S. population might the d

A sportswriter writing about the Cleveland Indians baseball team made the following
observation: "If the Indians suddenly slashed all tickets to $10, would their attendance actually
increase? Not all that much and revenue would drop dramatically." What is the sportswriter
assuming about the price elasticity of demand f

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What are the main sources of health insurance in the United States?

Barney subscribes to the NFL Sunday Ticket, a program package offered by DirecTV that allows
Barney to watch every regular season NFL game played on Sundays. The subscription price for
the Sunday Ticket is in addition to the fee paid for Barney's DirecTV package. Barney invites
two friends who work with him to watch fo

In an opinion column about improving the performance of doctors in the United States, a health
economist observed that "it's very hard to measure the things we really care about, like quality of
life and improvements in functioning." Why is it difficult to measure outcomes like these? Does
the economist's observation h

Like many other cities, Denver experienced a sharp decline in construction of new homes in the
years following 2006. Many carpenters, roofers, and other skilled workers left the area or found
jobs in other industries. In addition, builders stopped buying and preparing home lots for
construction. According to an article

Under the Social Security retirement system, the federal government collects a tax on most
people's wage income and makes payments to retired workers above a certain age who are
covered by the system. (The age to receive full Social Security retirement benefits varies based
on the year the worker was born.) The Social

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Define the following terms: a. Health insurance b. Fee-for-service c. Single-payer health care
system d. Socialized medicine

Globe Life Park in Arlington is the home ball park of the Texas Rangers, a Major League
Baseball team. The seating capacity of Globe Life Park is 49,170. Among the home games
played by the Rangers in 2015 were these four: Date ____________ Opponent __________
Attendance April 10 ............. Houston Astros .........
Draw a graph of a perfectly inelastic demand curve. Think of a product that would have a
perfectly inelastic demand curve. Explain why demand for this product would be perfectly
inelastic.

Briefly discuss the most important differences between the market for health care and the
markets for other goods and services.

Why do most economists prefer tradable emission allowances to the command-and-control

approach to pollution?

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Coca-Cola has been focusing on selling more 7.5-ounce cans in displays near supermarket
checkout lines. Previously, Coke had relied more heavily on 20-ounce bottles displayed in the
beverage sections of supermarkets. An article in the Wall Street Journal noted that, "The smaller
7.5 ounce mini-cans are typically price

Amazon allows authors who self-publish their e-books to set the prices they charge. One author
was quoted as saying: "I am able to drop prices and, by sheer volume of sales, increase my
income." Was the demand for her books price elastic or price inelastic? Briefly explain.

A news story notes that some features of the U.S. health care system contribute "to the high cost
of medical care by encouraging hospitals and doctors to perform tests and procedures regardless
of the value to a patient." What features is the article referring to? Why would hospitals and
doctors perform tests that may

The publisher of a magazine gives his staff the following information: Current
price ........................ $2.00 per issue Current sales ........... 150,000 copies per month Current total
costs ........... $450,000 per month The publisher tells the staff, "Our costs are currently $150,000
more than our revenues

Suppose that the long-run price elasticity of demand for gasoline is 20.55. Assume that the price
of gasoline is currently $3.00 per gallon, the equilibrium quantity of gasoline is 140 billion
gallons per year, and the federal government decides to increase the excise tax on gasoline by
$1.00 per gallon. Suppose that i

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According to an article in the Economist about the health care system in the United Kingdom: A
defining principle of the National Health Service is that it is free at the point of delivery. What
does "free at the point of delivery" mean? Is health care actually free to residents of the United
Kingdom? Briefly explain

An opinion column in the Wall Street Journal observes about "defensive medicine" that "many
physicians maintain that fear of lawsuits significantly affects the practice of medicine, and that
reform of the malpractice system is crucial for containing costs." Is there another economic
explanation-apart from fear of lawsu

Define the following terms: a. Asymmetric information b. Adverse selection c. Moral hazard d.
Principal-agent problem

Jeff and James have different opinions regarding the amount the U.S. government should spend
on national defense. Jeff believes that more should be spent in order to ensure that the country's
enemies will not challenge the United States militarily. James believes that a lot of defense
spending is wasted on overpriced m

The elasticities reported in this Making the Connection were calculated using price data for many
brands of beer. Why might price elasticity estimates be less reliable if they use data for only one
brand of beer?

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Eric Finklestein, an economist at Duke University, has argued that the external costs from being
obese are larger than the external costs from smoking because "the mortality effect for obesity is
much smaller than it is for smoking and the costs start much earlier in life." a. What does
Finklestein mean by the "mortal

Suppose consumers pay less than the true cost of medical services because a third party, such as
an insurance company or the government, pays most of the bill. In the following graph, D1
represents the demand for medical services if consumers paid the full price of medical services;
D2 represents the demand for medical

Briefly explain whether you agree with Manager 2's reasoning: Manager 1: "The only way we
can increase the revenue we receive from selling our frozen pizzas is by cutting the price."
Manager 2: "Cutting the price of a product never increases the amount of revenue you receive. If
we want to increase revenue, we have t

The Delaware River Joint Toll Bridge Commission increased the toll from $0.50 to $1.00 on the
bridges on Route 22 and Interstate 78 from New Jersey to Pennsylvania. Use the information in
the following table to answer the questions. (Assume that besides the toll change, nothing
occurred during these months that would a

If a 10 percent increase in the price of Cheerios causes a 25 percent reduction in the number of
boxes of Cheerios demanded, what is the price elasticity of demand for Cheerios? Is the demand
for Cheerios elastic or inelastic?

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The price elasticity of demand for crude oil in the United States has been estimated to be 20.06
in the short run and 20.45 in the long run. Why would the demand for crude oil be more price
elastic in the long run than in the short run?

What is the midpoint formula for calculating price elasticity of demand? How else can you
calculate the price elasticity of demand? What is the advantage of using the midpoint formula?

What is the main determinant of the price elasticity of supply?

A column in the New York Times has the headline, "Should We Tax People for Being
Annoying?" a. Do annoying people cause a negative externality? Should they be taxed? Do
crying babies on a bus or plane cause a negative externality? Should the babies (or their parents)
be taxed? b. Do people who plant flowers and other

Write the formula for the price elasticity of demand. Why isn't elasticity just measured by the
slope of the demand curve?

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Some coal is mined by private companies on land owned by the federal government. Two
economists writing in an opinion column argue, "The federal government should also take into
account the economic consequences of burning coal when pricing this fuel. The price for
taxpayer owned coal should reflect, in some measure, t

The graph on the next page illustrates the situation in the dry cleaning market, assuming that the
marginal social cost of the pollution increases as the quantity of items cleaned per week
increases. The graph includes two demand curves: one for a smaller city, DS, and the other for a
larger city, DL. a. Explain why t

Use the following graph for Yolanda's Frozen Yogurt Stand to answer the questions on the next
page. a. Use the midpoint formula to calculate the price elasticity of demand for D1 between
point A and point C and the price elasticity of demand for D2 between point A and point B.
Which demand curve is more elastic, D1 or

Suppose that Jill and Joe are the only two people in the small town of Andover. Andover has
land available to build a park of no more than 9 acres. Jill and Joe's demand schedules for the
park are as follows: Joe Price per Acre ___________ Number of Acres
$10 ..................................... 0 9 ..............

What does it mean for a producer or consumer to internalize an externality? What would cause a
producer or consumer to internalize an externality?

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A column in the Wall Street Journal observes, "Independent websites like Edmunds.com,
AutoTrader.com and Kelley Blue Book publish detailed pricing information [on automobiles] for
consumers and do so for free. Consumers want such information and businesses see opportunity
in providing it, even for free, in order to att

While teaching the concepts of asymmetric information, a professor asked his students for
examples of adverse selection or moral hazard in marriage. One of the students, who happened to
be married, replied: "Your spouse doesn't bring you flowers anymore!" Would the student's reply
be an example of adverse selection or

An article in the Wall Street Journal about the financial problems of the New York Metropolitan
Opera contained the observation that "a ticket-price increase in 2012 backfired." a. What does
the author mean that the increase in ticket prices to the opera "backfired"? b. Based on this
information, is it likely that de

What is meant by the phrase "health outcome"? How do health outcomes in the United States
compare with those of other high-income countries? What problems arise in attempting to
compare health outcomes across countries?

The head of the United Kumquat Growers Association makes the following statement: The
federal government is considering implementing a price floor in the market for kumquats. The
government will not be able to buy any surplus kumquats produced at the price floor or to pay us
any other subsidy. Because the demand for k

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Many antibiotics are no longer effective in eliminating infections because bacteria have evolved
to become resistant to them. Some bacteria are now resistant to all but one or two existing
antibiotics. In 2015, the Obama administration proposed subsidizing research aimed at
developing new antibiotics. a. Are there ext

According to a study by the U.S. Centers for Disease Control and Prevention, the price elasticity
of demand for cigarettes is 20.25. Americans purchase about 360 billion cigarettes each year. a.
If the federal tax on cigarettes were increased enough to cause a 50 percent increase in the price
of cigarettes, what would

In the fall of 2006, Pace University in New York raised its annual tuition from $24,751 to
$29,454. Freshman enrollment declined from 1,469 in the fall of 2005 to 1,131 in the fall of
2006. Assuming that the demand curve for places in the freshman class at Pace did not shift
between 2005 and 2006, calculate the price e

Suppose that instead of being highly inelastic, the demand for oil is highly elastic. a. Given the
situation illustrated by the first graph in the Making the Connection on page 203, would the
resulting price change be larger, smaller, or the same as the actual price change shown in the
graph? Briefly explain. b. Give

An economist discussing the Obama administration's Clean Power Plan argued, "The best
solutions would involve replacing EPA-centered regulation with better-suited tools, including a
carbon tax." a. Why might implementing a carbon tax be a better approach to reducing carbon
dioxide emissions than an approach that relie

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Employees in most circumstances do not pay taxes on the value of the health insurance provided
by their employers. If employees were taxed on the value of the employer-provided health
insurance, what would you expect to happen to the overall compensation employers pay
employees? To the value of health insurance provide

On January 2, 2015, Shine Lights purchased showroom fixtures for $18,000 cash, expecting the
fixtures to remain in service for five years. Shine Lights has depreciated the fixtures on a
straight-line basis, with zero residual value. On March 31, 2016, Shine Lights sold the fixtures
for $5,000 cash. Record both the depr

What are the accounts involved in recording the sale of merchandise on credit?

Gleaner Advertising, Inc.'s trial balance on September 30, 2015, shows the following: Gleaner
completed the following transactions in October: Oct 2 Paid three months rent for $1,200/month.
3 Signed a contract for $1,800/month for four months with a local radio station for radio ads. 10
Sold 2,000 common shares for

The June 30, 2015, adjusted trial balance of Energized Espresso, Inc. is shown next.
Requirements 1. Prepare the June closing entries for Energized Espresso, Inc. 2. Calculate the
ending balance in retained earnings. 3. Prepare a post-closing trial balance.

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Why does the time period in which revenue is recognized matter?

On July 1, 2015, Yama Inc.'s ledger shows its capital assets at $144,000 (at cost) and
accumulated depreciation of $55,000. When the capital assets were purchased, Yama estimated
that their useful life would be seven years. On October 1, 2015, Yama paid $26,000 for
additional investment on the capital assets, and as a

Meo Consulting, Inc. completed the following transactions during February 2015, its first month
of operations: Feb 2 Sold 6,500 shares for $65,000 to DaPing Meo to start the consulting
practice. 3 Paid monthly office rent, $800. 6 Paid cash for a new computer, $1,900. 8 Purchased
office furniture on account, $2,500
In a period of rising prices, which cost-flow assumption would produce the highest net income?
Why?

The following information is provided for Interlink Industries Inc. for the year 2015 along with
industry averages: Net sales for 2015 amounted to $150,000 and net income was $50,000.
Requirements 1. Calculate the assets turnover ratio and the long-term assets turnover ratio. 2.
Calculate return on assets and retur

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The Buffalo Insurance Agency received the following notes during 2015: Requirements 1.
Identifying each note by number, compute interest using a 360-day year, and determine the due
date and maturity value of each note. 2. Journalize a single adjusting entry on October 31, 2015,
to record accrued interest revenue on

Hamilton Furniture doesn't expect prices to change dramatically and wants to use a method that
averages price changes. Which inventory method would best meet Hamilton Furniture's goal?
What if Hamilton Furniture wanted to expense out the older purchases of goods instead? Which
inventory method would best meet that nee

Anthony's Consulting, Inc. started business in 2015 with total assets of $32,000 and total
liabilities of $14,000. At the end of 2015, Anthony's total assets were $42,000 and total liabilities
were $18,500. After analyzing the data, answer the following questions: 1. What was the amount
of the increase or decrease in

Under which method, percentage of sales or aging, would the balance in Allowance for Doubtful
Accounts just before the adjusting entry affect the amount of the adjusting entry? Why?

If a machine that cost $10,000 was estimated to have a salvage value of zero after a useful life of
10 years and was sold for $4,500 after it had been owned for 6 complete years, what would be
the amount of gain or loss recognized on the sale?

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At the end of the current year, Cuppa Joes' Inventory account balance was $12,600. A physical
count of the inventory revealed that inventory on hand totalled $12,200. What amount should
Cuppa Joes report on its statement of financial position?

What accounts will appear on the financial statements of a merchandiser that will not appear on
those of a service-oriented company?

The September 30, 2015, adjusted trial balance of Java Jolt, Inc. is shown next. Requirements 1.
Prepare the September closing entries for Java Jolt, Inc. 2. Calculate the ending balance in
retained earnings. 3. Prepare a post-closing trial balance.
Smile Maids, Inc.'s trial balance on February 28, 2015, shows the following: Smile Maids, Inc.
completed the following transactions in March: Mar 2 Signed a contract worth $1,200/month for
a year to provide cleaning service to an office building. 3 Paid one third of amount owing to the
suppliers. 4 Paid four months

After closing its accounts at October 31, 2015, Simmons Realty, Inc. had the following account
balances: Prepare Simmons Realty's post-closing trial balance at October 31, 2015. List accounts
in proper order.

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The following transactions occurred during April 2015 for Angelo's Garden Centre, Inc.: Apr 3
Purchased $3,500 of goods on account, terms 2/10, n/30, FOB shipping point. 6 Returned $400
of defective merchandise purchased on April 3. 8 Paid freight charges of $110 for delivery of
goods purchased on April 3. 11 Sold

On March 31, 2015, Orbit Airways purchased a used Boeing aircraft at a cost of $45 million.
Orbit Airways expects to fly the plane for five years and to have a residual value of $5 million.
Compute Orbit Airways' depreciation on the plane for the year ended December 31, 2015, using
the straight-line method.

McDonald Consulting, Inc. completed the following transactions during December 2015, its first
month of operations: Dec 2 Sold $10,000 of shares to Dan McDonald to start the consulting
practice. 3 Paid monthly office rent, $800. 6 Paid cash for a new computer, $1,600. 8 Purchased
office furniture on account, $2,100

On October 1, 2015, Alexander Corp. bought furniture for its new office for $20,000. (Furniture
falls within class 8-CCA rate 20%). The residual value of the furniture is $2,000, and it is
expected to remain in use for five years. The company uses the straight-line depreciation method.
Requirements 1. Calculate the d

Provincial Manufacturing incurred the following costs in acquiring land, making land
improvements, and constructing and furnishing a new building: Provincial Manufacturing
depreciates buildings over 30 years, land improvements over 20 years, and furniture over 8
years, all on a straight-line basis with zero residual v

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The account balances for the year ended December 31, 2015, for Williams Industries are listed
next: Requirements 1. Prepare Williams' Industries' multi-step income statement. 2. Prepare
Williams' Industries' statement of retained earnings. 3. Prepare Williams' Industries' classified
statement of financial position
The comparative financial statements of Bien Taco Restaurants for 2015, 2014, and 2013 include
the following selected data: Requirements 1. Compute these ratios for 2015 and 2014: a. Quick
ratio. b. Accounts receivable turnover. Assume all sales are credit sales. 2. Write a memo
explaining to the company owner whi

Keene Industries uses the allowance method to account for bad debts. Record the following
transactions that occurred during the year:

Teddy Sargent opened an accounting firm on May 1, 2015. During the month of May the
business completed the following transactions: May 1 The business sold $80,000 of shares to
open the firm, Sargent & Associates, Inc. 3 Purchased supplies, $500, and furniture, $1,200, on
account. 5 Performed accounting service for a

The following transactions occurred during March 2015 from KopyKat, Inc.'s operations:
Requirements 1. For each T-account, calculate the missing amount. 2. Explain transactions (1) to
(4), which resulted in the entries in the T-accounts. 3. Prepare the trial balance for KopyKat, Inc.
at the end of March.

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What is the primary way in which corporations differ from proprietorships and partnerships?
What are some of the factors that might affect a person's decision about the form of organization
that would be best in a given situation?

At the end of 2015, Zeman, Corp. had total assets of $25 million and total liabilities of $13
million. Included in the assets were property, plant, and equipment with a cost of $9 million and
accumulated depreciation of $3 million. During 2015, Zeman, Corp. earned total revenues of $20
million and had total expenses of

Distinguish between an event and a transaction. Are all transactions events? Are all events
transactions? Why or why not? What are the implications of your answers with respect to journal
entries?

Maple maintains a petty cash fund of $250. On April 30, the fund holds $19 cash, petty cash
tickets for office supplies, $185, and delivery expense, $40. Requirements 1. Make the journal
entry to replenish the petty cash fund. 2. Maple decided to increase the petty cash fund by $120.
Prepare the journal entry.

On January 3, 2015, Jose Rojo, Inc. paid $224,000 for equipment used in manufacturing
automotive supplies. In addition to the basic purchase price, the company paid $700
transportation charges, $100 insurance for the equipment while in transit, $12,100 sales tax, and
$3,100 for a special platform on which to place the

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Calco's sales for the year 2015 were $115,000 ($92/unit). On January 1, 2015, Calco's beginning
inventory showed 120 units, costing $4,800. During 2015, Calco purchased 1,420 units at $38
each. Calco's income statement is as follows Requirements 1. Complete the income statement for
Calco, using FIFO and weighted aver

The following information is provided for Canadian Industries Inc. for the year 2015 along with
industry averages: Net sales for 2015 amounted to $75,000 and net income was $25,000.
Requirements 1. Calculate the assets turnover ratio and the long-term assets turnover ratio. 2.
Calculate return on assets and return

Jill Riggins owns and operates Jill's Java coffee shop. She proposes to account for the shop's
revenue when she receives cash. Which accounting concept or principle does Jill violate? a.
Accrual basis accounting b. Entity concept c. Going-concern concept d. Comparability

On January 2, 2015, Bright Lights purchased showroom fixtures for $10,000 cash, expecting the
fixtures to remain in service for five years. Bright Lights has depreciated the fixtures on a
straight-line basis, with zero residual value. On September 30, 2016, Bright Lights sold the
fixtures for $5,000 cash. Record both t

The comparative financial statements of Perfection Taco Restaurants for 2015, 2014,and 2013
include the following selected data: Requirements 1. Compute these ratios for 2015 and 2014: a.
Quick ratio. b. Accounts receivable turnover. Assume all sales are credit sales. 2. Write a memo
explaining to the company owne

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On January 1, 2015, Niagara Constructions Inc. signed a contract for constructing a high-rise
condominium complex with a client for $20 million over a period of three years. The costs of
construction are estimated to be $14 million. On December 31, 2015, the company incurred $5
million of the costs. At the end of 2016,

Kimco's sales for the year 2015 were $575,000 ($230/unit). On January 1, 2015, Kimco's
beginning inventory showed 450 units, costing $40,500. During 2015, Kimco purchased 2,650
units at $95 each. Kimco's income statement is as follows. Requirements 1. Complete the income
statement for Kimco, using FIFO and weighted a

If a company with a December 31 year-end lends money in the form of a six-month note on
November 1, which accounts will be credited when the note is paid off on 4/30?

TaoYuen Ltd. has four assets. You are an accounting assistant who is in charge of identifying the
recoverable amount and determining whether each of the assets is impaired. If so, what is the
amount that should be recorded?
Jamie's Music School created a $200 petty cash fund on March 1. During the month, the fund
custodian uthorized and signed petty cash tickets as follows: Requirements 1. Record the journal
entry to create the petty cash fund. 2. Assuming that the cash in the fund totals $45 on March 31,
make the journal entry to repl

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On September 14, 2015, C & T Machinery, Inc. sold $2,300 of inventory (cost is $1,350) on
account to one of its customers. The terms were 1/10, n/30, FOB destination. On September 16,
C & T Machinery, Inc. paid freight charges of $75 related to the delivery of the goods sold on
September 14. On September 20, $900 of da

On July 1, Chi Kong creates a petty cash fund with a balance of $300. During July, Elise Sautter,
the fund custodian, signs the following petty cash tickets: On July 31, prior to replenishment, the
fund contains these tickets plus cash of $62. The accounts affected by petty cash payments are
Office Supplies Expense, T

On November 14, 2015, Amazing Sound, Inc. sold $3,100 of inventory (cost is $1,330) on
account to one of its customers. The terms were 3/10, n/30, FOB destination. On November 16,
Amazing Sound, Inc. paid freight charges of $65 related to the delivery of the goods sold on
November 14. On November 20, $800 of damaged go

Moore, Corp. completed the following selected transactions and prepared these adjusting entries
during May: May 1 Prepaid insurance for May through July, $2,700. 3 Performed service on
account, $2,500. 6 Purchased office furniture on account, $900. 8 Paid property tax expense,
$500. 12 Purchased office equipment f

Christine's Music School created a $220 petty cash fund on October 1. During the month, the
fund custodian authorized and signed petty cash tickets as follows: Requirements 1. Record the
journal entry to create the petty cash fund. 2. Assuming that the cash in the fund totals $55 on
October 31, make the journal entr

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The Bailey Insurance Agency received the following notes during 2015: Requirements 1.
Identifying each note by number, compute interest using a 360-day year, and determine the due
date and maturity value of each note. 2. Journalize a single adjusting entry on December 31,
2015, to record accrued interest revenue on

Limo.com had the following balances on December 31, 2015, before the year-end adjustments:
The aging of receivables yields these data: Journalize Limo.com's entry to adjust the allowance
account to its correct balance on December 31, 2015.