[Comparing budget deficits in different countries] The International Monetary Fund (IMF) publishes The World Economic Outlook. Go to www.imf.org and find the IMF data for the cyclically adjusted budget deficit as a percentage of potential GDP (which the IMF calls “General Government Structural Balance”) for Brazil, China, France, and Germany from 2000 to 2020. (The values for the later years are forecasts.) Use the series for the cyclically adjusted budget deficit that is measured as a percentage of potential GDP. (Under World Economic Outlook, click “DATABASE,” then under “Download WEO Data” choose “By Countries (country-level data).” Select “All economies,” choose Brazil, China, France, and Germany, and then choose “General government structural balance, Percent of potential GDP.”)

From 2013 to 2018, which of these four countries is expected to have the most expansionary fiscal policy? Briefly explain.

What is the cyclically adjusted budget deficit or surplus? Suppose that real GDP is currently at potential GDP, and the federal budget is balanced. If the economy moves into a recession, what will happen to the federal budget?

The Journal of the American Law and Economics Association (Vol. 3, 2001) published the results of a study of appeals of federal civil trials. The accompanying table, extracted from the article, gives a breakdown of 2,143 civil cases that were appealed by either the plaintiff or the defendant. The outcome of the appeal, as well as the type of trial (judge or jury), was determined for each civil case. Suppose one of the 2,143 cases is selected at random and both the outcome of the appeal and the type of trial are observed.

$$\begin{matrix} \text{ } & \text{Jury} & \text{Judge} & \text{Totals}\\ \text{Plaintiff trial win-reversed} & \text{194} & \text{71} & \text{265}\\ \text{Plaintiff trial win-affirmed/dismissed} & \text{429} & \text{240} & \text{669}\\ \text{Defendant trial win-reversed} & \text{111} & \text{68} & \text{179}\\ \text{Defendant trial win - affirmed/dismissed} & \text{731} & \text{299} & \text{1,030}\\ \text{Totals} & \text{1,465} & \text{678} & \text{2,143}\\ \end{matrix}$$

Find $P(A \cup B)$.

Express $C_n$ using the notation for combinations and without this notation.

Another application of mod functions occurs in assigning an ISBN (International Standard Book Number) to each title published. The 10-digit ISBN encodes information about the language of publication, the publisher, and the book itself. This is an example of coding for error checking rather than for security purposes. For example, the ISBN for the fourth edition of this book is 0-13-083143-3; the 0 indicates the book was published in an English-speaking country and the 13 identifies the publisher. The last digit is a check digit chosen to help prevent transcription errors. If $d_1 d_2 d_3 \cdots d_9 c$ is an ISBN, then $c$ is chosen so that

$$\left(d_1+2 d_2+3 d_3+\cdots+9 d_9+10 c\right) \equiv 0(\bmod 11) .$$

If $c$ is 10 , then the Roman numeral $X$ is used.

Companies following international accounting standards are permitted to revalue fixed assets above the assets' historical costs. Such revaluations are allowed under various countries' standards and the standards issued by the IASB. Liberty International, a real estate company headquartered in the United Kingdom (U.K.), follows U.K. standards. In a recent year, Liberty disclosed the following information on revaluations of its tangible fixed assets. The revaluation reserve measures the amount by which tangible fixed assets are recorded above historical cost and is reported in Liberty's stockholders' equity.

Liberty reported the following additional data. Amounts for Kimco Realty (which follows GAAP) in the same year are provided for comparison.

$$\begin{array}{lccc} \text{}&\hspace{2pt}\textbf{Liberty}\hspace{2pt}&\hspace{2pt}\textbf{Kimco}\hspace{2pt}\\ \text{}\hspace{5pt}&\underline{\hspace{2pt}\text{(pounds sterling, in thousands)}\hspace{2pt}}&\underline{\hspace{2pt}\text{(dollars, in millions)}\hspace{2pt}}\\ \text{Total revenues}&\pounds741&\$517\\ \text{Average total assets}&5,577&4,696\\ \text{Net income}&125&297\\ \end{array}$$

Instructions

a. Compute the following ratios for Liberty and Kimco.

1. Return on assets.

2. Profit margin on sales.

3. Asset turnover.

How do these companies compare on these performance measures?

b. Liberty reports a revaluation surplus of £1,952. Assume that £1,550 of this amount arose from an increase in the net replacement value of investment properties during the year. Prepare the journal entry to record this increase.

c. Under U.K. (and IASB) standards, are Liberty's assets and equity overstated? If so, why? When comparing Liberty to U.S. companies, like Kimco, what adjustments would you need to make in order to have valid comparisons of ratios such as those computed in (a) above?

Refer to the International Conference on Social Robotics (Vol. 6414, 2010) study on the current trend in the design of social robots. Recall that in a random sample of social robots obtained through a Web search, 28 were built with wheels. Toe numbers of wheels on each of the 28 robots are listed in the table. Find the mean and standard deviation for the sample data set.

$$\begin{matrix} \text{4} & \text{4} & \text{3} & \text{3} & \text{3} & \text{6} & \text{4} & \text{2} & \text{2} & \text{2} & \text{1} & \text{3} & \text{3} & \text{3}\\ \text{3} & \text{4} & \text{4} & \text{3} & \text{2} & \text{8} & \text{2} & \text{2} & \text{3} & \text{4} & \text{3} & \text{3} & \text{4} & \text{2}\\ \end{matrix}$$

In addition to fine chocolate, International Chocolate Company also produces chocolate-covered pretzels in its Savannah plant. This product is sold in five-pound metal canisters, which also are manufactured at the Savannah facility. The plant manager, Marsha Mello, was recently approached by Catawba Canister Company with an offer to supply the canisters at a price of $\$ 1.00$ each. International Chocolate's traditional product-costing system assigns the following costs to canister production.

$$\begin{array}{lr} \text{ Direct material } & \$ 300,000 \\ \text{ Direct labor (12,000 hrs. at \$15 per hr.) } & 180,000 \\ \text{ Variable overhead (\$10 per direct-labor hr.) } & 120,000 \\ \text{ Fixed overhead (\$45 per direct-labor hr.) } & 540,000 \\ \text{ Total cost } & \$ 1,140,000 \\ \end{array}$$

Unit costs: $\$ 1,140,000 \div 760,000$ canisters $=\$ 1.50$ per canister

Mello's conventional make-or-buy analysis indicated that Catawba's offer should be rejected, since only $\$ 708,000$ of costs would be avoided (including $\$ 80,000$ of supervisory salaries and $\$ 28,000$ of machinery depreciation). In contrast, the firm would spend $\$ 760,000$ buying the canisters. The controller, Dave Mint, came to the rescue with an activity-based costing analysis of the decision. Mint concluded that the cost driver levels associated with canister production are as follows:

$$\begin{array}{ll} \text{ 10 product specs } & \text{ 30 inspections } \\ \text{ 2,000 supervisory hours } & \text{ 15 setups} \\ \text{ 6,000 material-handling hours } & \text{ 70,000 machine hours } \\ \text{ 55 purchase orders } \end{array}$$

$1.$ Show how Mello arrived at the $\$ 708,000$ of cost savings in her conventional make-or-buy analysis.

$2.$ Determine the costs that will be saved by purchasing canisters, using Mint's $\mathrm{ABC}$ data.

$3.$ Complete the $\mathrm{ABC}$ relevant-costing analysis of the make-or-buy decision. Should the firm buy from Catawba?

$4.$ If the conventional and $\mathrm{ABC}$ analyses yield different conclusions, briefly explain why.

In Economic Policy (January 2011), researchers from the London School of Economics conducted a cross-country analysis of the relationship between teachers' pay and pupils' performance. Data collected for 39 countries were used to model $y=$ the country's average standardized score of its pupils. The independent variables under consideration were: $x_{1}=$ country's total teaching staff as a percentage of the country's labor force, $x_{2}=$ percentage of women in the country's entire teaching staff, $x_{3}=$ country's pupil-teacher ratio, $x_{4}=$ average teacher's salary after 15 years on staff, $x_{5}=$ average teaching hours per year, $x_{6}=$ GDP growth of country $(\%)$, $x_{7}=$ country's educational spending per year, and $x_{8}=$ percentile position of country's teachers' salaries after 15 years on staff. Consider a stepwise regression run on the data.

c. What is the form of the model fit in step 3? How many models fit? How is the "best" independent variable selected in this step?

U.S. wine export market. The Center for International Trade Development (CITD), provides a listing of the top 30 U.S. export markets for sparkling wines. Data on the amount exported (thousands of dollars) and 3-year percentage change for the 30 countries in a recent year are saved in the WINEX file. (Data for 5 countries are listed in the table.) Descriptive statistics for these variables are shown in the Minitab printout (next column). Use the information on the printout to find the range of the amount exported.

Manitou North
America, Inc., makes and distributes telehandlers (forklifts
with extendable telescopic booms) to dealers throughout the United States. Manitou agreed to make McCormick Inter- national, LLC, its exclusive dealer in the state of Michigan.
Later, Manitou entered into an agreement with Gehi Com- pany, which also makes and sells telehandlers. The companies agreed to allocate territories within Michigan among certain
dealers for each manufacturer, limiting the dealers’ selection
of competitive products to certain models. Under this agree- ment, McCormick was precluded from buying or selling Gehi telehandlers. What type of trade restraint did the agreement
between Manitou and Gehi represent? Is this a violation of
antitrust law? If so, who was injured, and how were they
injured? Explain. [Manitou North America, Inc. v. McCormick International, LLC, __ N.W.2d __, 2016 WL 439354 (2016)]

A survey of 1000 adult Americans (Rasmussen Reports, April 15, 2004) asked each whether t he best way to fight terrorism is to let the terrorists know we will fight back aggressively or to work with other nations to find an international solution. The first option was picked by 53% of the men but by only 36% of the womeen in the sample. Assume there were 600 men and 400 women in the sample.

a. Identify the response variable and the explanatory variable and their categories.

b. Construct a contingency table that shows the counts for the different combination of categories.

c. Use a contingency table to display the percentages for the two options, separately for females and for males.

d. Explain why the percentages reported here are conditional percentages.

e. Sketch a graph similar to that compares the responses for men and women.

f. Compute the difference of proportions and the ratio of proportions and interpret each.

g. Give an example of how results would have to differ from these for you to conclude that there's no evidence of association between these variables.

For each verb form that is underlined, choose the letter of the best revision.

When Marta and her family $\overset{\text{(1)}}{{\underline{\text{taked}}}}$ a vacation in Australia, they $\overset{\text{(2)}}{{\underline{\text{are}}}}$ surprised at how the time changed during their airline flights across the Pacific Ocean. When they $\overset{\text{(3)}}{{\underline{\text{flied }}}}$ from Los Angeles to Sydney, Australia, they arrived at a time that was nearly $32$ hours later than the time when they left. Coming back to Los Angeles, however, they $\overset{\text{(4)}}{{\underline{\text{were arriving}}}}$ at a time three and one-half hours earlier than when they left Sydney. Did Marta's family $\overset{\text{(5)}}{{\underline{\text{fly}}}}$ in a time machine on the way back from Sydney?

The arrival times were so different because the airplanes $\overset{\text{(6)}}{{\underline{\text{cross}}}}$ the International Date Line during the flights. The world $\overset{\text{(7)}}{{\underline{\text{divides}}}}$ into $24$ time zones so that the sun is high in the sky at noon almost everywhere on earth. The International Date Line $\overset{\text{(8)}}{{\underline{\text{lays}}}}$ between two time zones in the Pacific Ocean. The time in the first time zone east of the date line is $23$ hours earlier than the time in the first time zone to the west. Suppose a person travels around the world and $\overset{\text{(8)}}{{\underline{\text{lays}}}}$ a watch each time he or she enters a new time zone. If there $\overset{\text{(10)}}{{\underline{\text{were}}}}$ no date line, he or she would arrive home with a watch whose date is a day off from everyone else's.

A. flown

B. fly

C. will fly

D. flew

What are the causes of a change in demand?

Prices change all the time, but sometimes the consequences can be surprising. For example, if you had a store and wanted to increase your revenue, would you want to increase or decrease the price of your goods? Believe it or not, your total revenue could decrease in either or both cases! Let's examine the relationship between prices and changes in quantity demanded to see why.

Because quantity demanded depends on its price, economists use a concept called elasticity. Elasticity is a measure of responsiveness that describes the way a dependent variable changes in response to a change in an independent variable. In economics, price is almost always the independent variable, or the variable that causes the quantity demanded to change.

Pick a product that five of your friends use. Select three prices for the product with one being reasonable, and two others being one-third higher and one-third lower. Now, ask your friends how much they would spend on the product at each price. If you sold the product, which price would you use and why?

Concern price discrimination. Suppose you (age 17) go the zoo with your little sister (age 5), your mother (age 42) and your grandfather (age 66). When you arrive at the zoo, you find the following sign at the admission stand.

$$\begin{matrix} \text{Children (age 0-6)} & \text{3}\\ \text{Students (age 6-18 with school ID)} & \text{4}\\ \text{Senior Citizens (over 65)} & \text{6}\\ \text{General Admission} & \text{8}\\ \end{matrix}$$

Your mother mumbles something about age discrimination under her breath You ask what she means, and she explains that although she may enjoy the zoo the leash, she is charged the most. She says "Your little sister, who likely enjoys the zoo the most is charged the least. What an unfair pricing system!" Having mastered your recent economics quiz on price discrimination, how would you explain the purpose of the zoo pricing structure?