Read each question carefully and clearly state any assumptions made.

1. Compare and predict outcomes based upon transaction costs theory for a medical system where doctors are paid a salary based upon (a) the number of procedures performed and (b) doctor is paid a flat salary that is not affected by number of procedures performed. Outline the transaction cost approach in this setting and which system would be more "efficient" in providing medical services. Outline changes in the system that might in improved efficiency.

2. Based on this article

ageconsearch.umn.edu/handle/22253

a. What does factor analysis accomplish for the authors?
b. Did they apply the method according to methods covered in the book and class?

3. An economist suggests in a policy briefing that the market needs a "level playing field" for small producers. He recommends that contracts for beef producers not be allowed more than 2 months prior to slaughter, and that the terms of all contracts be reported to provide pricing information to the market. He argues that this would enhance both transparency and overall market performance. What is your assessment?

4. A beef processor is planning to get contracts with producers, so that all its supplies will be guaranteed by these contacts, and his input prices would be fixed and supplies would arrive exactly when needed. Would you recommend this course of action to processor? This is, does this provide risk...just like depending on the market?

EXTENDED QUESTIONS

The following are longer questions that should take 2-3 pages each typed answers to address effectively. The thoroughness of your answers, demonstrated knowledge of course concepts and applicability to the assigned situation will be major factors in evaluating your answers.

1. Read the article:

ageconsearch.umn.edu/bitstream/117606/2/20110046_Formatted.pdf

a. What is the sample for the survey? Is it representative of the overall population? Based on course/book/class discussion what sort of adjustments can/could be made to make the analysis truly representative. Comment on whether the paper's sampling method/statistics result is a representative sample and how you might recommend that they be adjusted.

b. Evaluate the effectiveness of the statistical estimation in their research. What methods discussed in class could have helped to ensure that the model that they generated is reliable. Explain how you might implement these methods to ensure reliability.

c. The authors use cluster analysis to determine different market segments. How would we know that this is the appropriate number of clusters

d. In Table 3 of article, it states "Prob of No Assoc.". What does this mean for interpreting the differences between clusters?

e. How do you think producers of capital equipment could use the results?

2. Read the articles:

Anti-Walmart activists believe that the company has a negative influence on the market. alternet.org/economy/39251/

a. How has Walmart impacted vertical coordination? Your opinion does not need to be based upon the article.

b. Discuss and describe if Walmarthas the negative impacts that are typically associated with monopoly/monopolistic competition?

c. How has Walmart impacted performance of the US economy?

d. Do you think breaking up the company would solve the problem?

e. Who would benefit from breaking up the company?