questions,,  At the start of the movie we meet Ray Kroc (Michael Keaton) who is a struggling traveling salesman for Prince Castle Sales

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 At the start of the movie we meet Ray Kroc (Michael Keaton) who is a struggling traveling salesman for Prince Castle Sales. The year is 1954. The movie is opening with him delivering a sales pitch directly to the camera. What is Kroc selling that nobody wants?

Kroc is selling a milkshake mixer.

2) While traveling around, trying to sell his product, what does Kroc observe about the many fast food/drive-in restaurants that he stops at?

Kroc observes that many fast food establishments take very long to prepare food.

3) When Kroc calls June, who is the secretary of the sales division of the company he works for, Prince Castle Sales, he finds out an order has been placed for six milkshake mixers from a restaurant drive-in out in California. He thinks this is an error so he calls the restaurant which he finds out is McDonald's. He talks to Dick, one of the owners and finds out it was a mistake. How many do they really want?

The quetion is well.

 

4) The ordering of so many milkshake mixer machines by McDonald's piques Kroc's curiosity and he makes a drive to San Bernardino to see the restaurant in person. What does Kroc find out about this restaurant that is so different than the other fast-food/drive-ins he has been to? What does he observe/experience?

 

5) Kroc introduced himself to one of the owners—Mac McDonald and tells him he has some operation and that he was the one who sold him the milkshake mixer. Mac tells him he can give him a tour and Kroc happily agrees. Kroc gets a behind-the-scenes look at how McDonald's operates. What are they doing that makes them so much better than their competition?

 

6) After the initial kitchen tour, Kroc wants to take the McDonalds brothers out to dinner because he says he is impressed with how the restaurant runs and that it is so remarkable. Wanting to hear their story/the history of McDonald's, he takes them out to dinner. Answer the following questions:

a)     When the restaurant first opened they were selling multiple items and sales were down. They also realized a drive-in restaurant had a host of problems like attracting teenagers, slow service, etc. They also realized that most of their profits came from hamburgers, fries, and milkshakes. With this realization, what did they decide to do?

b)    What was the purpose of the drawings out on the tennis court?

 

7) Kroc tells the McDonalds brothers he wants to franchise the restaurant. The brothers tell him they already tried and are against it—they already have five restaurants set up—four around California and one in Phoenix, Arizona. They say that is all there will ever be. Why are they against franchising?

 

8) Kroc makes note of a picture on the wall in the brothers' office. It is of a McDonald's with two golden arches on either side of the building. Who came up with the concept/design?

 

9) True or False. Circle one. Kroc's wife, Ethel, is skeptical of his idea to franchise McDonalds.

 

10) Fill in the blank. Kroc insists that the brothers let him start franchising/lead their franchising efforts and says that he will start by opening one in his town- Des Plaines, Illinois so that he can monitor it. They finally agree and he signs a _____. It allows the brothers control of every decision made since the franchise stores will be representing them. All changes need to receive the brothers' approval in writing.

 

11) Kroc goes from bank to bank to try to get a loan to start his franchise but they all remember him from his other pitches over the years and won't give him a loan. Finally, a banker is open to loaning him start-up funds but tells him he has to put up what for leverage/collateral?

 

12) As construction begins at Kroc's first franchise in Des Plaines, Illinois (where he lives), Kroc tries to make some changes but contractually he can't unless the brothers will approve it. What big company wanted to be a sponsor for McDonald's in exchange for having their name on the menu? Note: The McDonalds brothers said no.

 

13) True or False. Circle one. Kroc's first McDonald's franchise opens in Des Plaines, Illinois. Kroc micromanages it to make sure everyone on staff is following proper protocol.

 

14) At his country club, Kroc entices his wealthy friends to invest/open a McDonald's franchise. He tells them they just need to pay the franchise fee and he'll take care of everything else. They aren't responsible for anything. They can just share in the profits. In the next scene we see the McDonalds brothers talking about how many franchises Kroc has now opened in the last month. Answer the following:

a)     How many has he opened?

 

b)    What is Dick McDonald worried about concerning all these new franchises Kroc has popping up all over the place?

 

15) What does Kroc unfortunately encounter when he visits these new franchises that were owned by the country club men?

 

16) What were the country club men's reaction to Kroc when he went to the golf course to yell at them about their neglected restaurants?

 

17) Kroc realizes that rich men aren't good franchisee owners because they don't care enough. When he stops by his sales company he comes across a gentleman selling a bible to June and when he questions him why he is selling them he says he just wants to make a living. Kroc then gets the idea that the working class can get enough money together to buy a franchise and will take good care of it. He has this gentleman and other blue-collar workers buy a franchise. What is this gentleman's (Leonard) restaurant like?

 

18) At the Prince Castle Sales Office, June tells Kroc he is almost out of capital. Kroc is not making enough money off the franchises because by contract he only gets 1.4% of the profits. This is not covering his expenses and he is not breaking even. Kroc wants to renegotiate his contract with the McDonalds brothers. He calls the brothers to renegotiate. Will the brothers renegotiate the contract?

 

19) At home, Ethel tells Kroc that a man called from Illinois First Federal Bank and she is upset that he mortgaged their home/put it up as collateral. How many months behind are they on payments?

 

20) Kroc has dinner with one of his franchisees, Rollie Smith and his wife June. They share an idea with him on how they can save hundreds of dollars in electrical costs and reduce time in making milkshakes. They say that the walk-in refrigerator and ice cream is costing them a fortune. Answer the following:

a)     What is the solution?

b)    What is Kroc's response?

     c)     What happens when he calls the McDonalds brothers to pitch the idea of the milkshake mix to save costs? Do they agree?
[3:10 PM, 2/28/2022] Fridah: 1. Explain in your own words, what it means to say that a change is an economic improvement - i.e. leads to increased efficiency.

 

2. Give an example of a situation where applying the Pigouvian solution to an externality problem makes the outcome less efficient than doing nothing. Your example must be a numerical example where taxing is the inefficient or not the least-cost avoider solution.

 

3. Explain in your own words, Coase's critique of Pigou. [Note: Coase has two criticisms of Pigou's approach to negative externalities such as pollution].

 

4. What is the Pigouvian solution to negative externalities? How would Pigou deal with positive externalities? What are the difficulties in implementing the Pigouvian solution to externalities in general?

 

5. An airport has only one airline flying out of it; the land under the flight path belongs to ten landowners. The airline can either do nothing to reduce noise from planes landing and taking off, or spend a million dollars a year to completely eliminate the noise; for simplicity we assume that those are its only alternatives. The landowners can use the land either for housing or as a farmland. Each landowner's property is worth $200,000/year as a farmland; $400,000/year as a housing without airplane noise; $320,000/year as a housing with airplane noise. Suppose the transaction costs are very high, giving the same outcomes as (i) the airline is not liable for noise: (il) the airline is liable for noise, how large is the inefficiency from each rule, relative to the efficient outcome? (i) How large is the inefficiency relative to the efficient outcome when the airline is not liable for noise? (ill) How large is the inefficiency relative to the efficient outcome when the airline is liable for noise? (for this question, you need to elaborate and explain what could be the exception and to what extent this exception will the inefficiency vary)

 

A list of some of the stakeholders follows: 1. IT Director (Sponsor) 2. Steering Committee (composed of other property managment managers) 3. IT Department 4. Sales Department 5. Marketing Department 6. Maintenance/Repair Department 7. Interior Design Department 8. Branches all across the US (Managers and employees) 9. Individual Customers 10. Organizational Customers (Corporations that rent out properties regularly based on a contract) 11. Contractors building new properties 12. Insurance companies 13. Travel agencies 14. Government agencies (e.g., Department of Transportation, US Environmental Protection Agency) 15. Not-for-profit organizations (e.g., associations that were established to reduce the impact on the environment) 

(6) [10 points] Consumption Theories (a) [3 points] What were Keynes's three conjectures about the consumption function? (b) [2 points] What is the consumption puzzle? (c) [3 points] How does the Permanent Income Hypothesis (PIH) resolve the puzzle? (d) [2 points] Demographers predict that the fraction of the population that is elderly will increase over the next 20 years. What does the Life-Cycle Hypothesis (LCH) predicts for the influence of this demographic change on the national saving rate? That is, will the national saving rate increase or decrease? Why? (7) [10 points] Money Supply and Inflation To increase tax revenue, the US government in 1932 imposed a two-cent tax on checks written on deposits in bank accounts (In today's dollars, this tax was about 25 cents per checks) (a) [2 points] How do you think the check tax affected the currency-deposit ratio? Briefly explain (b) [2 points] Briefly discuss how this tax affected the money supply using the model of the money supply under a fractional-reserve banking system (c) [3 points] Now use the IS −LM model to discuss the impact of this tax on the economy in the short run. Was the check tax a good policy to implement in the middle of the Great Depression? (d) [3 points] Explain how this tax influenced nominal interest rates and inflation rates in the long run using the Quantity Theory of Money (QTM) and the Fisher effect 4 Part D (10 points) If you are a Graduate student, you should answer the following questions. This is a bonus question for Undergraduate Students (8) [10 points] Suppose that the central bank strictly followed a rule of keeping the real interest rate at 3% per year. That rate happens to be the real interest rate consistent with the economy's initial equilibrium (a) [5 points] Assume that the economy is hit by a money demand shock only. Under the central bank's rule, how will the money supply respond to a money demand shock? Will the rule make aggregate demand more stable or less stable than it would be if the money supply were constant? (b) [5 points] Assume that the economy is hit by IS shocks only. Under the central bank's rule, how will the money supply behave? Will the interest-rate rule make aggregate demand more stable or less stable than it would be if the money supply were constant?

1 (20 points) Answer true, false, or uncertain. Justify your answer. In an open economy with an overlapping generations demographic structure, an increase in the size of its pay-as-you-go social security system will not affect its current account. 2 (20 points) Answer true, false, or uncertain. Justify your answer. Money can lead to the first best allocation when households are infinitely lived, have heterogeneous endowment streams, and face borrowing constraints. 3 (20 points) Answer true, false, or uncertain. Justify your answer. When countries can be excluded from international capital markets if they default on their obligations, temptations to default in some states of nature prevent these countries from getting full consumption insurance. 4 (60 points) Consider a Ramsey economy with a continuum of households and firms operating under perfect competition. There is no population growth (with population normalized to one, such that aggregates and averages are identical), and the representative household is infinitely lived, has a unitary endowment of time each period which it supplies inelastically, and maximizes the following objective function under perfect foresight: max ct,kt+1 X∞ t=0 β t log ct , subject to a given initial level of capital, k0, and to the budget constraint: ct + kt+1 = wt + Rtkt , where ct is household consumption, wt is the wage rate, kt+1 is saving assumed to be in capital, and Rt = 1 + rt − δ is the gross return on saving, and 0 < β < 1 is the time discount factor. Production technology is Cobb-Douglas such that the representative firm i takes factor prices and aggregate capital as given and maximizes Π i t = Ki t α htL i t 1−α − rtKi t − wtL i t where Ki t is the demand for capital and L i t the demand for labor, and 0 < α < 1, and ht ≡ Kt Ψ θ , with 0 ≤ θ < 1, Kt representing aggregate (or average) capital in the economy and Ψ ≡ α 1/β−1+δ 1−α is a convenient normalization. This assumption implies that labor productivity, h increases with aggregate capital. a) Assume θ = 0. Write the Lagrangian for households' problem and derive its first order conditions with respect to ct , and kt+1. Derive the Euler equation and interpret it.