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According to CNN two dairy farmers challenged the legality of the funding ofthe Got Milk campaigns They argued that the Got Milk campaigns

According to CNN, two dairy farmers challenged the legality of the funding ofthe “Got Milk?” campaigns. They argued that the “Got Milk?” campaigns dolittle to support milk from cows that are not injected with hormones and othersustainable agriculture products, and therefore violate their (and other farm-ers’) First Amendment rights. The 3rd U.S. Circuit Court of Appeals agreedand concluded that dairy farmers cannot be required to pay to fund the adver-tising campaigns. One of the obvious backlashes to the National Dairy Promo-tion and Research Board is reduced funding for advertising campaigns. Toassess the likely impact on milk consumption, suppose that the National DairyPromotion and Research Board collected data on the number of gallons of milkhouseholds consumed weekly (in millions), weekly price per gallon, andweekly expenditures on milk advertising (in hundreds of dollars). These data,in forms to estimate both a linear model and log-linear model, are availableonline at www.mhhe.com/baye7e in a file named Q20.xls. Use these data toperform two regressions: a linear regression and a log-linear regression. Com-pare and contrast the regression output of the two models. Comment on whichmodel does a better job fitting the data. Suppose that the weekly price of milkis $3.10 per gallon and the National Dairy Promotion and Research Board’sweekly advertising expenditures falls 25 percent after the court’s ruling to $100(in hundreds). Use the best-fitting regression model to estimate the weeklyquantity of milk consumed after the court’s ruling.21. A few years ago, the Federal Communications Commission (FCC) eliminated arule that required Baby Bells to provide rivals access and discounted rates tocurrent broadband facilities and other networks they may build in the future.Providers of digital subscriber lines (DSL) that use the local phone loop are par-ticularly affected. Some argue that the agreement will likely raise many DSLproviders’ costs and reduce competition. Providers of high-speed Internet servicesutilizing cable, satellite or wireless technologies will not be directly affected,since such providers are not bound by the same facilities-sharing requirementsas firms using the local phone networks. In light of the FCC ruling, suppose thatNews Corp., which controls the United States’ largest satellite-to-TV broad-caster, is contemplating launching a Spaceway satellite that could provide high-speed Internet service. Prior to launching the Spaceway satellite, suppose thatNews Corp. used least squares to estimate the regression line of demand forsatellite Internet services. The best-fitting results indicate that demand isQ d sat  152.5  .9P sat  1.05P DSL  1.10P cable (in thousands), where P sat is theprice of satellite Internet service, P DSL is the price of DSL Internet service, andP cable is the price of high-speed cable Internet service. Suppose that after theFCC’s ruling the price of DSL, P DSL , is $30 per month and the monthly price ofhigh-speed cable Internet, P cable , is $30. Furthermore, News Corp. has identifiedthat its monthly revenues need to be at least $14 million to cover its monthlycosts. If News Corp. set its monthly subscription price for satellite Internet serv-ice at $50, would its revenue be sufficiently high to cover its cost? Is it possiblefor News Corp. to cover its cost given the current demand function? Justifyyour answer.

May 02 2020 View more View Less

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