1. Java Bean Corporation imports coffee beans and sells them under 3-year contracts to Mellow Roast, Inc. and a number of other high-end coffee houses in the San Francisco Bay area and a few other cities on the west coast.  Java Bean has successfully established itself as a supplier of gourmet coffee beans and has earned a reputation for its products. Java Bean also sells its own brand of coffee grinding and brewing equipment.  The coffee bean contracts require that during the two-year contract term that a coffee house not buy coffee beans or coffee-making equipment from any of Java Bean’s competitors.  These contracts do not limit the purchase of tea or other beverage ingredients from other suppliers.  In the second year of the contract, Mellow Roast, seeking to alter the contract, protests that this arrangement violates antitrust law in several respects.  Explain what would happen in litigation, and why.  Assuming that there is something questionable about the contracts, what would you advise either party to do in the future to have a better contract?  Java Bean also sells the same types and grades of coffee beans to Warbucks, Inc., a large chain of coffee houses owned by Little Orphan, LLC, but at lower prices than it sells to Mellow Roast.  Warbucks charges customers the same prices as Mellow Roast for various sizes of coffee.  With its higher margin of profit, Warbucks is slowly squeezing out Mellow Roast, and is thinking of a price war to hasten the process along.  Mellow is thinking of a lawsuit against Java Bean for price discrimination.  Discuss whether this would be be a good idea, or not, and wh.  What if Java Bean insists that both Mellow Roast and Warbucks sell packages of its ground coffees to consumers for no less that $15.00 per 12 ounce package? Java Bean’s main competitors in the Western USA are Peat’s Coffee and Kona King.  To reduce marketing costs, they agree that Java Bean will sell its products only in Oregon and Washington, Peat’s will sell only in California, and Kona King will sell only in the Rocky Mountain States.  Discuss. What if the three firms decide to merge into one new firm and start taking steps towards such a merger?  What if Java Bean, instead of cooperating with Peat’s and Kona King, starts a fierce competitive campaign, advertising aggressively and selling at prices so low that it’s actually losing money?

The following question(s) refer(s) to the generalized cell model picture. Identify the rough endoplasmic reticulum.

3.  Mother owns several parcels of real estate.  She deeds Parcel 1 to her daughters, Abby and Brigid, as joint tenants. She deeds Parcel 2 to her sons, Carl and Dan, as tenants in common.  She deeds Parcel 3 to her church for “as long as the property is used for church purposes.”  Mother, Abby, Brigid, Carl, and Dan all die in that order.  Who owns the 3 parcels now, and what ownership interests do they have.  Explain.  How could Abby, Brigid, Carl, and Dan have avoided the situation they faced after Mother died, before each of them died?  What if Parcel 3 ends up not being used “for church purposes” 30 years after Mother died?

3. PharmaBro, a pharmameutical research and manufacturing company, is currently a privately held corporation.  The owners of PharmaBro feel that they could significantly increase the company’s profitability with new capital.  The new capital would have to come from issuing stock to new investors.  The owners of PharmaBro estimate that they would need about $20 million to carry out the expansion plans. What are the options available to PharmaBro and discuss the advantages and disadvantages of each.

1.  Do A, B, and C, briefly A.   Explain what is required to establish a principal/agent relationship.  What is the difference between being an employee versus an independent contractor, and does it matter to a principal?  B. Albert was hired to manage a local, non-corporate, Starbucks location.  He was told that he had the customary authority of a manager.  What authority would be included in this situation?  On a Friday, Albert is driving to the bank to deposit the receipts for the week, and has an accident that injures Debbie Driver and damages her car.  Explain who is potentially liable and why, and if there are any defenses available, assuming Albert was in fact negligent. C. Compare an undisclosed principal to a partially disclosed principal.  What liabilities to third parties do principals and agents have if the principal is either undisclosed or partially disclosed?  Consider Able Baker, whom Jeff Bezos of Amazon wants to be his agent.  Jeff Bezos does not want third parties to know that Able Baker represents him in negotiating a contract.  Should Able accept? Why or why not?  Would it matter if the principal was not Jeff Bezos, but rather his distant cousin Bill Bezos, a small businessman of much more modest means?  Why might a principal want to be undisclosed?

2.  Discuss the various forms of alternative dispute resolution and assess the pros and cons of the 3 most common forms of ADR.  Is ADR better than litigation?  Why or why not?  Mandatory arbitration clauses are increasingly common in consumer contracts.  Are such clauses problematic?  Explain.

Suppose an economy has a marginal propensity to consume of along with $ consumption taking place when disposable income is $.  What would disposable income be if you observe a consumption level of $?  Round your answer to two digits after the decimal.

Assume taxes are zero and the consumption function is C = 0.83(Yd) + 450.  What is the level of savings if the economy is at the break-even level of income?

Suppose household income decreases in the economy.  What happens with interest rates, business borrowing and investment according to the loanable fund model?

Suppose actual real GDP is $ trillion, potential real GDP is $ trillion, and the marginal propensity to consume is . If we ignore price effects, and if the government already decided to increase its spending by $ trillion, by how many trillions of dollars should the government change its lump sum taxes to fix the gap?  (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)