Compare and Contrast the Colonization of Jamestown, Plymouth

HIST 1301: U. S. History to 1865 Fall 2012 Essay Assignment #1 Question: Compare and contrast the colonization of Jamestown, Plymouth, and Massachusetts Bay. Be sure to discuss the settlers involved, the purpose of the colonies, the success or failure of the colony, important developments associated with colonization, and the role of religion in the colony. HIST-1301-009 – U. S. HISTORY TO 1865 Essay Assignment #1 Jamestown, Plymouth, and Massachusetts Bay are all belong to English Colonization. There have some similarities and differences among these three places.Jamestown has no settler, but only 100 male adventures which was leaded by Captain John Smith looking for quick profit. Then, Thomas Gates sails 500 colonists and Lord Delaware arrives with 150 colonists in Jamestown. However, different with Jamestown, although Plymouth and Massachusetts Bay were settled by different people; Plymouth was steeled by Separatists from the Church of England and Massachusetts Bay was stee led by Non-Separating Congregationalists, but those settlers are all Puritans. The settlers of Plymouth are 101 men, women and children.In Massachusetts Bay, over 1000 Puritans sail for America in 1631 after 1630. Jamestown is for those adventures looking for a quick profit. But in Plymouth and Massachusetts Bay, both of them settled up not for quick. Plymouth was settled to avoid persecution. Massachusetts Bay was settled to reform the Church of England, to some extent, the colonists build a new society in there. Unfortunately, not like the success in Plymouth and Massachusetts Bay, the colonization of Jamestown is failure. From 1607 to 1624, people in Jamestown died from 14,000 to 1,132.In Plymouth, after they settled the colony up, it still had many people died at the first winner. The colonists helped the Wampanoags, and colony became self-sufficient in the following year. Then, civil government also grew out of church government. As Plymouth’s success, Massachusetts Bay also success in colonization. The colonists formed the New England Company, and Charles I grant a charter to the company. Finally John Winthrop moved the company to America to ensure the Puritan control. Even though Jamestown is failure, there still have many developments in colony. Related article: Jamestown and Plymouth Compare and ContrastTobacco became goods in exportation, colony accepted the Head-Right Policy to gain more settlers, and colonists granted the right of Englishmen. In Plymouth, colonists signed for the Mayflower Compact and became civil government because they landed off course and outside governmental jurisdiction. Massachusetts Bay had General Court. It was form by Winthrop and a few people, after more and more people got in, it finally became a legislative body in 1634, and became bicameral in following year. From Jamestown, there is no any religion get involved.Just some adventures want to get money in the short time, so they established the colony. However, different from Jamestown, religion plays a crucial role in Plymouth and Massachusetts Bay. First of all, the settlers of Plymouth are Separatists from the Church of England, and the settlers of Massachusetts Bay are Non-Separating Congregationalists. Both of those settlers are Puritans . Furthermore, Plymouth’s settlers established colony for avoid persecution, and Massachusetts Bay’s settlers established colony for reform the Church of England. Religion relates to these two colonies at the beginning.

Stock and Debt

CHAPTER 12 QUESTIONS 12-1Operating leverage affects EBIT and, through EBIT, EPS. Financial leverage generally has no effect on EBIT—it only affects EPS, given EBIT. 12-2Because Firm A has a higher fixed operating costs, its operating income will change by a greater percentage than Firm B’s operating income if sales change. Firm A has a higher degree of operating leverage than Firm B. 12-3If sales tend to fluctuate widely, then cash flows and the ability to service fixed charges also will vary. Consequently, there is a relatively large risk that the firm will be unable to meet its fixed charges.As a result, firms in unstable industries tend to use less debt than those whose sales are subject to only moderate fluctuations. 12-4The tax benefits from debt increase linearly, which causes a continuous increase in the firm’s value and stock price. However, bankruptcy-related costs begin to be felt after some amount of debt has been employed, and these costs offset the benefits of debt. See Figure 12-5 in the textbook. 12-5Carson does have leverage because its EPS increases by a greater multiple than its sales when sales change. According to the information that is given, Carson’s DTL is 4 = 20/5.Because we have no information about either the firm’s operating fixed costs or its fixed financing costs, we cannot state whether the firm has operating leverage, financial leverage, or both. 12-6EBIT depends on sales and operating costs that generally are not affected by the firm’s use of financial leverage, because interest is deducted from EBIT. At high debt levels, however, firms lose business, employees worry, and operations are not continuous because of financing difficulties. Thus, financial leverage can influence sales and cost, hence EBIT, if excessive leverage causes investors, customers, and employees to be oncerned about the firm’s future. 12-7Expected EPS generally is measured as EPS for the coming years, and we typically do not reflec t in this calculation any bankruptcy-related costs. Also, EPS does not reflect (in a major way) the increase in risk and ks that accompanies an increase in the debt ratio, whereas P0 does reflect these factors. Thus, the stock price will be maximized at a debt level that is lower than the EPS-maximizing debt level. 12-8A firm can change the proportion of debt it uses in its capital structure. If the firm has too much (little) debt, it can reduce (increase) the proportion of debt in its capital structure.Such as change should decrease the firm’s WACC, and thus increase its value. 12-9Absolute’s optimal capital structure is 40 percent debt (= $20,000,000/$50,000,000), because the market price of the company’s stock ($130. 75) is maximized at this point. 12-10With increased competition after the breakup of AT&T, the new AT&T and the seven Bell operating companies’ business risk increased. With this component of total company risk increasing, the new companie s probably decided to reduce their financial risk, and use less debt, to compensate.With increased competition the chance of bankruptcy increases and lowering debt usage makes this less of a possibility. If we consider the tax issue alone, interest on debt is tax deductible; thus, the higher the firm’s tax rate the more beneficial the deductibility of interest is. However, competition and business risk have tended to outweigh the tax aspect as we saw from the actual debt ratios of the Bell companies. The Bell companies and the new AT&T lowered their debt ratios, for reasons along these lines. 2-11Several possibilities exist for the firm, but trying to match the length of the project with the maturity of the financing plan seems to be the best approach. The firm might want to finance the R&D with short-term debt and then, if the project’s results are successful, to raise the needed capital for production through long-term debt or equity. Another possibility would be to issue convertible bonds, which can be converted to common stock—a lower interest rate would be paid now, and in the future (presumably the stock price will increase with the new process) investors would trade in the bonds for stock.One also should keep in mind that this project, and R&D in general, is extremely risky and debt financing might not be available except at extremely high rates. For this reason, many R&D companies have low debt ratios, instead paying low dividends and using retained earnings for financing projects. Under Debt financing the expected EPS is $5. 78, the standard deviation is $1. 05, the CV is 0. 18, and the debt ratio increases to 75. 5%. (The debt ratio had been 70. 6 percent. Under Equity financing the expected EPS is $5. 51, the standard deviation is $0. 85, the CV is 0. 15, and the debt ratio decreases to 58. 8 percent. At this interest rate, debt financing provides a higher expected EPS than equity financing; however, the debt ratio is significan tly higher under the debt financing situation as compared with the equity financing situation. Because EPS is not significantly greater under debt financing, but the risk is noticeably greater, equity financing should be recommended.INTEGRATIVE PROBLEMANSWER: Business risk is the uncertainty associated with a firm’s projection of its future operating income.It also is defined as the risk faced by a firm’s stockholders if the company uses no debt. A firm’s business risk is affected by many factors, including: (1) variability in the demand for its output, (2) variability in the price at which its output can be sold, (3) variability in the prices of its inputs, (4) the firm’s ability to adjust output prices as input prices change, (5) the amount of operating leverage used by the firm, and (6) special risk factors (such as potential product liability for a drug company or the potential cost of a nuclear accident for a utility with nuclear plants).ANSWER: Oper ating leverage is the extent to which fixed operating costs are used in a firm’s operations. If a high percentage of the firm's total operating costs are fixed, and hence do not decline when demand falls, then the firm is said to have high operating leverage. Other things held constant, the greater a firm’s operating leverage, the greater its business risk. [pic] ANSWER: Financial leverage refers to the firm’s decision to finance with fixed-charge securities, such as debt and preferred stock. Financial risk is the additional risk, over and above the company's inherent business risk, orne by the stockholders as a result of the firm's decision to finance with debt. [pic] ANSWER: As we discussed above, business risk depends on a number of factors such as sales and cost variability, and operating leverage. Financial risk, on the other hand, depends on only one factor—the amount of fixed-charge capital (financing) the company uses. [pic] ANSWER: Here are the f ully completed statements: The expected TIE would be larger than 2. 5x if less debt were used, but smaller if leverage were increased. [pic] ANSWER: The optimal capital structure is the capital structure at which the tax-related benefits of leverage are exactly offset by debt’s risk-related costs.At the optimal capital structure, (1) the total value of the firm is maximized, (2) the WACC is minimized, and the price per share is maximized. [pic] ANSWER: Here is the sequence of events: 1. CDSS must first announce its recapitalization plans. 2. The company’s stock would have some market price before the announcement, in this case, $20 per share. The company would have to estimate (a) the price it would have to pay for the repurchased shares and (b) the method to be used for the repurchase (open market purchases, or a tender offer). 3.For simplicity, we assume that the firm could repurchase stock at its current price, $20, which also happens to be its book value per share. In actuality, investors would probably reassess their views about the firm’s profitability and risk under the new capital structure, and the stock price probably would rise. No current shareholder would be willing to sell at a price very far below the expected new price, although some would be afraid the recap plan might not go through, and those stockholders would sell out at a lower-than-expected price.Therefore, the stock price would adjust quickly to a new equilibrium that reflects the recapitalization. 4. CDSS would purchase stock, then issue debt and use the proceeds to pay for the repurchased stock. After the recapitalization, the company would have more debt but fewer common shares outstanding. A new EPS could be calculated, and the price would settle into its new level. [pic]4. ANSWER: The analysis for the debt levels being considered (in thousands of dollars and shares) is shown below: At Debt = $0: [pic] At Debt = $250,000: Shares repurchased = $250,000/$20 = 12,5 00.Remaining shares outstanding = 100,000 – 12,500 = 87,500. Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $500,000: Shares repurchased = $500,000/$20 = 25,000. Remaining shares outstanding = 100,000 – 25,000 = 75,000. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $750,000: Shares repurchased = $750,000/$20 = 37,500. Remaining shares outstanding = 100,000 – 37,500 = 62,500. (Note: EPS and TIE calculations are in thousands of dollars. ) [pic] At Debt = $1,000,000: Shares repurchased = $1,000,000/$20 = 50,000. Remaining shares outstanding = 100,000 – 50,000 = 50,000. (Note: EPS and TIE calculations are in thousands of dollars. [pic] [pic] ANSWER: We can calculate the price of a constant growth stock as DPS divided by rs minus g, where g is the expected growth rate in dividends: [pic] Because in this case all earnings are paid out to the stockholders, DPS = EPS. Further, because no earnings are plowed back, the firm’s EBIT is not expected to grow, so g = 0.Here are the results: Debt Level DPS rs Stock Price $ 0 $3. 00 15. 0% $20. 00 250,000 3. 26 15. 5 21. 03 500,000 3. 56 16. 5 21. 58* 750,000 3. 86 18. 0 21. 44 1,000,000 4. 8 20. 0 20. 40 * maximum ANSWER: A capital structure with $500,000 of debt produces the highest stock price, $21. 58, hence it is the best of those considered. ANSWER: We have seen that EPS continues to increase beyond the $500,000 optimal level of debt. Therefore, focusing on EPS when making capital structure decisions is not correct—while the EPS does take account of the differential cost of debt, it does not account for the increasing risk that must be borne by the equity holders. ANSWER: Currently, Debt/Total assets = 0%, so total assets = initial equity = $20 x 100,000 shares = $2,000,000.WACC = ($500,000/$2,000,000)[(11%)(0. 60)] + ($1,500,000/$2,000,000)(16. 5%) = 1. 65% + 12. 38% = 14. 03%. NOTE: If we had (1) used the equilibri um price for repurchasing shares and (2) used market value weights to calculate WACC, then we could be sure that the WACC at the price-maximizing capital structure would be the minimum. Using a constant $20 purchase price, and book value weights, inconsistencies might creep in. [pic] ANSWER: If the firm had higher business risk, then, at any debt level, its probability of financial distress would be higher.Investors would recognize this, and both rd and rs would be higher than originally estimated. It is not shown in this analysis, but the end result would be an optimal capital structure with less debt. Conversely, lower business risk would lead to an optimal capital structure that included more debt. ANSWER: The three degrees of leverage are calculated below: S = $1,350,000 New debt = $500,000 @ 11% VC = 0. 6S F = $40,000 (Note: Calculations are in thousands of dollars. ) [pic] [pic] DTL = DOL x DFL = 1. 08 x 1. 12 = 1. 21. The degree of operating leverage is defined as the percent age change in perating income (EBIT) associated with a given percentage change in sales. Because our company’s degree of operating leverage is 1. 08, this means that a given percentage increase in sales will lead to an 8 percent greater increase in EBIT. For example, if sales increased by 100 percent, then EBIT would increase by 108 percent. The degree of financial leverage is defined as the percentage change in EPS associated with a given percentage change in EBIT. Because CDSS’s degree of financial leverage is 1. 12, this means that if EBIT increased by 100 percent, then EPS would increase by 112 percent.The degree of total leverage shows the combined effects of operating and financial leverage on the firm’s earnings per share. It is defined as the percentage change in EPS brought about by a given percentage change in sales, and it is calculated as DOL x DFL. Because CDSS’s DTL is 1. 21, a 100 percent increase in sales would produce a 121 percent increa se in EPS. The degree of leverage concept is useful for planning purposes, as it gives an idea of what will happen to earnings as sales vary. Investors can use the concept to consider firms with different leverages if they expect sales to rise or fall. [pic]ANSWER: Because it is difficult to quantify the capital structure decision, managers consider the following judgmental factors when making capital structure decisions: (1)The average debt ratio for firms in their industry. (2)Pro forma tie ratios at different capital structures under different scenarios. (3)Lender/rating agency attitudes. (4)Reserve borrowing capacity. (5)Effects of financing on control. (6)Asset structure. (7)Expected tax rate. ANSWER: The following figure presents a graph of the situation: [pic] The use of debt permits a firm to obtain tax savings from the deductibility of interest.So the use of some debt is good; however, the possibility of bankruptcy increases the cost of using debt. At higher and higher leve ls of debt, the risk of bankruptcy increases, bringing with it costs associated with potential financial distress. Customers reduce purchases, key employees leave, and so on. There is some point, generally well below a debt ratio of 100 percent, at which problems associated with potential bankruptcy more than offset the tax savings from debt. Theoretically, the optimal capital structure is found at the point where the marginal tax savings just equal the marginal bankruptcy-related costs.However, analysts cannot identify this point with precision for any given firm, or for firms in general. Analysts can help managers determine an optimal range for their firm’s debt ratios, but the capital structure decision still is more judgmental than based on precise calculations. ANSWER: The asymmetric information concept is based on the premise that management’s choice of financing gives signals to investors. Firms with good investment opportunities will not want to share the benef its with new stockholders, so they will tend to finance with debt. Firms with poor prospects, on the other hand, will want to finance with stock.Investors know this, so when a large, mature firm announces a stock offering, investors take this as a signal of bad news, and the stock price declines. Firms know this, so they try to avoid having to sell new common stock. This means maintaining a reserve of borrowing capacity so that when good investments come along, they can be financed with debt. 12-17Computer-Related Problem a. If the outstanding debt has to be refunded at the new higher interest rate, expected EPS would decline under either financing plan. However, EPS would decline more if debt financing were used. Therefore, ebt financing has become relatively less attractive than stock financing. The output generated by the model is given below:ETHICAL DILEMMA A BOND IS A BOND †¦ IS A STOCK †¦ IS A BONDOCK?Ethical dilemma: Wally is evaluating whether to use a new (to the United States) financial instrument to raise funds to finance Ohio Rubber & Tire’s (ORT) expansion plans. The new instrument, which is called a bondock, has some characteristics of traditional debt and some characteristics that are similar to common equity. The cost of capital associated with bondocks is slightly higher than traditional debt, but significantly lower than common equity.If ORT’s expansion plans are successful, both its bondholders and its stockholders will receive handsome returns. However, if the expansion plans are not successful, then it appears that stockholders can still benefit but at the expense of bondholders. ORT’s executives are some of the company’s major stockholders, so it appears that they would be in favor of issuing bondocks. Discussion questions: ?Is there an ethical problem? If so, what is it? The question here is whether it is appropriate to use a new financial instrument called a bondock to raise funds needed for expansi on.Because the cost of capital associated with a bondock is slightly higher than the cost of debt but significantly lower than the cost of equity, management thinks that it might be appropriate to use this medium to raise funds to invest in risky ventures. If the expansion investment is successful, both the bondholders and the stockholders will benefit. Of course, the benefit to stockholders will be greater than the benefit to bondholders. On the other hand, if the expansion investment is unsuccessful, both bondholders and stockholders will suffer financial losses.But, because the market values of the bondocks will decline significantly, the firm could benefit by repurchasing these financing instruments in the capital markets. In this case, stockholders would benefit at the expense of bondholders. As a result, the ethical question is whether ORT should raise funds using bondocks knowing that there is a possibility that its stockholders will gain at the expense of its bondholders. ?I s it appropriate for ORT to use bondocks to raise funds that are needed for expansion? Is there an ethical dilemma here? Maybe not. Remember that investors take risks when purchasing the stocks and bonds of firms.In this case, ORT would be wise to use bondocks if the purpose is to raise funds for expansion while trying to lower the cost of capital associated with â€Å"going to† the financial markets. It might be argued that it is unethical for ORT to use bondocks if the intent is to benefit executives who receive bonuses and incentives in the form of the company’s stock. It also might be argued that it is unethical if the intent is to harm the position of bondholders.However, if the primary objective is to increase the value of the firm, then it is difficult to argue that issuing this new financial instrument is unethical. What would you do if you were Wally? It seems that the best solution is for Wally to try to get more information about the new financial instrument called a bondock. Because little is known about bondocks and they appear to be rather complex financial instruments, Wally should gather more information about the risks as well as the benefits to ORT associated with using this medium to raise funds for expansion. Once he has performed his due diligence, Wally should determine whether using bondocks will benefit the firm and its investors in general.If the answer is â€Å"no,† then bondocks should not be used. References: The following articles might be assigned for background material: Emily Thornton, â€Å"Gluttons at the Gate,† BusinessWeek, October 30, 2006, pp. 58-66. David Henry, â€Å"Cross-Dressing Securities,† BusinessWeek, March 13, 2006, pp. 58-59

Case study Example | Topics and Well Written Essays - 1000 words - 21

Case Study Example Additionally, â€Å"Persuasion  is a matter of persuaders engineering actors decisions to produce the desired action† (Funkhouser & Parker, 1999, p.28). Jill presents raw data to her guests that require her to breakdown for them so that they may be emotionally appealed. She further makes the assumption that once they leave they will read the information in the folder that she presents to them. Jill completely fails to communicate to her guests effectively because of the lack of emphasis to the significance of her proposed research. Effective communication requires adequate appeal to the passion, logic and the character of an individual. Jill’s does not appeal to these aspects hence she is not able to convince her guests to donate towards her research. As pointed out by Barker (2010), â€Å"the key to effective persuasion is having powerful ideas and delivering them well† (p.75). Though Jill presents herself and her work in a systematic and orderly way, she does not convince the guests to be passionate about her work. In addition, she does not appeal to their logic by demonstrating clearly in very basic language how the project would be helpful to the society as well as the donors. Instead, she assumes that the guests (donors) will understand what she is up to. Nothstine & Michael (1989) have mentioned that â€Å"most people have never been trained in formal logic and reasoning† (p. 47). On the other hand, the potential donors are people that are rich and their character may be based on the need for self-actualization. Jill fails to clearly communicate to the guests by appealing to their character. It is clear that there is an aspect that is lacking in the communication, as well put by Mayo and Jarvis (1992), â€Å"Persuasive  communication  is more effective when salespeople create a sense of togetherness with those with whom they speak† (p.1). At the ends of the day, she ends up not getting any correspondence from

Impacts of Cybercrime on Shareholder Value and Marketing Essay

Impacts of Cybercrime on Shareholder Value and Marketing - Essay Example This discussion declares that Yahoo.com, Ebay.com, and Amazon.com were attacked by cyber-terrorists in February, in the year 2000. It is believed that the attack was conducted by a hacker and Elias Levy the chief technology officer at that time, of CSIS, mentioned that it was difficult to find who did the attack since there were many machines that were used to do the attack, and the attack could have been directed from any part of the globe. In addition, according to him, the same group could have held all the attacks in these three online sites since it happened almost the same day. It was later discovered that a boy by the name of Michael Calce was the one who executed the crime. Michael Calce was a fifteen year old Canadian citizen whose nickname was Mafia boy. This paper highlights that Amazon announced to its users that their passwords had to be changed, what they termed as a preventive measure towards protecting the users passwords. This was after they detected various passwords and email addresses that did not relate to Amazon, posted online. So, they had to change their user’s passwords because they believed that the same passwords were used in other websites. Users were advised not to use their previous passwords for the sake of safety. The software helped him to hack into the websites of Amazon, eBay, Dell, CNN, and yahoo and made some harmful alterations to the program coding.

Lessons from Jesus Essay Example | Topics and Well Written Essays - 1000 words

Lessons from Jesus - Essay Example The first twenty verses of Chapter five of Mark describe how Jesus freed a man from the demons that had possessed him. Background information presented indicates that the demons tormented the man immensely compelling him to dwell near tombs. However, on seeing Jesus, the man recognized that Jesus could offer a remedy to his problem, by ordering the demons to depart from him. Moreover, the man had knowledge of the true identity of Jesus as the one sent from God because he hid obeisance to him. Jesus ought to know the man’s name, and he replied that he was Legion because multiple demons had possessed him. Upon his request, Jesus ordered the demons to move out of him and possess the swine that were feeding on the mountains instead. After the demons possessed the swine, they moved into the sea and drowned. On Jesus’ order, the man went to retell his experience to his people (Reddish, 2011). From verses 21 by Mark, Chapter 5, a man named Jairus approached Jesus requesting hi m to accompany him to his homestead and heal his daughter. According to the man, the daughter was critically ill. Heeding his call, Jesus accepted to go with him, although the large crowd following Jesus proved to hinder swift movement. In this crowd was a woman who had suffered hemorrhaging for twelve years without finding any remedy despite her search. She had the conviction that Jesus had the potential of healing her condition. She only touched her garments and experienced instant healing. As they walked, they received news that Jairus’ daughter had succumbed to her illness. However, Jesus proceeded to the homestead and brought her back to life. In addition, John in Chapter 11 outlines how Jesus resurrected his friend, Lazarus. This happened after he had been in the tomb for four days. During this occasion, Jesus saw the grief of the people and wept to show his sensitivity to their needs (Reddish, 2011). Application It is evident that Jesus had power and used it in a sensi tive manner of helping others.  

Economics and Government Assignment Example | Topics and Well Written Essays - 750 words

Economics and Government - Assignment Example The market only stabilizes where demand is equal to supply and an equilibrium price is determined. Many sellers meet and each produces what he/she is best at hence quality goods are sold by willing sellers to willing buyers at an agreed price (Harford, 61-65). Q2: What does Harford mean when he says that in competitive markets, "Things are going to the right people†? In a competitive market, there is free allocation of resources although the consumers are the ones who determine how resources are to be allocated through their purchasing power. All the players in the market have a self interest; the producers maximize profits, the owners of factors of production get rewards, while the consumers get maximum utility. The consumers demand goods thus forcing producers to produce the goods and the producers in turn allocate factors of production in the production process. All the players in the market thus get what they deserve; profits, rewards, and utility. The buyers get what they can afford based on their income and wealth (Harford, 61-79). Q3: When Harford talks about the absence of a market for schools, he argues that people find a way to trade in access to schools---they use the property market. Does this mean that, in fact, there is a market for schools, and that we should expect provision of schooling to be efficient? Provision of education is not profitable to businessmen hence there is no market for schools. However, where property market is thriving there is establishment of schools as businessmen cater for their needs or arising out of economies of scale. The workers who work in those properties require education hence more schools are established for easier access. There is market for schools but they are underprovided hence government intervention is needed to ensure all citizens have access to schools especially in poor areas where no industries exist. Q4: What is an externality? Give an example of an externality, and show how its presence makes the price of an activity diverge from the cost of the activity. An externality is an unintended consequence that results from production and consumption in the market thus affecting others not directly involved in the process. For example, the consumption of demerit goods such as cigarettes gives the individual satisfaction but affects the health of others who inhale the smoke. This is an additional cost to the society which is not included while determining prices in the market hence the price of the activity is lower than the actual cost of the activity (Harford, 79-108). Q5: What is a positive externality? Give an example of one, and show how in "complete, free and competitive markets" (to use Harford's phrase), too little of this good would be produced and traded. A positive externality occurs when consumption or production of a good is beneficial to other members of the society who are not involved in the transaction such that the social cost is less than private cost. For exam ple, research and development is beneficial to all. This means the producer engaging in research and development incurs high costs and in a free market, other producers will benefit from information or ideas generated from this research to improve their products. It therefore discourages producers from investing in research since the private cost is higher than social cost. More of the product will thus be needed than is available in the market. Q6:

Property Law - Formal Legal Advice Essay Example | Topics and Well Written Essays - 1750 words

Property Law - Formal Legal Advice - Essay Example THE FACTS 2. The basic facts appear as outlined. 3. Leo has drafted a will that expresses his intentions. The draft will contain several clauses. 4. In the first clause he offers income from his building society shares to be for Ben as long as he lives. The main issue in this clause is the gifts that Leo gives to Ben. The income from Leo’s building shares will be given to Ben as long as he lives. An issue may arise in the transferability of such shares.1 5. He gives reasonable income to Kasim from the rent on his blue chip shares for as long as he shall live. The main issue in this clause is the ascertainment of â€Å"reasonable income†. As an executor and trustee, Kasim can also be a beneficiary as law does not prohibit executors and trustees from being beneficiaries. Also, it is important that Leo specifies the shares rather than simply saying blue chip shares.2 6. He gives one of his two dogs to Ben and the other to Toby. The main concern will arise if Ben dies befor e choosing because he is required to choose first, as this will result to uncertainty of subject matter. Ben is an executor and trustee, and he can be a beneficiary as well.3 7. Leo offers a bulk of his residuary estate to Sonya and Adaeze. The main issue here is lack of sufficient certainty. The actual size should be provided and the mode and ratio of splitting between Sonya and Adaeze determined in advance.4 8. He offers ?70,000 for the erection of a suitable monument to himself at the university. An issue may arise as to whether the monument is considered as part of the fabric of the university, as well as whether it involves maintenance of the university yard.5 9. He has offered ?50,000 to be invested by his trustees and the interest used to maintain the monument. The main issue in this clause is whether the erection of monument has been considered as part of the university fabric the first place. If it has the trust for the maintenance should not offend the rules against perpet uities. 10. Leo gives ?10,000 to the purposes of promoting the use of a new alphabet to simplify the English language. The main issue in this clause is whether this gift is considered a charitable purpose for education.6 11. He has offered ?100,000 to promote the freedom of small newspapers to compete with large media companies. The main issue is whether the beneficiaries are ascertainable. The intended beneficiaries (small newspapers) should be made more precise because such newspapers may be so many. 12. He has given ?19,000 for the welfare of his grey parrot and tortoise for as long as they shall live. Since this clause provides for the welfare of his animal, the only issue that can arise is that of execution of the wish in regards to the perpetuities period on animals. 13. He has offered ?5,000 for the purposes of anti-vivisection campaigns. The main issue is that the gift achieves the charitable trusts threshold. Such a gift is considered as other charitable purposes that seek to promote the welfare of animals.7 14. Leo has given ?500,000 for a sports field for the recreation of employees of Canterbury Christ Church University and any other people his trustees see fit to include. An issue might arise concerning the purpose of the gift rather than the beneficiary. The consideration of whether the gift is a charity or not will depend on the determination of whether it benefits the public or a significant section of the public.8 15. He has offered ?1,000,000 for