In 2008 John Hagee, a prominent evangelical leader and author, said this about Hurricane Katrina: “All hurricanes are acts of God, because God controls the heavens. I believe that New Orleans had a level of sin that was offensive to God, and they were recipients of the judgment of God for that. The newspaper carried the story in our local area, that was not carried nationally, that there was to be a homosexual parade there on the Monday that the Katrina came. And the promise of that parade was that it was going to reach a level of sexuality never demonstrated before in any of the other gay pride parades. So I believe that the judgment of God is a very real thing. I know there are people who demur from that, but I believe that the Bible teaches that when you violate the law of God, that God brings punishment sometimes before the Day of Judgment, and I believe that the Hurricane Katrina was, in fact, the judgment of God against the city of New Orleans.” QUESTIONS: Is this a good theory? Does it hold up to what a good theory should be (natural, with consequences we can trace, consistent with known facts, able to explain what needs to be explained)? If this explanation were true, what would follow for the individual victims of Hurricane Katrina? For others not in New Orleans?

 

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In 2008, the world entered the worst recession since the Great Depression of the 1930s. Of course, many people lost their jobs and houses while others became uncertain about their financial future. Use the theory of supply and demand to predict the effect the recession would have on airline demand (the willingness and ability of people to purchase airline tickets), supply (the willingness and ability of airlines to provide flights), and price (the average price of an airline ticket).

Data Source

The federal government collects and makes an immense amount of data on the US economy available to the public, including large airline datasets. Having made your predictions or hypotheses, use the US airline industry data from the US Bureau of Transportation Statistics (BTS) to see if the industry reacted as you expected.

To obtain the data to test your predictions (hypotheses), find a BTS customizable data table following these steps: 1) Google “Bureau of Transportation Statistics”, 2) use the search box for “Air Traffic”, 3) select “U.S. Air Carrier Traffic Statistics” which will return a customizable table. (Note: The BTS occasionally changes the presentation of the data which affects the steps needed to find data. It may be necessary to modify this search slightly.)

Customize your data by selecting:

1. From 2007 until the end of the recession or to an endpoint of your interest
2. Domestic
3. Scheduled
4. Passengers, then select the statistics of interest (scroll to the bottom for selection criteria).

Prices

Prices are, of course, another piece of this puzzle. BTS provides a table of national fares. To find these data, use the BTS search box for Air Fares. Locate National Level Fares Since 1995. Again, the BTS occasionally changes the database names and files, so you may need to modify this search.

Discussion

Post your findings and explain your initial predictions.

• Would either the supply and/or demand curves shift?
• What is the predicted effect on quantity supply and demanded and on average price?
• Although not required, a graphical depiction would be helpful. Then discuss whether the data support your predictions. Graphs of the data are easily prepared in a spreadsheet. Again, these are not required but would be helpful.
• A few airline terms will be helpful.
• Airline supply is usually measured in Available Seat Miles (ASM).
• Measures of demand are Revenue Passenger Miles (RPM) and Enplanements.
• Passenger Load Factor is yet another indication of demand.
• Should you ever wish to do more research, perhaps for the GCP, the BTS has all the airline statistics you will probably ever need.

 

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4. In 2009, Osgood Corporation purchased $4 million in ten-year municipal bonds at face value. On December 31, 2011, the bonds had a market value of $3,600,000 and Osgood reclassified the bonds from held to maturity to trading securities. Osgood’s December 31, 2011, balance sheet and the 2011 income statement would show the following:Investment in municipal bonds Income state. loss on inva. 3,600,000 0b. 3,600,000 400,000c. 4,000,000 400,000d. 4,000,000 0A. Option bB. Option aC. Option CD. Option D

Question:4. In 2009, Osgood Corporation purchased $4 million in ten-year municipal bonds at face value.On December 31, 2011, the bonds had a market value of $3,600,000 and Osgood reclassifiedthe…

 

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In 2010, Bluebird Corporation had net income from operationsof $80,000 and operating expenses of 30,000. Further, Bluebird recognized a long-term capital loss of $20,000, and a short-term capital gain of $5,000. What is the taxable income to be reported by Bluebird Corporation in 2010?

 

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