Glendale Community College Business Law Essay

Q. 3. In explaining why their country is an attractive place to invest, the Minister of Commerce from Country A has argued that the political problems have been exaggerated and that fewer people have been imprisoned for political reasons than you have been led to believe. However, Amnesty International reports that one third of the prisoners in Country A are political prisoners. A representative from your company visited a prison and sampled 300 prisoners in Country A, concluding that 75 of them are political prisoners. Test the hypothesis, at the 5% significance level, that one third of the prisoners in Country A are political prisoners. Does this data support the Minister of Commerce or Amnesty International? What other issues might be important when evaluating this data?

Consumer Durables Focus, Inc.
You are the financial vice-president of Consumer Durables Focus, Inc., a large manufacturer of consumer
durables that is considering expanding into two developing countries. Country A and Country B split off
from the former Soviet Union and may provide opportunities for both manufacturing and sales for your
company. While the two countries have similar backgrounds and current GDPs, they differ substantially
in economic policies. Because of limited resources, your company can only expand into one country.
You would like to invest in a country that will be growing rapidly so that the citizens will be able to afford
to buy your products. Your job is to assess the prospects for investing in the two countries.
In making your decisions, you have met with the Minister of Commerce for Country A, Mr. Vasiliev, and
the Minister for Development for Country B, Mr. Alexeev. Your company has also sent a number of
representatives to the two countries to gather data to help you make your decision.
Country A
Country A is run by a generally peaceful one-party government. The government budget has been
balanced, with taxes and tariffs at a level typical for a developing country. Government spending has
focused on education with the goal of universal primary education. The legal system is well developed
and has been effective in supporting property rights (although less effective for political rights). Corruption
is low.
Country B
Country B has had a democratic and populist tradition. This has resulted in the people enjoying
substantial civil rights after independence, including free speech and popular elections. However, the
government has an inefficient civil service and a mixed record of enforcing property rights. Investment in
education and physical capital is low even though public spending and the federal deficit are high.
Unlike Country B, Country A is more restrictive in terms of civil rights and democracy. There are no
prospects for elections in the near future and a number of opposition leaders have been jailed. All
television and radio are run by the government. Newspapers have a close relationship with the
government and generally follow a pro-government line.
Required:
You have been asked to report on the expansion possibilities of Country A and Country B. Write a report
using the report guidelines found on the course web site.
In answering your questions, you may wish to review macroeconomics concepts 2 and 3 and statistics
concepts 1, 2, 6, and 8.