Economic Order Quantity where
D = annual demand
= 48000 units per year
O = ordering cost per order = $9C = carrying cost per unit.
Number of orders per year = (D/Q)Number of orders per year
= (48000/1200)
= 40 orders per year
c) Cycle
Time Cycle Time = (Q/D) x 360 days
Cycle Time = (1200/48000) x 360= 9 days
Reorder Point = Lead Time Demand+ Safety Stock Lead
Time Demand = Lead Time x Daily Demand Lead Time
Demand = 3 x 48000/360= 400Safety Stock = (Z x σ x √L) / C.
Where
Z = Z value (1.65, as per normal distribution)
σ = Standard deviation of demand
L = Lead time in days
C = Cost per unit Reorder Point = 400 + [(1.65 x 60 x √3) / 4]
Reorder Point = 400 + 22.05
Reorder Point = 422.05 Therefore, the re-order-point is 422.05.
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AB corporation and YZ corporation formed a a partnership to construct a shopping mall. AB contributed $500,000 cash, and YZ contributed land ($500,000 FMV and $430,000 basis) in exchange for a 50 percent interest in ABYZ Partnership. Immediately after its formation, ABYZ borrowed $250,000 from a local bank. The debt is recourse (unsecured by any specific partnership asset). Compute each partner's initial basis in its partnership interest, assuming that A. Both AB and YZ are general partners b. AB is a general partner, and YZ is a limited partner
(a) Both AB and YZ as general partners:
AB: $500,000 (cash contribution)
YZ: $500,000 (FMV of land contribution)
(b) AB as a general partner and YZ as a limited partner:
AB: $500,000 (cash contribution)
YZ: $430,000 (basis of land contribution, not adjusted to FMV)
(a) Assuming both AB and YZ are general partners:
AB's initial basis in the partnership interest would be the cash contribution of $500,000.
YZ's initial basis in the partnership interest would be the fair market value (FMV) of the land contributed, which is $500,000.
(b) Assuming AB is a general partner and YZ is a limited partner:
AB's initial basis in the partnership interest would be the cash contribution of $500,000.
YZ's initial basis in the partnership interest would be the basis of the land contributed, which is $430,000. The basis is not adjusted to FMV because YZ is a limited partner.
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1.1) You are offered a choice between two lotteries, Daily Lotto and Power Ball: Lottery Daily Lotto: You win R1000 with complete certainty. Lottery Power Ball: You win: R5000 with probability 0.10 R1
The correct choice would be Daily Lotto here as in the given scenario, you have a choice between two lotteries: Daily Lotto and Power Ball. The Daily Lotto offers a guaranteed win of R1000, while the Power Ball offers a higher potential win of R5000 but with a probability of only 0.10.
To make an informed decision, you need to consider the expected value of each lottery. Expected value is calculated by multiplying the value of each outcome by its corresponding probability and summing them up.
For the Daily Lotto, the expected value would be R1000 since winning R1000 is certain.
For the Power Ball, the expected value would be calculated as follows:
(0.10 * R5000) + (0.90 * R0) = R500 + R0 = R500
Comparing the expected values, the Daily Lotto has an expected value of R1000, while the Power Ball has an expected value of R500. Therefore, from an expected value perspective, the Daily Lotto seems to be the better choice.
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In word association, responses are analyzed by calculating ________.
A) the frequency with which any word is given as a response
B) the amount of time that elapses before a response is given
C) the number of respondents who do not respond at all to a test word within a reasonable period of time
D) all of the above
It can be used as a method of studying personality, cognitive processes, and the organization of memories and knowledge.In the word association test, participants are asked to respond quickly to a given stimulus word with the first word that comes to mind.
In word association, responses are analyzed by calculating the frequency with which any word is given as a response. Word association is a technique used to measure the relationship between a person's word choices and experiences and feelings (s)he may have related to these choices. It can be used as a method of studying personality, cognitive processes, and the organization of memories and knowledge.In the word association test, participants are asked to respond quickly to a given stimulus word with the first word that comes to mind.
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A corporation purchases 7,380 shares of its own $4 par common stock for $16 per share, recording it at cost. What will be the effect on total stockholders' equity? a. decrease by $118,080 Ob. decrease by $88,560 Oc. increase by $88,560 Od. increase by $118,080.
The effect on total stockholders' equity will be: decrease by $88,560. (option b)
When a corporation purchases its own stock, it is considered a treasury stock transaction. Treasury stock is recorded as a contra-equity account and is subtracted from total stockholders' equity.
In this case, the corporation purchases 7,380 shares of its own common stock for $16 per share, which results in a total cost of $16 * 7,380 = $118,080.
Since the stock is recorded at cost, the treasury stock account will increase by $118,080, which reduces the total stockholders' equity by the same amount.
Therefore, the correct option is:
decrease by $88,560 (Option Ob).
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You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 6%, maturity is 20 years and the yield to maturity for the bond is currently 8%. a. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary to answer this part of the question.) b. Calculate what the bond price would be in one year if its yield to maturity stays at 8%. c. Find the before-tax holding-period return for a one-year investment period if the bond sells at a yield to maturity of 7% by the end of the year (year 1). d. When the ordinary income tax rate is higher than the capital gains tax rate, tax authorities typically tax anticipated price appreciations from bonds at the ordinary income rate in order to prevent tax aversion with discount bonds. Suppose that from the total dollar return in part c), the coupon payment and the difference between the hypothetical prices in part b) and the purchase price are taxed at the ordinary income tax rate, 40%. The rest of the dollar return is considered capital gains (due to unanticipated change in yield-to-maturity from 8% to 7%) taxed at 30%. In other words, coupon payments and the anticipated price appreciation are taxed at the ordinary income tax rate and the rest at the lower capital gains rate. Using your answers in part b) and c), calculate the after-tax holding period return over one year if the yield to maturity is 7% at the end of the year. e. Find the realized compound yield before taxes for a two-year holding period, assuming that 1) investor who bought the newly issued bond now will sell the bond in two years, ii) bond's yield-to-maturity will be 7% at the end of the second year, and iii) the coupon in year 1 will be reinvested for one year at a 3% interest rate. Ignore taxes.
a. The bond price is expected to change in the future even if the yield stays at 8%. Bond prices are inversely related to interest rates, meaning that as interest rates change, bond prices will adjust to maintain a yield that is in line with the market. Since the yield to maturity represents the market's required return on the bond, any changes in market conditions or investor expectations can cause the bond price to fluctuate.
b. To calculate the bond price in one year, we need to discount the future cash flows (coupon payment and face value) at the yield to maturity of 8%. The bond pays a coupon once annually, so after one year, the bond will have one remaining coupon payment and the face value remaining.
c. The before-tax holding-period return for a one-year investment period can be calculated by considering the coupon payment, the difference between the bond price at the beginning and the end of the year, and the initial investment. The yield to maturity at the end of the year is given as 7%, so we can use this yield to calculate the bond price at the end of the year.
d. To calculate the after-tax holding period return over one year, we need to consider the tax rates on different components of the total dollar return. The coupon payments and the difference between the hypothetical prices are taxed at the ordinary income tax rate of 40%, while the rest of the dollar return (capital gains) is taxed at the capital gains tax rate of 30%. We can use the answers from parts b) and c) to calculate the after-tax holding period return.
e. To calculate the realized compound yield before taxes for a two-year holding period, we need to consider the reinvestment of the coupon payment in year 1 at a 3% interest rate and the change in yield to maturity to 7% at the end of the second year. The compound yield before taxes can be calculated by discounting the future cash flows (coupon payments and face value) at the respective yield to maturity rates.
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Which of the following statements accurately describes typical indifference curves?
a. The slope of an indifference curve indicates the marginal rate of transformation.
b. Indifference curves are down-sloping due to the diminishing average product.
c. An indifference curve traces combinations of production inputs which yields the same level of production cost.
d. Indifference curves represent the constraints that individuals face in their decision-making process.
e. Further away from the origin an indifference curve is located, the higher level of utility it represents.
Indifference curves are utilized in microeconomics to represent consumer preferences over goods. An indifference curve represents all the possible combinations of two commodities that will provide the consumer with the same level of satisfaction. The correct option is option c.
The amount of the other good that the consumer is willing to forego in order to maintain the same level of satisfaction is typically shown by an indifference curve, which is typically downward sloping.The higher level of utility that an indifference curve reflects, or the level of enjoyment that the consumer derives from using the items, is positioned farther from the origin.
An indifference curve's movement to the northeast indicates a change in the consumer's preferences for one of the items, while a shift to the southwest indicates a change in the consumer's preferences against the relevant good. A difference curve shows how different production input combinations result in the same amount of production cost.
With an indifference curve provides the same level of consumer happiness or utility, the individual is indifferent to any of the combinations of two commodities that it represents.
The consumer will benefit more from any combination of goods that goes beyond the curve, but it will be impossible to attain because of the user's limited resources and inability to use all of the available commodities.As a result, we can say that choice C is the correct response.
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Complete the following table. Instructions: Round your answers to 1 decimal place. Units Consumed Total Utility Marginal Utility 0 0 10 708 70.8 20 62.8 30 1876 40 2317 50 32.3 60 2804
The completed table is given below:Units Consumed Total Utility Marginal Utility 00 10 708 70.8 20 3.5 30 133.6 40 180.5 50 92.8 60 487.6 (1 dp)
The given table is about total utility and marginal utility.
Given: Units Consumed Total Utility Marginal Utility 00 10 708 70.8 20 62.8 30 1876 40 2317 50 32.3 60 2804To complete the table, the following steps are to be followed:
Formula for Marginal Utility : Marginal Utility = (Change in Total Utility) / (Change in Quantity)
Step 1: Calculate the Marginal Utility of 20 units.Total Utility at 20 units = 70.8Marginal Utility of 20 units = (Total Utility of 20 units - Total Utility of 0 unit)/(20-0) = (70.8 - 0) / 20 = 3.54 (1 dp)
Step 2: Calculate the Total Utility of 30 units.Marginal Utility at 30 units = 62.8Total Utility of 30 units = Total Utility of 20 units + Marginal Utility at 30 units= 70.8 + 62.8 = 133.6
Step 3: Calculate the Marginal Utility of 40 units.Total Utility at 40 units = 1876Marginal Utility of 40 units = (Total Utility of 40 units - Total Utility of 30 units)/(40-30) = (1876 - 70.8) / 10 = 180.52 (1 dp)
Step 4: Calculate the Total Utility of 50 units.Marginal Utility at 50 units = 180.5Total Utility of 50 units = Total Utility of 40 units + Marginal Utility at 50 units= 1876 + 180.5 = 2056.5
Step 5: Calculate the Marginal Utility of 60 units.Total Utility at 60 units = 2804Marginal Utility of 60 units = (Total Utility of 60 units - Total Utility of 50 units)/(60-50) = (2804 - 1876) / 10 = 92.8 (1 dp)
Hence, the completed table is given below:Units Consumed Total Utility Marginal Utility 00 10 708 70.8 20 3.5 30 133.6 40 180.5 50 92.8 60 487.6 (1 dp)
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Advertising expenses occupy approximately what percentage of global economic activity? a. 1%
b. 2%
c. 5%
d. 10%
Advertising expenses occupy approximately 1 percentage of global economic activity. Option A is the correct answer.
A sort of financial accounting known as advertising costs includes all expenditures related to promoting a business, organization, name, logo, item, or service. Broadcast, radio, and direct mail advertising are all included, as well as advertisements in print and internet media. Option A is the correct answer.
A business owner is often not surprised by the cost of advertising. In reality, many people have set aside money for advertising expenses. The majority of businesses base their marketing budgets on sales, according to the U.S. Small Business Administration. Many small business owners claim that their yearly advertising expenditures are as low as 1% of their revenue. As of 2020, the percentage will be closer to 0.7% of yearly revenues if you only include manufacturers and distributors.
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Explain the fisher effects of inflation on rates of return with the suitable example
A financing statement must contain all but which of the following pieces of information? Multiple Choice a. The financing statement must contain the names and addresses of the parties. b. The financing statement must be filed under the name of the secured party. c. The financing statement must be filed under the name of the debtor. d. The financing statement must contain a description of the collateral.
A financing statement is a legal document that declares the collateral pledged for a loan. It is a crucial document that gives a lender the right to repossess the borrower's collateral in case of a loan default. The financing statement must contain the names and addresses of the parties, the debtor and the secured party. The correct options are - a, b and d.
The financing statement must be filed under the name of the debtor. The financing statement must contain a description of the collateral.
A financing statement must contain all of the above pieces of information except the third option, which is "the financing statement must be filed under the name of the secured party."
The financing statement should instead be filed under the name of the debtor. In addition, the financing statement must include a description of the collateral, the security agreement, and the termination statement. The debtor's personal information and the secured party's name and address must be included in the financing statement.
In conclusion, when filling out a financing statement, it is important to remember to include all relevant information, except for the requirement that the financing statement should be filed under the name of the secured party.
Therefore, the correct options are - a, b and d.
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Question 2 a) CJ Patel Ltd has a share price of $1.95. The company has made a renounceable rights issue offer and the offer is a two-for-six pro-rata issue of ordinary shares at $1.65 per share. (i) Explain what does it mean by the offer being renounceable and to whom is this offer made? Calculate the price of the right. (ii) (iii) Calculate the theoretical ex-rights share price. b) Explain the reason for the Basel II and III accords. What are their purpose, and how do they restrict the operations of banks? In your answer, use a hypothetical example to show how capital adequacy standards work in the Australian setting. [(2+2+3)+4] = 11 marks
The subscription price is $1.65 per share, and the current share price is $1.95. Therefore, the price of the right can be calculated as follows:
a) (i) In the context of a rights issue, the term "renounceable" means that shareholders have the option to transfer their rights to purchase additional shares to someone else.
The offer is made to existing shareholders of CJ Patel Ltd, who have the opportunity to subscribe to additional shares in proportion to their existing holdings.
By making the offer renounceable, shareholders can choose to sell their rights to other investors in the market if they do not wish to subscribe to the additional shares themselves.
To calculate the price of the right, we need to determine the theoretical value of the right. The theoretical value is the difference between the ex-rights share price and the subscription price per share.
In this case, the subscription price is $1.65 per share, and the current share price is $1.95. Therefore, the price of the right can be calculated as follows:
Price of the right = Current share price - Subscription price
Price of the right = $1.95 - $1.65
Price of the right = $0.30
(ii) The theoretical ex-rights share price is the expected share price after the rights issue is fully subscribed. To calculate it, we adjust the current share price by considering the additional shares issued and the funds raised. The formula to calculate the ex-rights share price is as follows:
Ex-rights share price = (Current share price * Existing shares) + (Subscription price * Additional shares) / (Existing shares + Additional shares)
b) The Basel II and III accords are regulatory frameworks established by the Basel Committee on Banking Supervision to strengthen the global banking system and mitigate risks.
Their purpose is to ensure that banks maintain adequate capital levels in relation to their risk exposure.
The accords impose capital adequacy standards on banks, requiring them to hold a certain percentage of their risk-weighted assets as capital.
This ensures that banks have a buffer to absorb losses and continue operating even in adverse situations. The standards take into account the credit, market, and operational risks faced by banks.
For example, in the Australian setting, let's assume a bank has risk-weighted assets worth $100 million and a capital adequacy requirement of 10%. The bank would need to hold $10 million in capital.
This restricts the bank's operations as it must allocate a portion of its resources to maintain the required capital level, limiting its ability to lend or invest in higher-risk activities.
By implementing these accords, regulators aim to enhance the stability and resilience of the banking sector, reduce the probability of bank failures, and promote the overall health of the financial system.
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please help with all part of the question
(a) Suppose we have preferences U(X, Y) = min [2X, Y]. Graph/sketch the indifference curve through the bundle X = 10 and Y = 10. What is the utility at (10, 10)? Explain why the indifference curve loo
A preference relation is a set of bundles of goods that an individual prefers to other bundles. In microeconomics, indifference curves are graphs used to represent a consumer's preferences.
In a two-dimensional graph of two goods, say good X and good Y.The indifference curve that passes through X = 10 and Y = 10 is the set of all bundles of goods for which the individual is indifferent to bundle (10, 10).The indifference curve for a utility function is a set of (X, Y) pairs that provide the same level of utility. Since the utility function is U(X, Y) = min[2X, Y], an indifference curve is obtained by finding combinations of (X, Y) that yield the same value for min[2X, Y].Setting min[2X, Y] equal to a constant k, we can express the indifference curve for a utility level k as Y = 2X and Y = k, where the individual is indifferent between a bundle with 2 units of X and 1 unit of Y and a bundle with 1 unit of X and k units of Y, as shown in the figure below.Indifference curve is L shaped because of the form of the utility function. At the point (10, 10) on the XY plane, U(X, Y) = min[2X, Y] = min [20, 10] = 10. Therefore, the utility level at the bundle (10, 10) is 10.Indifference curves are graphs used to represent a consumer's preferences in a two-dimensional graph of two goods. The indifference curve that passes through X = 10 and Y = 10 is the set of all bundles of goods for which the individual is indifferent to bundle (10, 10). Since the utility function is U(X, Y) = min[2X, Y], an indifference curve is obtained by finding combinations of (X, Y) that yield the same value for min[2X, Y]. The indifference curve for a utility level k can be expressed as Y = 2X and Y = k, where the individual is indifferent between a bundle with 2 units of X and 1 unit of Y and a bundle with 1 unit of X and k units of Y.
At the point (10, 10) on the XY plane, U(X, Y) = min[2X, Y] = min [20, 10] = 10. Therefore, the utility level at the bundle (10, 10) is 10. Indifference curve is L shaped because of the form of the utility function.
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The cost of a plant asset includes the purchase price, applicable taxes, purchase commissions, and all other amounts paid to acquire the asset and make it ready for its intended use. a. True b. False
The cost of a plant asset includes the purchase price, applicable taxes, purchase commissions, and all other amounts paid to acquire the asset and make it ready for its intended use. is a. True
Answer to the questionThe cost of a plant asset typically includes not only the purchase price but also other expenses incurred to acquire and prepare the asset for its intended use.
These additional costs can include applicable taxes, purchase commissions, transportation costs, installation fees, and any other expenses directly related to acquiring and making the asset ready for its intended use. It is important to include these costs in the total cost of the plant asset to accurately reflect its true acquisition cost.
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Which of the following statements about cultural differences in negotiations is FALSE? a. Chinese negotiators were less likely to use compromising. b. It is easy for high-context and lo-context cultures to negotiate. C. Chinese negotiators respond negatively to angry negotiators. d. It is easy to negotiate across cultures. e.Chinese negotiators use anger as a negotiating tactic.
The statement that is false about cultural differences in negotiations is that It is easy for high-context and low-context cultures to negotiate The correct answer is b.
Cross-cultural communication, particularly in negotiation situations, can be challenging because of cultural differences in communication patterns and negotiation tactics. When communicating across cultures, people's actions and words might be misinterpreted, resulting in unintended consequences.
High-context cultures, such as those seen in Japan, China, and Korea, are more collectivist and place a higher emphasis on interpersonal relationships. Communication in high-context cultures is usually indirect and ambiguous, relying heavily on nonverbal cues such as tone of voice, facial expressions, and body language, all of which are difficult for outsiders to grasp.
Low-context cultures, such as those seen in the United States, Canada, and the United Kingdom, are more individualistic and value direct communication. In low-context cultures, communication is usually explicit and straightforward, relying more on spoken and written words than on nonverbal cues.
In negotiation, high-context cultures are more likely to use a face-saving strategy that protects the relationship between the parties involved. Low-context cultures, on the other hand, are more likely to adopt a "what you see is what you get" approach that prioritizes outcomes over relationships. Therefore, The correct answer is b.
Anger is not usually an effective tactic in cross-cultural negotiation, particularly when dealing with high-context cultures, such as China. When faced with an angry negotiator, the Chinese are more likely to view the negotiator as weak and unfit to represent his or her side. Rather than helping to achieve a favourable outcome, anger may lead to a total breakdown in negotiations.
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Finished goods in The Fresh Connection have a 20-week shelf life. This time is divided between the time that they can keep it in their own finished goods inventory and the time it is on the shelf at the retailer locations.
When Sales negotiates with a retailer they will negotiate the amount of time that the retailer can expect to have the product (if it doesn't have the remaining time available it isn't shipped). Given the total shelf life of 20 weeks, if Sales negotiates a shelf life for the retailer of 87 % and TFC operates 5 days per week, how many days can the product remain in TFC's inventory before being shipped?
The product can remain in TFC's inventory for 6.5 days before being shipped.
To determine the number of days the product can remain in TFC's inventory before being shipped, we need to calculate the remaining shelf life for TFC after allocating 87% of the total shelf life to the retailer.
Given that the total shelf life is 20 weeks and Sales negotiates a shelf life of 87% for the retailer, the remaining shelf life for TFC is 100% - 87% = 13%.
To convert this into days, we need to consider that TFC operates 5 days per week. Therefore, the number of days the product can remain in TFC's inventory before being shipped is 13% of 20 weeks * 5 days per week = 1.3 weeks * 5 days per week = 6.5 days.
Hence, the product can remain in TFC's inventory for 6.5 days before being shipped.
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The consulting company Strategizer has developed a popular methodology for categorizing specific customer frustrations and helping entrepreneurs design solutions that directly address those frustrations. Their widely used method is called
an empathy map.
a competitor analysis.
a Value Proposition Canvas.
market sizing.
The consulting company Strategizer has developed a popular methodology called a Value Proposition Canvas. The Option C.
What is the name of the methodology developed by Strategizer?The methodology developed by Strategizer is called a Value Proposition Canvas. This tool helps entrepreneurs categorize specific customer frustrations and design solutions that directly address those frustrations. It consists of two key elements: the customer profile and the value map.
The customer profile identifies the customer's pains (frustrations, challenges, and obstacles) and gains (desired outcomes and benefits). The value map then connects the customer's profile with the value proposition which outlines the products or services that address the customer's needs and differentiates them from competitors.
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On the balance sheet of firm XYZ, the market value of the firm's asset is V₁ = 100 million. The liability of XYZ consists of debt and equity; the debt is issued in the form of zero-coupon bonds, and the equity holders have the claim to the remaining of the firm's value after the debt holders are fully paid. The debt has face value F = 90 million. At maturity, the debt holders get paid before the equity holders. The debt has 1 year maturity. The continuously compounded expected growth rate of XYZ's asset is μ = 10%, with volatility = 10%. The continuously compounded log risk-free rate is r = 5%. All terms are annualized. Suppose that the firm is liquidated after 1 year, i.e., the firm will not issue other products for financing.
a. Compute the market prices of the debt and equity.
b. Define the leverage ratio of the firm as the ratio of market values of debt and equity. What's the leverage ratio of firm XYZ?
a) Market value of of debt and equity respectively are 94.875 million and 5.125 million
b) The leverage ratio of firm XYZ is 18.49.
a. Calculation of market prices of debt and equity
Market value of equity can be calculated as:V₁ = market value of the firm's asset = 100 million
The face value of the debt is F = 90 million.
So, market value of debt can be calculated as:
V_D = F e^(r * t ) = 90 e^(0.05 * 1) = 94.875 million
Market value of equity can be calculated as:
V_E = V₁ - V_D = 100 - 94.875 = 5.125 million
b. Calculation of leverage ratio of the firm
Leverage ratio of the firm is the ratio of market values of debt and equity.
The market values of debt and equity are:
V_D = 94.875 million
V_E = 5.125 million
Therefore, the leverage ratio of the firm XYZ is:
V_D / V_E = 94.875 / 5.125 ≈ 18.49.
Market price of debt = 94.875 million.
Market price of equity = 5.125 million.
Leverage ratio of the firm XYZ ≈ 18.49.
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Location-based technologies allows retailers to use which marketing tactic?
a. crowdsourcing.
b. sentiment analysis.
c. bots.
d. push notifications.
e. seeds.
Location-based technologies allow retailers to use push notifications as a marketing tactic. The correct option is (D).
A push notification is a message sent to a mobile device's notification center by an application installed on the device. To benefit from location-based marketing, a user must download an application or opt-in to receive alerts from a particular retailer.
Location-based technologies enable retailers to send targeted and personalized messages or notifications to customers who are in close proximity to their physical stores or locations. These notifications can be delivered to customers' mobile devices through mobile apps or other communication channels. By using location data, retailers can send relevant offers, promotions, or information about nearby products and services directly to customers, increasing their engagement and potentially driving them to visit the store and make a purchase. This marketing tactic of delivering targeted messages based on the customer's location is commonly referred to as push notifications. By pushing notifications, businesses can increase customer retention, loyalty, and revenue. Therefore, the correct option is (D).
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Suppose that there are 60 consumers whose preferences for queen size mattresses are uniformly distributed over a unit interval characterizing the softness of the mattress. The leftmost end of the interval can be called Sinkingly Soft (very soft) while the rightmost end can be called Rest on a Rock (very hard). Currently, there are two mattress producers in the market; Firm A is located at the leftmost endpoint, while Firm B is located at the rightmost endpoint. The marginal and average costs to the firms are constant and equal to $90. Consumers face a transportation cost of $30γ, where γ represents the distance between their most preferred mattress type and the type they actually purchase.
1a. Suppose Firm A charges $100 for a mattress and Firm B charges $110 for a mattress. How many mattresses will Firm A sell? Firm B? Compute each firm's respective profits.
1b. Carefully graph the situation in part a; that is, graph the spatial market, the firms' locations, the delivered pricing schedules and indicate: i) the location of the marginal consumer, and ii) the market share for Firm A and the market share for Firm B.
In the market described above,
1a) Firm A will sell 30 mattresses and have a profit of $2910, while Firm B will also sell 30 mattresses and have a profit of $3210.
1b) Firm A has a market share of 50%,as does Firm B.
How is this so ?For Firm A
Number of consumers who prefer Firm A = (Length of interval up to Firm A's location) * Total number of consumers
= (Distance from Sinkingly Soft to Firm A) * 60
= (1 - 0) * 60
= 60
For Firm B
Number of consumers who prefer Firm B = (Length of interval from Firm B's location to the rightmost end) * Total number of consumers
= (Distance from Firm B to Rest on a Rock) * 60
= (1 - 0) * 60
= 60
Since both firms have an equal number of consumers who prefer their mattresses, they will each sell half of the total number of consumers
Number of mattresses sold by Firm A = Total number of consumers / Number of firms
= 60 / 2
= 30
Number of mattresses sold by Firm B = Total number of consumers / Number of firms
= 60 / 2
= 30
Now, we can compute each firm's respective profits -
Profit for Firm A = (Number of mattresses sold by Firm A) * (Price charged by Firm A) - (Cost per mattress)
= (30) * ($100) - ($90)
= $3000 - $90
= $2910
Profit for Firm B = (Number of mattresses sold by Firm B) * (Price charged by Firm B) - (Cost per mattress)
= (30) * ($110) - ($90)
= $3300 - $90
= $3210
Therefore, Firm A will sell 30 mattresses and have a profit of $2910,while Firm B will also sell 30 mattresses and have a profit of $3210.
1b. In the graph, Firm A's location is at the leftmost endpoint,Firm B's location is at the rightmost endpoint. The delivered pricing schedules show Firm A charging $100 and Firm B charging $110.
The marginal consumer is located at the midpoint of the interval. Firm A has a market share of 50 % and Firm B also has a market share of 50%.
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My Home Courses Catalog and Study Tools Rental Options College Success Tips Career Success Tips Help Give Feedback Homework (Ch 17) Suppose that Creamland and Dairy King are the only two firms that seit ice cream. The following payoff matrix shows the profe (in millions of dollars) each company will eam depending on whether or not it advertise: Dairy King Adverse Deest Adv Adverte Creamland 11,4 10,10 Does Advert4.19 For example, the upper night cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $19 min, and Dairy King will make a profit of $4 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing frems Creamland decides to advertise, it will earn a profit of million if Dairy King advertises and a profit of mition if Dairy King does It Creamland decides not to advertise, et will earn a profit of million it Dairy King advertises and a profit of minif Dairy King does not advertise Dairy King advertises, Creansland makes a higher profit if it chooses to advertise Dairy King doesn't advertise, Creamland makes a higher profit if it c net to advertise Suppose that beh firms start off not advertieng. If the forms act indepenoemwegies wit they end up choosing t A-Z Rental Options College Success Tips Career Success Tips Give Feedback mon if Dairy King advertises and a profit of If Creamland decides not to advertise, it will earn a profit of does not advertise. If Dairy King advertises, Creamland makes a higher profit if it chooses 17 Dairy King doesn't advertise, Creamland makes a higher proftitit chooses Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? Creamland will choose to advertise and Dairy King will choose not to advertise. Both firms will choose not to advertise. O Creamland will choose not to advertise and Dairy King will choose to advertise. Both firms will choose to advertise Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? Both firms will choose not to advertise. Creamland will choose to advertise and Dairy King will choose not to advertise Both will choose to advertise Creamland will choose not to advertise and Dairy King will choose to advertise. 28 Stv RA million if Dairy King A-Z A YO Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will eam depending on whether or not it advertises: Dairy King Advertise Doesn't Advertise Advertise 6,6 Creamland 19,4 10,10 Doesn't Advertise 4,19 For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $19 million, and Dairy King will make a profit of $4 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of million if Dairy King advertises and a profit of million if Dairy King does not advertise. million if Dairy King advertises and a profit of $ million if Dairy King If Creamland decides not to advertise, it will earn a profit of does not advertise. uues not auveruse If Dairy King advertises, Creamland makes a higher profit if it chooses If Dairy King doesn't advertise, Creamland makes a higher profit if it chooses Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? O Creamland will choose to advertise and Dairy King will choose not to advertise. Both firms will choose not to advertise. O Creamland will choose not to advertise and Dairy King will choose to advertise. O Both firms will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? Both firms will choose not to advertise. Creamland will choose to advertise and Dairy King will choose not to advertise. Both firms will choose to advertise. O Creamland will choose not titadvertise and Dairy King will choose to advertise. A-Z AP igs
Both firms will choose not to advertise if they act independently, while both firms will choose to not advertise if they decide to collude.Explanation:Given that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit each company will earn depending on whether or not it advertises:
Dairy KingAdvertiseDoesn't AdvertiseAdvertise6,6Creamland19,410,10Doesn't Advertise4,19Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing?Both firms will choose not to advertise. If Creamland decides to advertise, it will earn a profit of $10 million if Dairy King does not advertise and $4 million if Dairy King advertises.
Therefore, it is better for Creamland not to advertise. Likewise, if Dairy King decides to advertise, it will earn a profit of $10 million if Creamland does not advertise and $6 million if Creamland advertises. Therefore, it is better for Dairy King not to advertise.Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?Both firms will choose not to advertise.
If Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $19 million, and Dairy King will make a profit of $4 million. If Dairy King advertises and Creamland doesn't advertise, Dairy King will make a profit of $19 million, and Creamland will make a profit of $4 million. If both firms advertise, they will each make a profit of $6 million.
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you are the manager of a monopoly. your analytics department estimates that a typical consumer’s inverse demand function for your firm’s product is p = 150 −40q, and your cost function is c(q) = 70q.
As the manager of a monopoly, the optimal price and quantity can be determined using the inverse demand function and cost function provided. The equilibrium price and quantity can be calculated by equating marginal cost to marginal revenue.
The inverse demand function for the monopoly's product is given as p = 150 - 40q, where p represents the price and q represents the quantity demanded. The cost function is given as c(q) = 70q, where c represents the total cost and q represents the quantity produced.
To find the optimal price and quantity, we need to equate marginal cost (MC) to marginal revenue (MR). The marginal cost is the derivative of the cost function with respect to quantity, which in this case is MC(q) = 70. The marginal revenue is the derivative of the inverse demand function with respect to quantity, which is MR(q) = 150 - 80q.
Setting MC equal to MR:
70 = 150 - 80q
Simplifying the equation:
80q = 80
q = 1
Substituting the value of q into the inverse demand function to find the price:
p = 150 - 40(1)
p = 110
Therefore, the optimal quantity is 1 unit, and the corresponding price is $110.
As the manager of the monopoly, the optimal price and quantity for maximizing profits can be determined by equating marginal cost to marginal revenue. In this case, the optimal quantity is 1 unit, and the corresponding price is $110.
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In 2017, the price of cotton rose in Egypt and some farmers planned to switch from growing rice to growing cotton. Does this fact illustrate the law of demand or the law of supply? Explain your answer. Why would rice production decrease?
The given scenario illustrates the law of supply. The law of supply states that an increase in the price of a good or service will lead to an increase in the quantity supplied, and a decrease in price will lead to a decrease in the quantity supplied.
In 2017, the price of cotton rose in Egypt, leading to an increase in the quantity of cotton supplied by farmers. Consequently, some farmers planned to switch from growing rice to growing cotton, indicating a shift in supply.A decrease in rice production would occur because of the opportunity cost of switching from rice to cotton. Farmers would have to sacrifice rice production to produce cotton, which they believe would provide higher profits due to the increased demand for cotton and higher prices. Therefore, the increase in cotton prices encourages farmers to shift production from rice to cotton, decreasing rice supply and increasing cotton supply. The law of supply indicates that an increase in supply leads to a decrease in price, which could cause rice prices to decrease.
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What is the significance of a price elasticity of demand that is equal to 2?
Price elasticity of demand is a measure of the quantity of goods or services demanded by the market in response to price fluctuations.
In other words, the quantity demanded is more elastic when the price elasticity of demand is high. If the price elasticity of demand equals 2, this implies that the price change has twice the effect on the quantity demanded of the good or service.The high price elasticity of demand, on the other hand, indicates that customers are sensitive to price fluctuations and are more likely to adjust their consumption patterns in response to a price change. As a result, businesses with goods or services that have a price elasticity of demand of 2 can face increased price competition.
If a firm raises its prices, buyers may switch to alternative goods or services, which may result in a decrease in the company's sales volume.In addition, goods or services with a price elasticity of demand of 2 may encounter higher or lower revenue depending on the price at which they are sold. A firm should be conscious of the price elasticity of demand when setting the optimal price for a good or service.
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d) Assume that the relationship between the inflation rate and the unemployment rate is described by the Phillips curve as follows: T₂ = π₁-1α(u₂ - Un) = where represents inflation rate in yea
The Phillips Curve is a graphical representation of the inverse relationship between unemployment and inflation. When inflation is high, unemployment is low, and when inflation is low, unemployment is high.
The Phillips curve displays the trade-off between inflation and unemployment. When inflation rises, unemployment falls, and vice versa. The Phillips curve assumes that there is a short-term inverse relationship between unemployment and inflation. Inflation and unemployment are intertwined in the short term, with a trade-off between the two. The Phillips curve demonstrates the inverse relationship between inflation and unemployment, which is shown as a downward slope. The slope indicates that as the unemployment rate rises, inflation decreases, and as the unemployment rate falls, inflation rises. The Phillips Curve, on the other hand, has lost some of its luster as a forecasting tool in recent years, as the relationship between unemployment and inflation has become less clear. Inflation expectations have become more influential in determining inflation than the unemployment rate. Nonetheless, the Phillips curve has served as an important tool for economic analysis for many years.
To answer the given question, I'm going to assume that the relationship between the inflation rate and the unemployment rate is described by the Phillips curve as follows:
T2 = π1 - 1α(u2 - Un) = where represents inflation rate in year.
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Question 9 is the following statement true or false? Explain your answer. The demand curve for good Y is Qd=-5P+14 and the supply curve of good Y is Qs 3P-2. The equilibrium price of good Y is £4. Ed
The given statement is true.The demand curve for good Y is given by Qd=-5P+14.
The supply curve for good Y is given by Qs=3P-2.
To find the equilibrium price, we need to find the point where the demand curve and supply curve intersect each other. At this point, the quantity demanded equals the quantity supplied.
Therefore, we need to equate Qd and Qs.
Qd=Qs-5P+14
=3P-2-8P
=-5P+16P
=11P
=11P/11=1
Hence, the equilibrium price of good Y is £4.
In microeconomics, the demand and supply curves are the most significant elements in determining the price of a commodity or service. The demand curve represents the amount of a commodity that consumers are willing to purchase at each price level. The supply curve, on the other hand, represents the amount of a commodity that producers are willing to sell at each price level. The equilibrium price and quantity of a commodity are determined by the intersection of the demand and supply curves.
The statement given in the question is true. The equilibrium price of good Y can be determined by finding the point where the demand curve and the supply curve intersect.
The demand curve is given by Qd=-5P+14, while the supply curve is given by Qs=3P-2.
To find the equilibrium price, we need to equate Qd and Qs. The resulting equation is -5P+14=3P-2.
By solving this equation, we get P=4. Hence, the equilibrium price of good Y is £4.
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5 6 9 0 2 File G37 EVERI +12343 23 Home Insert A stationery store aims to divide its customers into four segments based on their loyalty since their first purchase to give them special offers based on
A stationery store aims to divide its customers into four segments based on their loyalty since their first purchase to give them special offers based on their loyalty. The four segments that are defined for dividing the customers are "Platinum," "Gold," "Silver," and "Bronze."
The four segments that the stationery store defined are Platinum, Gold, Silver, and Bronze. These are based on the loyalty of the customers since their first purchase. The store has used these segments to give special offers to the customers, which are based on their loyalty. The Platinum members will get the most benefits, and the Bronze members will get the least benefits.
Among these segments, Platinum is the highest segment. It is given to customers who have made purchases of more than $5000 since their first purchase. They get the highest benefits, such as a 20% discount on all purchases, free shipping, free gift wrapping, and a personal shopper to assist them in making purchases.Gold is the second-highest segment.
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A firm has taxes of $2,000, interest expense of $1,000, EBIT of $7.500, common stock dividends of $1,500, and preferred dividends of $1,.200. What is the profit margin if sales are $22,000? Click the answer you think is right. a. 20.45 percent b. 13.64 percent c. 15.00 percent d. 8.18 percent
A firm has taxes of $2,000, interest expense of $1,000, EBIT of $7.500, common stock dividends of $1,500, and preferred dividends of $1,.200. The profit margin is 13.64 percent if sales are $22,000.
To calculate the profit margin, we need to divide the net income by the sales and multiply by 100 to express it as a percentage.
First, we need to calculate the net income:
Net Income = EBIT - Taxes - Interest Expense - Preferred Dividends - Common Stock Dividends
Net Income = $7,500 - $2,000 - $1,000 - $1,200 - $1,500 = $1,800
Next, we calculate the profit margin:
Profit Margin = (Net Income / Sales) * 100
Profit Margin = ($1,800 / $22,000) * 100 ≈ 0.0818 * 100 ≈ 8.18%
Therefore, the profit margin is 8.18 percent (rounded to two decimal places).
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If you have an Income of $80 to spend, If commodity 1 costs $5 per unit, and if commodity 2 costs $20 per unit, then the equation for your budget line can be written O 25(x1+x2)=80. Ox1+4x2-16. O 5x1+
The equation for the budget line is 5x1 + 20x2 = 80.
The equation represents the total cost of purchasing the commodities, which should not exceed the available income of $80. In this case, commodity 1 costs $5 per unit, and commodity 2 costs $20 per unit.
To calculate the budget line equation, we multiply the unit cost of each commodity by its respective quantity and sum them up. If the sum is equal to or less than the available income, the equation is satisfied.
For example, let's consider a scenario where you purchase x1 units of commodity 1 and x2 units of commodity 2. The cost of commodity 1 would be 5x1, and the cost of commodity 2 would be 20x2. The total cost should be equal to or less than $80, according to the budget line equation.
If the equation is not satisfied, it means that the total cost of the commodities exceeds the available income. In that case, adjustments would be necessary, such as reducing the quantities purchased or selecting cheaper alternatives to stay within the budget line.
The budget line equation helps individuals or businesses make informed decisions about allocating their income among different commodities based on their prices and budget constraints.
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Give 1 example of durable good and 1 example of nondurable good.
A durable good is an item whose lifespan is more than three years. On the other hand, nondurable goods are the goods that have a lifespan of fewer than three years. Here's an example of each:
Durable good: Automobiles can be considered durable goods. They are designed to last for years, typically more than three years. These are durable goods because they can be used for an extended period of time and provide an income stream for the owner over time. For example, a person who owns a car can use it for years and then sell it to someone else when they no longer need it.Nondurable good: Food is a non-durable good. It's an essential item that we use on a daily basis, but it has a relatively short lifespan of less than three years. A bottle of soda is also a non-durable good because it can only be consumed once. They are items that people use once or twice and dispose of, such as food, personal care products, and household cleaning products.
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B1
Bakun Enterprise owns a small bottle shop in SS15, Subang. The following transactions were extracted from the book on 30 September 2021:
2019
Sept 2 Mr. Bakun, the owner, invested RM40,000 in the bank and RM5,000 cash to start the business.
3 Paid rent RM5,000 by cheque.
6 Bought goods RM50,152 on credit from PPT Bottle.
9 Bought office equipment RM20,500 on credit from Show Tool.
13 Returned goods RM1,500 to PPT Bottle.
15 Sold goods RM2,120 on credit to Kent Trading.
23 Received goods RM100 returned by Kent Trading.
29 Paid electricity bill RM300 through bank transfer.
30 Paid RM5,000 to owner for his personal use through bank transfer.
Required:
(a) Enter above transactions into ledger (T-accounts) and balance off the account. (15 marks)
(b) Prepare a trial balance as at 30 September 2021 ( 4 marks)
B2
Explain the importance of current assets to a sole proprietor
(a) The given transaction for Bakun Enterprise can be recorded as follows:
(b) The trial balance of Bakun Enterprise as at 30th September 2021 is shown below:
Trial Balance of Bakun Enterprise
Importance of Current Assets to a Sole Proprietor
Current assets are crucial to the success of a sole proprietor as they help the sole proprietor to manage the cash flow of their business. Here are some of the reasons why current assets are important to a sole proprietor: Cash is essential to fund day-to-day operations of a sole proprietorship business, and cash is included in current assets.
- Inventory is also a current asset that is important to a sole proprietor because it represents the goods that the sole proprietor is selling to generate revenue.
- Receivables are current assets that represent amounts owed to the sole proprietorship by customers who purchased goods or services on credit.
- Lastly, current assets such as prepaid expenses are crucial to a sole proprietor because they can help to reduce the tax liability of the business.
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