a. Own price elasticity (Ep) ≈ -5.25
b. Cross price elasticity with the other two goods (Epy and Epz) can be calculated using the respective formulas provided.
c. Income elasticity (Ei) ≈ 0
d. The effect on Qy of a 10% increase in the price of the other two goods is a decrease from 68 to 7.6.
To calculate the different elasticities and determine the effect on Qy, let's go through each calculation step by step:
Q = 100 - 4P
Py = 8
Px = 21
Pz = 9
M = 55000
a. Own price elasticity (Ep) measures the responsiveness of the quantity demanded to a change in price.
Ep = (% change in quantity demanded) / (% change in price)
First, we need to calculate the initial quantity demanded (Q) at the given price (P):
Q = 100 - 4P
Q = 100 - 4 * 21
Q = 100 - 84
Q = 16
Now, let's calculate the new quantity demanded when the price (P) changes by 1 unit:
New P = P + 1 = 21 + 1 = 22
New Q = 100 - 4 * 22
New Q = 100 - 88
New Q = 12
Now we can calculate the percentage change in quantity demanded and the percentage change in price:
% change in quantity demanded = (New Q - Q) / Q = (12 - 16) / 16 = -0.25
% change in price = (New P - P) / P = (22 - 21) / 21 = 0.0476
Now we can calculate the own price elasticity (Ep):
Ep = (% change in quantity demanded) / (% change in price) = -0.25 / 0.0476 ≈ -5.25
b. Cross price elasticity measures the responsiveness of the quantity demanded of one good to a change in the price of another good.
Cross price elasticity (Epy) between good y and good x:
Epy = (% change in quantity demanded of y) / (% change in price of x)
First, we need to calculate the initial quantity demanded of y (Qy) at the given price of y (Py):
Qy = 100 - 4Py
Qy = 100 - 4 * 8
Qy = 100 - 32
Qy = 68
Now, let's calculate the new quantity demanded of y when the price of x (Px) changes by 1 unit:
New Px = Px + 1 = 21 + 1 = 22
New Qy = 100 - 4 * 22
New Qy = 100 - 88
New Qy = 12
Now we can calculate the percentage change in quantity demanded of y and the percentage change in price of x:
% change in quantity demanded of y = (New Qy - Qy) / Qy = (12 - 68) / 68 ≈ -0.8235
% change in price of x = (New Px - Px) / Px = (22 - 21) / 21 = 0.0476
Now we can calculate the cross price elasticity (Epy):
Epy = (% change in quantity demanded of y) / (% change in price of x) ≈ -0.8235 / 0.0476 ≈ -17.27
Similarly, you can calculate the cross price elasticity (Epz) between good z and good x.
If the cross price elasticity (Epy or Epz) is positive, it indicates that goods y and z are substitutes. If it is negative, it indicates that goods y and z are complements.
c. Income elasticity measures the responsiveness of the quantity demanded to a change in income.
Income elasticity (Ei) = (% change in quantity demanded) / (% change in income)
First, we need to calculate the initial quantity demanded (Q) at the given income (M):
Q = 100 - 4P
Q = 100 - 4 * 21
Q = 100 - 84
Q = 16
Now, let's calculate the new quantity demanded when the income (M) changes by 1 unit:
New M = M + 1 = 55000 + 1 = 55001
New Q = 100 - 4 * 21
New Q = 100 - 84
New Q = 16
Now we can calculate the percentage change in quantity demanded and the percentage change in income:
% change in quantity demanded = (New Q - Q) / Q = (16 - 16) / 16 = 0
% change in income = (New M - M) / M = (55001 - 55000) / 55000 = 0.0000182
Now we can calculate the income elasticity (Ei):
Ei = (% change in quantity demanded) / (% change in income) = 0 / 0.0000182 ≈ 0
If the income elasticity (Ei) is positive, it indicates that the good is a normal good (as income increases, the quantity demanded increases). If it is negative, it indicates an inferior good (as income increases, the quantity demanded decreases). If it is close to zero, it indicates a necessity or a relatively income-inelastic good.
d. Effect on Qy of a 10% increase in the price of the other two goods:
To determine the effect on Qy, we need to calculate the new quantity demanded of y when the price of x and z increases by 10%
New Px = Px + 0.10 * Px = 21 + 0.10 * 21 = 23.1
New Pz = Pz + 0.10 * Pz = 9 + 0.10 * 9 = 9.9
New Qy = 100 - 4 * 21
New Qy = 100 - 4 * 23.1
New Qy = 100 - 92.4
New Qy = 7.6
The effect on Qy of a 10% increase in the price of the other two goods is a decrease from 68 to 7.6.
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Fernanda and Jack are lifelong friends who have decided to open a bakery together. They are both experienced bakers who specialize in artisanal cheesecake, and they feel the world is in need of their creamy and decadent desserts. They are concerned about protecting their assets in case the business fails, about being able to pay the taxes for a business that is just starting out, and about the difficulty of setting up and maintaining the business. What are the pros and cons of the different business entities they could form?
Fernanda and Jack are lifelong friends who have decided to open a bakery together. They are both experienced bakers who specialize in artisanal cheesecake, and they feel the world is in need of their creamy and decadent desserts. They are concerned about protecting their assets in case the business fails, about being able to pay the taxes for a business that is just starting out, and about the difficulty of setting up and maintaining the business.
Following are the pros and cons of the different business entities they could form:-
Sole Proprietorship
Pros
1. Low setup cost
2. Full control over the business
3. Tax Benefits
Cons
1. Unlimited personal liability Partnership
Pros
1. Low setup cost
2. Shared management and responsibility
3. Tax Benefits
Cons
1. Unlimited personal liability
2. Conflict of interest Corporation
Pros
1. Limited personal liability
2. Perpetual existence
3. Easy to raise funds
Cons
1. Double taxation
2. Complicated and expensive setup cost Limited Liability Company
Pros
1. Limited personal liability
2. Pass-through taxation
3. Flexible management
Cons
1. Expensive setup cost
2. State-specific laws
Fernanda and Jack may choose the business entity that is right for them. They need to evaluate their goals and choose the one that is most appropriate for their business.
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which general area of the united states receives the most solar energy
The Southwestern region of the United States receives the most solar energy. This area includes California, Arizona, New Mexico, Nevada, Texas, and Colorado.
This region receives the most solar energy because of its location on the planet. The southwestern United States is closer to the equator than the rest of the country. This proximity means that the sun’s rays hit this area at a more direct angle.
The angle of the sun’s rays affects the intensity of the solar radiation that reaches the surface of the earth, and as a result, more solar energy is available in the southwestern United States.
Additionally, this region is known for its clear skies and low humidity. This means that there is less atmospheric interference blocking the sun’s rays from reaching the earth’s surface. The combination of a direct angle of sunlight and clear skies makes the southwestern United States an ideal location for solar energy production.
In fact, the Southwest is home to many of the largest solar power plants in the United States. For example, the Ivanpah Solar Electric Generating System in California and the Solana Generating Station in Arizona are two of the largest solar power plants in the world.
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Suppose the terms of trace for nation X rises from 100 to 110.
Explain how this will impact the terms of trade for nation
Y.
The rise in the terms of trade for nation X may put upward pressure on the terms of trade for nation Y.
If the terms of trade for nation X rise from 100 to 110, it implies that nation X now needs fewer units of its exports to obtain a given quantity of imports. This improvement in the terms of trade for nation X can have an impact on the terms of trade for nation Y.
When nation X's terms of trade improve, it means that it can receive more imports for a given amount of its exports. As a result, nation X can afford to import more goods from nation Y without exporting as much. This increased demand for imports from nation Y puts upward pressure on the terms of trade for nation Y.
In response to the improved terms of trade for nation X, nation Y might negotiate for better terms to maintain a balance in their trading relationship. Nation Y might seek to increase the price of its exports to nation X or negotiate for a larger quantity of imports from nation X in exchange for a given amount of its exports. By doing so, nation Y aims to capture some of the gains from nation X's improved terms of trade.
However, the impact on nation Y's terms of trade will ultimately depend on various factors, including the relative bargaining power of the two nations, the elasticity of demand for their respective exports, and the availability of alternative trading partners. If nation Y has limited bargaining power or faces competition from other countries, it may not be able to fully capitalize on nation X's improved terms of trade.
In summary, when the terms of trade for nation X rise, it puts upward pressure on the terms of trade for nation Y. However, the actual impact on nation Y's terms of trade will depend on several factors and the bargaining dynamics between the two nations.
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Question 11 of 12 < > View Policies Current Attempt in Progress The adjusted trial balance columns of the worksheet for Sheridan Company, owned by C. Sheridan, are as follows. Sheridan Company Workshe
The given trial balance sheet is used to prepare financial statements at the end of an accounting period. In this worksheet, the adjustments for accruals and deferrals are entered separately to ensure that all accounts are up-to-date. Below are the accounts affected by each adjustment entry:
1. Insurance expired$1,200 – This is a prepaid expense that has been used up in the current period. As a result, Insurance Expense is debited while Prepaid Insurance is credited.
2. Depreciation expense$950 – This is the cost of the furniture and fixtures that have been used in the business. Sheridan Company has been using these assets since the day of purchase, so their value has been reduced by depreciation. Accumulated Depreciation is credited while Depreciation Expense is debited.
3. Interest revenue$275 – Interest is earned on a bank deposit, but it will not be received until the end of the month. To account for the interest earned, Interest Receivable is debited while Interest Revenue is credited.
4. Wages accrued$600 – This is a liability that the company owes to its employees for the current pay period. As a result, Wages Expense is debited while Wages Payable is credited.
5. Rent expired$450 – This is a prepaid expense that has been used up in the current period. Rent Expense is debited while Prepaid Rent is credited.
As a result, Office Supplies Expense is debited while Office Supplies is credited.7. Income taxes accrued$550 – This is an expense that the company owes to the government for the current tax period. As a result, Income Tax Expense is debited while Income Tax Payable is credited.
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Chiles Inc. recently paid a dividend of $1.65 that is expected to grow at a rate of 20% for the next 3 years and then at a more stable and constant rate of 5% thereafter. If investors of this stock require a 10% rate or return what is the intrinsic value (PO) of this stock?
The intrinsic value (PO) of the stock is $65.71.
To calculate the intrinsic value (PO) of Chiles Inc. stock, we can use the dividend discount model (DDM). The DDM calculates the present value of future dividends to determine the stock's intrinsic value.First, let's calculate the dividends for the next three years using the dividend growth rate:Year 1: $1.65 * (1 + 20%) = $1.98Year 2: $1.98 * (1 + 20%) = $2.38Year 3: $2.38 * (1 + 20%) = $2.86Next, we need to calculate the present value of the dividends using the required rate of return. We will use a discount rate of 10% for this calculation:PV = ($1.98 / (1 + 10%)^1) + ($2.38 / (1 + 10%)^2) + ($2.86 / (1 + 10%)^3)The calculation for the perpetuity value is as follows:Perpetuity Value = $2.86 * (1 + 5%) / (10% - 5%)Perpetuity Value = $2.86 * (1.05) / (0.05)Perpetuity Value = $2.86 * 1.05 / 0.05Perpetuity Value = $3.00 / 0.05Perpetuity Value = $60.00Therefore, the perpetuity value of the stock is $60.00.After the third year, the dividends are expected to grow at a stable rate of 5%. To calculate the perpetuity value, we use the formula: PV = D / (r - g), where D is the dividend and g is the growth rate:Perpetuity Value = $2.86 * (1 + 5%) / (10% - 5%)Finally, we sum the present value of the dividends and the perpetuity value to get the intrinsic value (PO) of the stock:PO = PV + Perpetuity ValuePresent Value = ($1.98 / (1 + 10%)^1) + ($2.38 / (1 + 10%)^2) + ($2.86 / (1 + 10%)^3)Present Value = ($1.98 / (1.10)^1) + ($2.38 / (1.10)^2) + ($2.86 / (1.10)^3)Present Value = $1.80 + $1.91 + $2.00Present Value = $5.71Therefore, the present value of the dividends for the first three years is $5.71.To calculate the intrinsic value (PO) of the stock, we need to add the present value of the dividends for the first three years to the perpetuity value calculated earlier.Intrinsic Value (PO) = Present Value of Dividends + Perpetuity ValueIntrinsic Value (PO) = $5.71 + $60.00Intrinsic Value (PO) = $65.71Therefore, the intrinsic value (PO) of the stock is $65.71.Calculating the exact value requires plugging in the numbers into the formulas and performing the calculations. However, based on the provided information, the intrinsic value (PO) of Chiles Inc. stock can be determined using the steps outlined above.For more questions on stock
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α= 4 and β=7
Suppose MPC is 0.8. If government purchases increase by $10α and cuts taxes by $50β, how much the equilibrium output is changed?
In macroeconomics, equilibrium output refers to the level of total output in an economy that occurs when aggregate demand is equal to aggregate supply. The aggregate demand is the total amount of goods and services demanded in an economy while the aggregate supply is the total amount of goods and services supplied in an economy.
Therefore, to determine how much the equilibrium output is changed when the government purchases increase by $10α and cuts taxes by $50β,
we need to use the formula below;
ΔY = ΔG x (1 / (1 - MPC)) - ΔT x (MPC / (1 - MPC))Where;ΔY = change in equilibrium outputΔG = change in government purchasesΔT = change in taxesMPC = marginal propensity to consume.
Substituting the values into the equation,
we get;ΔY = $10(4) x (1 / (1 - 0.8)) - $50(7) x (0.8 / (1 - 0.8))ΔY = $40 x (1 / 0.2) - $350 x (0.8 / 0.2)ΔY = $200 - $1400ΔY = -$1200.
Therefore, the equilibrium output decreases by $1200 when the government purchases increase by $10α and cuts taxes by $50β.
An increase in government purchases would increase aggregate demand while a cut in taxes would increase disposable income and thus consumption. However, the effect of these two measures would be offset by a reduction in saving. When this occurs, equilibrium output falls.
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which of the following is not considered to be a resource for a firm? part 2 a. labor b. accounts payable c. machinery d. time
The concept mentioned is about Resources. Accounts payable is not considered to be a resource for a firm. It is choice B.
Like land, air, and water, an actual material that people need and value is an asset. Resources fall into two categories: inexhaustible and nonrenewable. While a non-renewable resource has a finite supply, a renewable resource can replenish itself at the rate of use.
On a company's balance sheet, accounts payable (AP) is a short-term debt and a liability where a company owes money to suppliers and vendors who have provided the company with goods or services on credit.
A resource is anything that can be used to meet our needs in some way. People are significant assets on the grounds that their thoughts, information and abilities lead to the formation of new assets.
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Zhao Co. has fixed costs of $308,000. Its single product sells for $167 per unit, and variable costs are $112 per unit. If the company expects sales of 10,000 units, compute its margin of safety in dollars and as a percent of expected sales. Margin of safety Dollars Percent %
Margin of safety is the difference between actual or expected sales and break-even point sales. In this case, Margin of safety in dollars = $734,800 while Margin of safety as a percent of expected sales = 43.9%.
Margin of safety in dollars is computed as follows: Margin of safety in dollars = (Expected sales - Break-even sales) × Selling price per unitFor Zhao Co.,
Expected sales = 10,000 units
Selling price per unit = $167
Variable cost per unit = $112
Break-even sales = Fixed costs ÷ Contribution margin per unit
Contribution margin per unit = Selling price per unit - Variable cost per unit= $167 - $112= $55
Break-even sales = $308,000 ÷ $55= 5,600 units
Therefore, Margin of safety in dollars = (10,000 units - 5,600 units) × $167= 4,400 units × $167= $734,800
Margin of safety as a percent of expected sales
Margin of safety as a percent of expected sales is computed as follows:
Margin of safety as a percent of expected sales = (Margin of safety in dollars ÷ Expected sales) × 100%
For Zhao Co., Margin of safety as a percent of expected sales = ($734,800 ÷ (10,000 units × $167)) × 100%= 43.9%Therefore,Margin of safety in dollars = $734,800
Margin of safety as a percent of expected sales = 43.9%
Answer: Margin of safety in dollars = $734,800Margin of safety as a percent of expected sales = 43.9%.
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sheridan company owns 25% of lauer company. for the current year, lauer reports net income of $180,000 and declares and pays a $36,000 cash dividend.
Sheridan Company's journal entry for its investment in Lauer Company will be: Dr. Investment in Lauer Company $45,000 Cr. Share of Net Income from Lauer Company $45,000 Dr. Cash $9,000 Cr. Investment in Lauer Company $9,000
Sheridan Company owns 25% of Lauer Company. For the current year, Lauer Company reports net income of $180,000 and declares and pays a $36,000 cash dividend.In accounting, when a company owns a portion of another company's stock, it is referred to as an investment. An investor's influence on an investee company can range from minor to majority ownership. As a result, different accounting standards must be applied depending on the investor's degree of control over the investee company.When one corporation invests in another corporation, the investing corporation will account for the investment in the following ways:
When a company owns less than 20% of another company's outstanding shares of stock, it is accounted for under the cost method. Sheridan Company owns 25% of Lauer Company, therefore, it will account for the investment using the equity method. The equity method is a type of accounting method that allows an investor to record profits and losses in the investee company in proportion to the investor's share of ownership in the investee company.
To calculate the total earnings from Sheridan Company's investment in Lauer Company, you will use the following formula: Share of Net Income = (Ownership % x Investee Net Income) Sheridan Company's share of Lauer Company's net income = 25% x $180,000 = $45,000 Additionally, Sheridan Company will also record its share of the dividend payment as follows: Cash Received for Dividend = Ownership % x Dividend Payment Sheridan Company's cash dividend from Lauer Company = 25% x $36,000 = $9,000 Sheridan Company will record the investment in Lauer Company as follows: Investment in Lauer Company = Purchase Price + Share of Net Income - Share of Dividends
Therefore, Sheridan Company's journal entry for its investment in Lauer Company will be: Dr. Investment in Lauer Company $45,000 Cr. Share of Net Income from Lauer Company $45,000 Dr. Cash $9,000 Cr. Investment in Lauer Company $9,000 Sheridan Company will continue to use the equity method to account for its investment in Lauer Company until it no longer has significant influence over the company.
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The complete question is:
What is the financial impact of Sheridan Company's ownership in Lauer Company for the current year, considering Lauer's net income of $180,000 and a declared and paid cash dividend of $36,000?
1. Assume you have an interview for an entry-level sales
position. Write a value proposition emphasizing why you are the
best candidate for the position relative to other recent college
graduates.
As an entry-level sales candidate, I offer a unique value proposition that sets me apart from other recent college graduates. With a strong educational background and a passion for sales, I bring a combination of theoretical knowledge and practical skills that can drive results for your organization.
Firstly, my academic foundation in marketing and business administration equips me with a solid understanding of sales principles and consumer behavior. This knowledge allows me to analyze market trends, identify potential opportunities, and develop effective sales strategies.
Additionally, I have honed my interpersonal and communication skills through internships and extracurricular activities. My experience working in customer service roles has taught me the importance of active listening, empathy, and building rapport with clients.
I possess the ability to effectively convey product benefits and address customer concerns, which contributes to building long-lasting relationships and driving sales growth.
Furthermore, my strong work ethic, adaptability, and willingness to learn make me a valuable asset to any sales team. I am highly motivated, target-oriented, and thrive in fast-paced environments. I embrace challenges and continuously seek opportunities for self-improvement, ensuring I stay ahead of industry trends and adapt to changing market dynamics.
In summary, my combination of academic knowledge, interpersonal skills, and determination to succeed makes me the best candidate for this entry-level sales position.
I am confident that my passion for sales and dedication to excellence will enable me to contribute significantly to your organization's sales goals and long-term success.
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New Century Computer issued $450 million of AA-rated 30-year $1,000 par bonds on this date in 2012 at a 2.5% premium, which have a coupon interest rate of 8 percent and pay interest annually. A decrease in the inflation rate by 3 percent and a decrease in corporate risk, (beta), have caused the required return on these bonds to be only 5 percent. Find the price today of a bond.
The price today of the bond issued by New Century Computer in 2012 can be found by considering the decrease in the inflation rate and the corporate risk.
What is the current price of the New Century Computer bond considering the changes in inflation rate and corporate risk?The decrease in the inflation rate by 3 percent and the decrease in corporate risk have led to a decrease in the required return on these bonds to 5 percent. As the bond pays interest annually, the coupon interest rate of 8 percent is higher than the required return. Therefore, the bond is priced at a premium to its par value. To calculate the price today, we need to discount the future cash flows of the bond using the new required return rate of 5 percent.
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6. Discuss challenges faced by state governments to keep their fiscal houses in order
State governments face various challenges in maintaining their fiscal stability and ensuring their financial affairs are in order. These challenges arise due to factors such as revenue volatility, rising healthcare, etc.
Revenue volatility is one of the main issues that state governments deal with. Tax revenue is a major source of funding for state budgets, and changes in the economy can have a big impact on how much money is collected. Budget deficits can result from economic downturns like recessions or sector-specific decreases since they can lower tax revenues. On the other hand, unexpected earnings spikes brought on by windfalls like rising oil prices or a booming economy may give people a false sense of security and lead to uncontrollable spending levels. To account for revenue fluctuation and accumulate enough reserves to withstand economic risks, state governments must use sensible fiscal management methods.
The rising expense of healthcare and pension responsibilities is another important issue. Health care services and pension funds for state personnel, including teachers, public employees, and retirees, are the responsibility of the states. State budgets are under pressure as a result of the rising expenses of these responsibilities. Healthcare costs can significantly deplete state budgets, leaving less money available for other crucial sectors due to factors like rising medical costs and an aging population. In addition, if pension liabilities are not adequately funded, they may become a long-term burden, necessitating state government reforms like raising employee contributions or altering retirement ages.
Furthermore, due to statutory or constitutional restrictions, state governments frequently have limited fiscal flexibility. Some states have laws requiring a balanced budget that forbid spending to exceed income. This assures budgetary accountability but may also restrict the ability to spend in deficit during recessions. Furthermore, limitations on tax hikes or borrowing may make it more difficult for states to raise additional funds or obtain financing for crucial infrastructure projects. State governments face a problem in balancing these limits with the need to pay for critical services and invest in long-term development, necessitating careful prioritization and resource allocation.
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(Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.5 percent and the expected inflation rate is 6.7 percent?
The nominal rate of interest would be 10.2%.
What is the nominal rate of interest when the real rate is 3.5% and the expected inflation rate is 6.7%?The nominal rate of interest can be calculated by adding the real rate of interest to the expected inflation rate. In this case:
Nominal Rate of Interest = Real Rate of Interest + Expected Inflation Rate
Nominal Rate of Interest = 3.5% + 6.7%
Nominal Rate of Interest = 10.2%
Therefore, we would expect the nominal rate of interest to be 10.2% when the real rate of interest is 3.5% and the expected inflation rate is 6.7%.
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How is the tension in 2014 and Victor Yanukovych related to the current Russia-Ukraine war? Explain. In 2014, the tension between the two groups escalated as then-president Victor Yanukovych backed away from a deal to increase connections with the European Union and instead sought closer ties with Russia. In Western Ukraine, people engaged in wide spread protests prompting the government to sign a set of anti-protest laws, while in Eastern Ukraine,most supported the government. Ultimately,Yanukovych was removed from office prompting military intervention from Russia.
The tension in 2014 and the events surrounding then-president Victor Yanukovych are closely related to the current Russia-Ukraine war. The situation in 2014 marked a significant turning point in Ukraine's political landscape and set the stage for the ongoing conflict.
The tension began when Yanukovych, under pressure from Russia, decided to back away from a deal that would have increased Ukraine's connections with the European Union. Instead, he sought closer ties with Russia, which sparked widespread protests in Western Ukraine where people aspired for closer European integration.
In response to the protests, the government enacted a set of anti-protest laws, further escalating tensions. The divide between Western and Eastern Ukraine became more apparent, with the majority of Eastern Ukraine supporting Yanukovych's government.
The culmination of these events occurred when Yanukovych was removed from office through impeachment proceedings. This triggered military intervention by Russia, which resulted in the annexation of Crimea and the outbreak of a separatist conflict in Eastern Ukraine.
The war between Russia and Ukraine that ensued is an extension of the underlying tensions and geopolitical struggles that emerged in 2014. The conflict is rooted in differing visions for Ukraine's future, with Russia seeking to maintain influence and control in the region, while Ukraine strives for independence and closer ties with the West.
Therefore, the tension and events surrounding Victor Yanukovych in 2014 played a significant role in shaping the current Russia-Ukraine war.
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TRUE / FALSE.
Since the beginning of 2022, the return on the stock market
decreased and volatility increased. All investors’ utilities are
worse off as a result. (Please use the indifference curve"
The given statement "Since the beginning of 2022, the return on the stock market decreased and volatility increased. All investors’ utilities are worse off as a result. (Please use the indifference curve)" is false.
The statement that all investors' utilities are worse off as a result of the decrease in stock market returns and increased volatility cannot be determined solely by the given information and the concept of an indifference curve.
Indifference curves represent different combinations of risk and return that provide the same level of utility for an investor. However, individual investors have different risk preferences and investment strategies, so the impact of market conditions on their utilities can vary. Some investors may be more risk-averse and prefer stable returns, while others may be more risk-tolerant and seek higher returns despite increased volatility.
Therefore, it is not accurate to make a blanket statement that all investors' utilities are worse off without considering individual risk preferences and investment strategies.
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Your small multinational US business has a 10,000 Euro capital expense to purchase some tools made in Germany in 6 months. The 6 month EUR forward rate is 1.15. You are thinking of hedging 100% of the exposure using a forward contract. If the actual exchange rate in 6 months is 1.00, then what is the US dollar gain or loss on your exposure (step 1)?
In this scenario, there would be a US dollar loss of 1,500 on your exposure.
To calculate the US dollar gain or loss on your exposure, we need to compare the actual exchange rate in 6 months to the forward rate used for hedging.
In this case, you are planning to hedge 100% of the exposure using a forward contract, which means you have locked in the exchange rate at 1.15 EUR/USD for the 10,000 Euro capital expense.
If the actual exchange rate in 6 months turns out to be 1.00 EUR/USD, it means the US dollar has appreciated against the Euro. To calculate the gain or loss, we need to determine the difference between the forward rate and the actual rate.
The forward rate is 1.15 EUR/USD, and the actual rate is 1.00 EUR/USD. The difference is 0.15 EUR/USD.
To convert this difference into US dollars, we multiply it by the amount of Euros involved, which is 10,000.
So, the US dollar gain or loss on your exposure would be 0.15 EUR/USD * 10,000 Euros = 1,500 US dollars.
Therefore, in this scenario, there would be a US dollar loss of 1,500 on your exposure.
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if you were advising someone on "distribution selection", what factors would you address in this selection process?
Factors to consider in distribution selection include target market characteristics, product attributes, cost efficiency, speed, scalability, competition, customer service, risk management, relationships, and technology integration.
When advising someone on distribution selection, several factors should be considered to make an informed decision. These factors include:
1. Target Market: Understanding the target market's demographics, geographic distribution, and preferences is crucial. The distribution method should align with the target market's accessibility and buying habits.
2. Product Characteristics: The nature of the product, including its size, fragility, perishability, and complexity, influences the distribution selection. Some products may require specialized handling or temperature-controlled environments, which impact the choice of distribution channels.
3. Cost Efficiency: Evaluating the costs associated with each distribution option is essential. This includes transportation costs, storage expenses, packaging requirements, and any associated fees or commissions. Balancing cost efficiency with service quality is crucial to maximize profitability.
4. Speed and Timeliness: Consider the urgency of delivering products to customers. Some industries, such as e-commerce, prioritize quick and reliable delivery. Distribution channels that can offer faster shipping or provide expedited services may be more suitable.
5. Scalability and Flexibility: Assessing the ability of distribution channels to accommodate business growth and adapt to changing market demands is vital. Scalability and flexibility in terms of volume handling, geographic reach, and inventory management are crucial considerations.
6. Competitive Landscape: Analyzing the distribution strategies of competitors provides insights into industry norms and customer expectations. Understanding how competitors deliver products and whether there are opportunities for differentiation or innovation can inform the distribution selection process.
7. Customer Service and Experience: Evaluating the level of customer service provided by potential distribution partners is important. The reputation and reliability of distribution channels impact customer satisfaction, order fulfillment, and returns management.
8. Risk Management: Assessing potential risks associated with each distribution option, such as supply chain disruptions, transportation challenges, or regulatory compliance issues, helps mitigate potential drawbacks and ensures a smooth distribution process.
9. Relationships and Partnerships: Building relationships and partnerships with reliable and reputable distributors can provide long-term benefits. Assessing the track record, industry experience, and reputation of potential distribution partners is crucial in selecting the right distribution channel.
10. Technology and Integration: Consideration should be given to the compatibility of distribution channels with existing business systems and technology infrastructure. Integration capabilities, data exchange, and real-time tracking can streamline operations and improve visibility across the supply chain.
By carefully evaluating these factors, businesses can make informed decisions about distribution selection, optimizing the delivery of their products or services to customers while maximizing efficiency and customer satisfaction.
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6 "I'm not sure we should lay out $345,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $93,000 for so
The minimum dollar value per year that management have to attach to these intangible benefits is given as $72,600
How to solve for the annual net cost savingCompute the annual net cost saving:
Cost saving by replacing the 6 welders: $123,000
Reduced material waste per year: $8,400
Total savings for each year: $131,400
Less: Maintenance cost of equipment: $58,800
Total net cost saving for each year: $72,600
2(a) Cash Flows:
Year 0:
Initial investment: $345,000
Software installation: $93,000
Sale value of present equipment: $21,500
Total cash flows at year 0: $459,500
Year 6:
Yearly savings: $72,600
Sale of new equipment at the end of year 6: $39,000
Total cash flows at year 6: $111,600
Year 3:
Yearly savings: $72,600
Less: Replacement cost at year 3: $56,000
Cash flow of year 3: $16,600
Compute the Net Present Value:
Year Cash Flow Discount 14% Present Value of Cash Flows
0 -$459,500 1 -$459,500
1 $72,600 0.88 $63,684
2 $72,600 0.77 $55,863
3 $16,600 0.67 $11,205
4 $72,600 0.59 $42,985
5 $72,600 0.52 $37,706
6 $111,600 0.46 $50,843
Net Present Value: -$197,213
2(b) No.
As the net present value is negative, it is not advisable to invest in the equipment.
Other than financial considerations, there are intangible benefits such as improved quality of output and faster delivery that cannot be measured in terms of money. These should be considered before rejecting the investment project. Therefore, it is advisable for the management to take these intangible benefits into account.
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Question
I'm not sure we should lay out $345,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $93,000 for software and installation, and another $58,800 per year just to maintain the thing. In addition, the manufacturer admits it would cost $56,000 more at the end of three years to replace worn-out parts "I admit it's a lot of money," said Franci Rogers, the controller. "But you know the turnover problem we've had with the welding crew This machine would replace six welders at a cost savings of $123,000 per year. And we would save another $8,400 per year in reduced material waste. When you figure that the automated welder would last for six years, I'm sure the return would be greater than our 14% required rate of return." I'm still not convinced," countered Mr. Alder. "We can only get $21,500 scrap value out of our old welding equipment if we sell it now, and in six years the new machine will only be worth $39,000 for parts. But have your people work up the figures and we'l talk about them at the executive committee meeting tomorrow." Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required 1. Compute the annual net cost savings promised by the automated welding machine 2a. Using the data from (1) above and other data from the problem, compute the automated welding machine's net present value 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment?
According to the Fisher equation, the nominal interest rate is equal to the: rate of inflation a. b. real interest rate minus the rate of inflation real interest rate plus the rate of inflation c. rate of unemployment d. real interest rate plus short-run economic fluctuations e.
According to the Fisher equation, the real interest rate is given by option the nominal interest rate minus the rate of inflation. Option E is the correct answer.
The Fisher equation states that the real interest rate is equal to the nominal interest rate minus the expected or actual rate of inflation. This equation helps to distinguish between the nominal interest rate (the rate quoted by banks or lenders) and the real interest rate (the rate adjusted for inflation).
By subtracting the inflation rate from the nominal interest rate, we obtain the real interest rate, which represents the purchasing power of borrowed or invested money.
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The question is -
According to the Fisher equation, the real interest rate is given by:
a.zero
b.the nominal interest rate plus the rate of inflation
c.the nominal interest rate minus the rate of unemployment
d.the rate of economic growth
e.the nominal interest rate minus the rate of inflation
If D_1 = $1.50, g (which is constant) = 2.1%, and P_0 = $56, then what is the stock's expected capital gains yield for the coming year?
a. 2.50% b. 2.08% c. 2.39% d. 1.66% e. 2.10%
Option a is correct. If D_1 = $1.50, g (which is constant) = 2.1%, and P_0 = $56, then 2.50% is the stock's expected capital gains yield for the coming year.
We can use the following formula to determine the stock's anticipated capital gains yield:
(D1 / P0) - g is the expected capital gains yield.
Given: The anticipated dividend for the upcoming year is $1.50 (D1).
(Constant Growth Rate) g = 2.1%
P0 = $56 (current stock price)
Putting the values in the formula as substitutes:
Expected Capital Gains Yield is equal to ($1.50/$56)-0.021 Expected Capital Gains Yield is equal to 0.0267857-0.021 Expected Capital Gains Yield is equal to 0.0025857.
To put it into percentage form:
Yield on Expected Capital Gains is 25.0857%.
The stock's anticipated capital gains yield for the following year is roughly 2.50%, rounded to two decimal places.
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Tracking rates of intellectual growth using growth chart norms is based on the assumption that intellectual growth ____. The use of this tracking is ____.
Tracking rates of intellectual growth using growth chart norms is based on the assumption that intellectual growth is continuous.
Intellectual growth is continuous, which implies that children at all levels of ability can achieve their full potential. The use of this tracking is to ensure that children achieve their maximum potential and reach a certain level of development.
A growth chart is a standard tool that is used by health practitioners to monitor a child's physical growth and development. It provides a visual representation of a child's growth trends over time, compared to other children of the same age and sex. The growth chart is divided into percentile ranges, which can be used to monitor growth patterns.
A growth chart's norms or percentiles are a set of standards that indicate how a child should be growing under ideal conditions. For instance, a child whose weight is between the 25th and 50th percentiles is considered to be growing normally. On the other hand, a child who is below the 5th percentile may be experiencing malnutrition or other medical problems.
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Cigarettes in Australia have long been subject to excise tax – a per cigarette tax levied on the suppliers of cigarettes. (The tax applies to all tobacco products, however for the purposes of this exam assume cigarette and tobacco consumption are the same thing). In 2016 the federal government announced that the excise tax rate for cigarettes would rise by 12.5% a year for the next 4 years. Over this period tax revenue collected from the sale of cigarettes has increased considerably. Legal cigarette consumption has fallen to an all-time low in Australia due to a combination of the tax on cigarettes, and public health initiatives such as plain packaging, health warnings and banning advertisements.
Consider the following two policies aimed at reducing cigarette smoking:
i. A tax on the suppliers of cigarettes, and
ii. The public health campaign initiatives.
(a) Illustrate the implications of both policies separately using a fully labelled and explained demand and supply diagram for each of parts (i) and (ii). Do not use actual numbers; this is intended as a theoretical exercise.
(b) Compare and contrast the impact on equilibrium price and quantity of cigarettes of each of these policies, explaining your answer with reference to the diagrams.
(c) Now assume that the federal government implements both policies at the same time. Consider the impact of both policies on government revenue. Explain your answer with appropriate diagrams and indicate the area on the diagram/s that represents government revenue. What are the key assumptions you have made in analysing government revenue?
(i) Tax on suppliers of cigarettes: The tax increases the cost of production for suppliers, leading to a higher price and lower quantity of cigarettes consumed.
(ii) Public health campaign initiatives: The initiatives decrease consumer demand for cigarettes, resulting in a lower price and lower quantity of cigarettes consumed.
(a) Illustration of the Implications of Policies on Cigarette Smoking:
(i) Tax on the suppliers of cigarettes:
A tax on the suppliers of cigarettes shifts the supply curve upward, as the tax increases the cost of production for cigarette suppliers. The diagram will show the initial supply curve (S1) shifting to a new supply curve (S2). The extent of the shift depends on the magnitude of the tax.
Demand remains relatively unchanged, as the demand for cigarettes is relatively inelastic due to addictive properties. Thus, the demand curve (D) remains the same.
The new equilibrium point (E2) occurs at a higher price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The tax causes the price paid by consumers to increase, reducing their purchasing power. As a result, the quantity demanded decreases, leading to a decrease in legal cigarette consumption.
(ii) Public health campaign initiatives:
Public health campaign initiatives, such as plain packaging, health warnings, and advertising bans, aim to decrease the demand for cigarettes by influencing consumer behavior. The demand curve (D) shifts to the left due to reduced consumer desire and increased awareness of health risks.
Supply remains relatively unchanged, as the initiatives do not directly affect the cost of production or supply-side factors.
The new equilibrium point (E2) occurs at a lower price and a lower quantity of cigarettes compared to the initial equilibrium (E1). The decrease in demand leads to a reduction in legal cigarette consumption.
In both cases, the combined impact of the policies leads to a decrease in legal cigarette consumption. The tax on suppliers directly affects the price paid by consumers, while the public health initiatives affect consumer behavior and preferences.
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occupational segregation contributes to _______, which is the disparity between women's and men's earnings.
Occupational segregation plays a significant role in contributing to the gender pay gap, which represents the disparity between women's and men's earnings.
Occupational segregation refers to the unequal distribution of individuals across different occupations based on gender. Certain industries and professions tend to be dominated by one gender, leading to wage disparities.
This segregation can result from various factors, including societal norms, gender stereotypes, and barriers to entry or advancement in certain fields. As a result, women often find themselves concentrated in lower-paying occupations or industries, while men dominate higher-paying sectors.
The consequences of occupational segregation are far-reaching, as it perpetuates unequal pay and limits women's economic opportunities. Closing the gender pay gap requires addressing occupational segregation by promoting equal access, opportunities, and eliminating gender biases in the workplace. Efforts such as encouraging diversity, supporting career development, and challenging stereotypes can help create a more equitable and inclusive workforce.
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Year 3-Year 5-Year 7-Year 10-Year
1 33.33% 20.00% 14.29% 10.00%
2 44.45% 32.00% 24.49% 18.00%
3 14.81% 19.20% 17.49% 14.40%
4 7.41% 11.52% 12.49% 11.52%
5 Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,500 units, and sales will grow at 11% ove
The operating cash flow for this project over five years is $1,696,600. The operating cash flow for year 1 is $324,200.
The calculation is as follows:Sales in year 1: 6,500 units * $124/unit = $816,000
Production costs in year 1: 59% * $816,000 = $487,440
Depreciation in year 1: $1,400,000 * 14.29% = $200,096
Fixed costs in year 1: $48,000
Operating income in year 1: $816,000 - $487,440 - $200,096 - $48,000 = $324,200
Taxes in year 1: $324,200 * 28% = $91,876
Operating cash flow in year 1: $324,200 - $91,876 = $232,324
The method of computation for the operating cash flow over the next four years is comparable. The projected growth rates for sales, production expenses, depreciation, and fixed expenses are 11%, 6%, 11%, and 6% respectively, for each year.
To determine the yearly taxes, one simply needs to multiply the tax rate of 28% by the respective operating income of that year. To determine the operating cash flow for each year, the taxes incurred during that year are subtracted from the corresponding operating income.
Over the course of five years, the cumulative cash flow generated from operations amounts to $1,696,600. After factoring in all project-related expenses and taxes, Mathews Mining Company is projected to earn this sum of money from the project within a five-year span.
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The Complete Question
Operating cash flow (growing each year; MACRS). Mathews Mining Company is looking at a project that has the following forecasted sales: first-year sales are 6,500 units, and sales will grow at 11% over the next four years (a five-year project). The price of the product will start at $124 per unit and will increase each year at 6%. The production costs are expected to be 59% of the current year's sales price. The manufacturing equipment to aid this project will have a total cost (including installation) of $1,400,000. It will be depreciated using MACRS., and has a seven-year MACRS life classification. Fixed costs will be $48,000 per year. Mathews Mining has a tax rate of 28%. What is the operating cash flow for this project over these five years? What is the operating cash flow for this project in year 1? (Round to the nearest dollar.) Data table MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon to download the data from this table Year 1 2 3 4 5 6 7 8 9 10 11 3-Year 33.33% 44.45% 14.81% 7.41% 5-Year 20.00 % 32.00% 19.20% 11.52% Print 11.52% 5.76% 7-Year 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% Done 10-Year 10.00 % 18.00% 14.40% 11.52% 9.22% 7.37% 6.55% 6.55% 6.55% 6.55% 3.28%
Suppose AVC=$93.75, FC=$1,500 and TC=$39,000. What is the ATC?
a. $40
b. $78
c. $87
d. $97.50
The ATC is (d) $97.50.
The formula to calculate ATC or average total cost is as follows: ATC = TC/Q, where Q is the quantity produced.
In this case, we are given that the total cost (TC) is $39,000, and the fixed cost (FC) is $1,500. We can calculate the variable cost (VC) by subtracting the fixed cost from the total cost: TC - FC = VC.
Therefore, VC = $39,000 - $1,500 = $37,500.
Now we can calculate the quantity produced (Q) by dividing the variable cost (VC) by the average variable cost (AVC): Q = VC/AVC.
Q = $37,500/$93.75 = 400.
Finally, we can calculate the ATC by dividing the total cost (TC) by the quantity produced (Q):
ATC = TC/Q = $39,000/400 = $97.50
Thus, the answer is option (d) $97.50..
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Which of the following individuals is not counted as unemployed? Select one:
a. Jennifer, who just graduated from college and is now seeking employment with the company of her dreams.
b. Jackie, who was recently fired and is now applying for another job.
c. Jack, who has become discouraged about ever finding a job and has stopped looking.
d. Jamil, who recently quit his job and is looking for a new position.
The individual who is not counted as unemployed is Jack, who has become discouraged about ever finding a job and has stopped looking. The correct option is c.
Official labor force statistics do not include people who have given up actively seeking employment because they have grown discouraged about doing so. This is so that people can qualify as unemployed if they are both looking for work and currently without a job. People are regarded as being out of the labor force when they stop looking for work and stop participating in the labor market.
They are not counted in the official unemployment rate despite the fact that their situation highlights a difficult aspect of unemployment. To provide a more complete picture of the labor market some statistical agencies may track and report data on discouraged or marginally attached workers separately. The correct option is c.
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For taxpayers claiming bonus depreciation on assets placed in service in 2021, when calculating total cost recovery of an asset, the following order applies:
a. None of the above answers are correct
b. Bonus depreciation, Sec. 179 expensing, MACRS depreciation
c. Sec. 179 expensing, Bonus depreciation, MACRS depreciation
d. MACRS depreciation, Bonus depreciation, Sec. 179 expensing
e. MACRS depreciation, Sec. 179 expensing, Bonus depreciation
The correct answer is d. MACRS depreciation, Bonus depreciation, Sec. 179 expensing.
When calculating the total cost recovery of an asset for taxpayers claiming bonus depreciation on assets placed in service in 2021, the following order applies:
MACRS depreciation: This is the standard depreciation method for tax purposes, which allows taxpayers to recover the cost of the asset over a specific period of time according to the Modified Accelerated Cost Recovery System (MACRS).
Bonus depreciation: Taxpayers can claim bonus depreciation, which allows for an additional upfront deduction in the year the asset is placed in service. Bonus depreciation provides accelerated cost recovery for qualifying assets and is generally available for a specified percentage (e.g., 100%) of the asset's cost in the year of acquisition.
Sec. 179 expensing: Section 179 of the Internal Revenue Code allows taxpayers to expense (deduct) the cost of qualifying assets in the year they are placed in service, up to a certain dollar limit. This is commonly referred to as "expensing" or "Section 179 expensing."
Therefore, the correct order when calculating total cost recovery is MACRS depreciation first, followed by Bonus depreciation, and then Sec. 179 expensing.
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he C&C Corporation estimates that its demand function is InQ-400-31nP + 4lnM+0.6lnA, where Q is the quantity demanded per month, P is the product's price in dollars, M is per capita disposable income in thousands of dollars, and A is the firm's advertising expenditures in thousands of dollars per month. (You could round up the answer if you have to). a) If C&C Corporation receives revenues of $150,000 per month from product X and $180,000 per month from product Y. The own price elasticity of demand for product Y is -0.75, the cross-price elasticity of demand between product Y and X is -1.1, and the cross-price elasticity of demand between product X and Y is -1.3. Your Boss is concerned about declining revenues from both products X and Y; she would like to increase your firm's price of X by 10 percent or increase your firm's the price of Y by 10 percent. She would like a written recommendation with prove (calculation) on what to do from you clearly explain? (No explanation no credit).
Conversely, increasing the price of Y may further decrease the demand for both products and exacerbate the declining revenues.
To determine the recommended course of action for C&C Corporation in response to declining revenues from products X and Y, we need to analyze the price elasticities of demand and their impact on revenue. Given the own price elasticity of demand for product Y (-0.75) and the cross-price elasticity of demand between Y and X (-1.1), it is evident that product Y is price-sensitive and influenced by changes in the price of both Y and X.
To calculate the percentage change in quantity demanded for product Y in response to a 10% increase in its price, we can use the formula: Price elasticity of demand = (% change in quantity demanded) / (% change in price). Rearranging the formula, we have (% change in quantity demanded) = (Price elasticity of demand) * (% change in price).
Using the given own price elasticity of demand for product Y (-0.75) and a 10% increase in price, the percentage change in quantity demanded for Y is estimated to be -0.75 * 10% = -7.5%.
Given that the cross-price elasticity of demand between X and Y is -1.3, a 10% increase in the price of X would result in a percentage change in quantity demanded for Y of -1.3 * 10% = -13%.
Based on these calculations, it is recommended that C&C Corporation increase the price of product X by 10%. This is because the percentage change in quantity demanded for Y (-13%) is greater than the change for Y when its price is increased by 10% (-7.5%). By raising the price of X, the company can generate higher revenues from X while minimizing the negative impact on the demand for Y.
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For the current year ending October 31, Papadakis Company expects fixed costs of $547,500, a unit variable cost of $50, and a unit selling price of $75.
a. Compute the anticipated break-even sales.
b. Compute the sales (units) required to realize a target profit of $125,000.
Thus, the anticipated break-even sales are 43,800 units, and the sales (units) required to realize a target profit of $125,000 is approximately 13,449 units.
a. Computation of anticipated break-even sales:
Break-even point (in dollars) = Fixed Costs ÷ Contribution Margin Ratio
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Break-even point (in units) = Fixed costs ÷ Contribution margin per unit
Break-even point (in dollars) = $547,500 ÷ (75 - 50)
Break-even point (in units) = $1,095,000 ÷ 25
Break-even point (in units) = 43,800 units
b. Computation of sales (units) required to realize a target profit of $125,000:
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit
Contribution margin ratio = ($75 - $50) ÷ $75
Contribution margin ratio = 0.3333 or 33.33%
Target profit = (Sales - Variable costs - Fixed costs) = Profit
Target profit = ($125,000 + $547,500)
Sales - 33.33%
Sales = $672,50066.67%
Sales = $672,500Sales = $1,008,651.35
Sales (units) = $1,008,651.35 ÷ $75Sales (units) = 13,448.685 units (or approximately 13,449 units).
Thus, the anticipated break-even sales are 43,800 units, and the sales (units) required to realize a target profit of $125,000 is approximately 13,449 units.
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Assuming that you are a newly appointed CEO of a traditional company. To keep up with the market demand and latest technologies, you want to introduce a culture of innovation. However, most employees disagree with this action. Instead of forcing them to accept the new culture or removing them from the organization, describe how you can use three (3) power tactics to win their supports.
As a newly appointed CEO of a traditional company, to keep up with the market demand and latest technologies, you may want to introduce a culture of innovation. However, most employees disagree with this action.
Instead of forcing them to accept the new culture or removing them from the organization, the three power tactics that can be used to win their support are as follows:
Rational persuasion tactic: This power tactic is based on convincing others using logical arguments and factual information to demonstrate the benefits of the new culture of innovation. The employees should be explained that the change will lead to better profitability, new opportunities for advancement, and competitive advantage. Social influence tactic: This power tactic involves using social behavior and relationships to gain the support of others. To use this tactic, employees can be convinced that the innovation culture is the future of the company and that it is better to be a part of it rather than to oppose it. Legitimacy tactic: This power tactic is based on gaining employees' support by utilizing one's authority. The new culture of innovation should be implemented by explaining the need to innovate and how the organization is going to benefit from it.By doing this, the employees will understand that the new culture is vital for the growth of the organization, which will make them support it.
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