The buyer of a call option pays the premium initially for the possibility of buying an asset later for a price below its market price.
The term "premium" refers to the option's current market value. It is the cost incurred for the call option's rights. The call buyer forfeits the premium they paid if the underlying asset is worth less at expiration than the strike price. They are not required to pay more for the stock than what the current market price is worth per share. However, if it is higher than the strike price, the buyer can purchase the shares for less than market price and still make a healthy profit.
As a result, unlike other derivatives like futures and forward contracts, which provide investors the right to make a profit on the transaction, options contracts only give them that right.
Thus, the option buyer is not required to purchase the stock at the strike price. They only have the option to do so, at which point they may choose to do so.
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Facility location analysis considers the competitive imperative of locating near the appropriate labor pool to take advantage of low wage costs and/or skill levels.True
The competitive necessity to locate close to the right labor pool to benefit from low wage costs and/or skill levels is taken into account in facility location analysis. The statement is True.
Define Facility location analysis.Facility location analysis, also known as location-allocation analysis, distributes consumer demand to retail sites or distribution hubs while also identifying the ideal locations for a specified number of facilities based on a set of potential locations.
Facilities, competitiveness, logistics, labor, community and site, political risk, and incentives are the seven factors that affect a location decision in operations management, according to Reference for Business.
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Think of an idea you are passionate about. How would you sell your idea to a high content versus low content culture? How about a low power distance versus high power distance culture?
Answer:
Selling an idea to a high-content versus low-content culture would involve emphasizing the substance and details of the idea in a high-content culture, while in a low-content culture the emphasis would be on the benefits and practical applications of the idea. In a high power distance culture, the emphasis would be on the expertise and authority of the person presenting the idea, while in a low power distance culture the emphasis would be on the idea itself and its potential benefits to the audience.
For example, if I were passionate about the idea of creating a community garden in my neighborhood, I might present the idea to a high-content culture by focusing on the specific plants and techniques that would be used in the garden, and how they would benefit the local ecosystem. In a low-content culture, I might focus on the potential health benefits of having access to fresh produce, and the potential for creating a sense of community among neighbors.
In a high power distance culture, I might present myself as an expert on gardening and emphasize my qualifications and experience, while in a low power distance culture I might focus on the idea itself and invite discussion and feedback from the audience.
inventory is controlled in a kanban system because production occurs at an upstream resource only when it has an _____container.
Inventory is controlled in a Kanban system because production occurs at an upstream resource only when it has an empty container.
The Kanban system is a process management tool that visualizes the status of each job on a company's radar and controls the flow of production from clients' requests back to the warehouse. The Kanban system offers a visual representation to manage and keep track of work as it goes ahead through a process. The word 'kanban' is Japanese translated to mean 'card you can see.'
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the main goal of financial managers who focus on current assets and liabilities is to maximize the return to the business on cash, temporary investments of idle cash, accounts receivable, and inventory.
The essential goal of monetary administration is to maximize the contemporary fee of the existing stock. Any administration action that is opposite to this purpose would be an suited answer.
List three decisions that a economic supervisor makes that would fall below the category of working capital management.
What is referred to as financial management?In easy terms, economic management is the business characteristic that deals with investing the on hand financial resources in a way that larger commercial enterprise success and return-on-investment (ROI) is achieved. Financial management specialists plan, organize and control all transactions in a business.
What is financial administration example?Financial administration instance for enterprise or corporation consists of managing smartphone cost, hiring a new employee, purchasing of facilities, undertaking budgets, etc. Financial management instance for folks consists of managing month-to-month budgets, expenses, shopping, etc.
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https://brainly.com/question/989344#SPJ4Edward asked her firm's advertising agency to estimate how often consumers saw her firm's IMC message and what percentage of the target audience was exposed to the message. Edward is asking for __________ data.frequency and reach
Edward asked her firm's advertising agency to estimate firm's IMC message and what percentage of the target audience was exposed to the message. Edward is asking for frequency and reach data.
The distinct reach and frequency metrics keep track of both the overall number of viewers and the frequency of exposure to an advertisement.
These statistics reflect the number of times an advertisement was viewed by individuals across formats, various devices, and networks, going beyond mere cookie analytics.
As a result, Edward is using frequency and reach data in this instance by asking her company's advertising agency to determine the frequency of consumer exposure to the message and the proportion of the target population that was exposed to it.
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due to , the financial markets should adjust the relationship between the interest rate differential of two currencies and the forward premium (or discount) on the forward exchange rate between the two currencies.
Due to covered interest arbitrage the financial markets should adjust the relationship between the interest rate differential of two currencies and the forward premium (or discount) on the forward exchange rate between the two currencies.
In a covered interest arbitrage trade, an investor uses a forward contract to cover exchange rate risk in order to profit from the difference in interest rates between two countries.
Covered interest arbitrage is one such trading method that is most frequently applied when trading currencies. Utilizing this interest arbitrage approach, you may profit from market fluctuations while also reducing the risk associated with the exchange rate between two currencies.
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which of the following are the least appropriate items for which to use long term credit? which of the following are the least appropriate items for which to use long term credit? mortgages automobile loans consumable goods such pizzas, restaurant meals, travel durable goods such as refrigerators and washing machines
The least appropriate items for which to use long-term credit are consumable goods such as pizzas, restaurant meals, and travel.
These items are not considered to be investments and will not increase in value over time. Luxury items, such as vacations, jewelry, and designer clothes are also included. Additionally, they do not provide any tangible return on the money invested. For this reason, it is not advisable to use long-term credit to purchase consumable goods.
Long-term credit is a loan that is taken out for a period of more than one year, usually for five years or more. It is typically used for large purchases such as real estate or business expansion. Long-term credit is typically taken out from a bank or other financial institution, and the terms of the loan are negotiated between the borrower and the lender.
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review of family financial decision making: suggestions for future research and implications for financial education
Accept a Hard Wake Up call The remedy, albeit hard to hear, is to reduce spending and/or boost my monthly income while you're in too little cash.
What are an example and income?
Income is the cash which an individual or company obtains in return for working, creating a good or service, or using capital. People normally make money through wages or salaries, whereas corporations make money by selling products or services for more than it costs to produce them.
What does income mean?
The sum of money, land, and other transfers of calculated value over a predetermined time frame in return for services or goods are often referred to as "income."
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the pricing of origins makeup, which is priced considerably higher than brands such as cover girl, revlon, and maybelline, is used to communicate , which is the company's primary pricing objective.
fame quo in pricing seeks to preserve present prices or to meet the competition's prices.
What is Status Quo Pricing Strategy?Status quo pricing is a method the place corporations mimic the costs of their competitors or preserve modern fee points of similar merchandise or offerings on the market.
reactive advertising and marketing strategy characterised by means of a want to avoid war of words with competitors; the organization seeks to preserve matters in the enterprise the way they were, and hence avoid the highly-priced task on taking on a competitor directly.What enterprise makes use of repute quo pricing?
An often-cited instance of fame quo pricing is the soft drink industry. The fee of a bottle of soda tends to be fairly consistent, be it a Coca-Cola product or a Pepsi product. Other competitors, with much less company loyalty, may try discounted pricing, but Coca-Cola and Pepsi have a tendency to represent a reputation quo in pricing.
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https://brainly.com/question/15969466#SPJ4Ataxia Fitness Center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 4 years with no salvage value at the end of the 4 years. Ataxia's internal rate of return on this equipment is 7%. Ataxia's discount rate is also 7%. The payback period on this equipment is closest to (Ignore income taxes.):
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
4 years
3.39 years
2.00 years
4.49 years
Option B is correct. The payback period on this equipment is closest to 3.39 years
The payback period is basically the amount of time an investor needs to recover his/her initial investment.
lets assume initial investment = $1,000
when you calculate IRR, the present value of the cash flows = initial investment
the present value of an annuity for 4 years and 7% is 3
$1,000 = yearly cash flow x 3
yearly cash flow = $1,000 / 3 = $282
payback period = $1,000 / 282 = 3.388 years ≈ 3.39 years
Payback period in capital planning alludes to the time expected to recover the assets exhausted in a speculation, or to arrive at the make back the initial investment point. For instance, a $1000 venture made toward the beginning of year 1 which returned $500 toward the finish of year 1 and year 2 individually would have a two-year recompense period
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conventional finance theory assumes investors are , and behavioral finance does not assume investors are .
Conventional theories presume that financial backers are judicious and conduct finance assumes that they may not be reasonable.
Traditional finance expects that a financial backer might be an objective one that can cycle all data fair-mindedly. While conduct finance draws from certifiable experience expressing that a financial backer has predispositions, it's silly, and his feelings play an errand inside the unassuming speculations embraced.
The Traditional or regular money and financial matters worldview states. that protections' costs in monetary business sectors completely mirror their gamble and returns. In light of. their gamble resistance financial backers take positions in such protections by accurately dissecting them. Within social money, it is expected that monetary members are not entirely levelheaded and self-controlled yet rather mentally persuasive with to some degree typical and self-controlling propensities. Monetary direction frequently depends on the financial backer's psychological and actual well-being.
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in the best buy case, analysis of the consumer electronics retail industry suggests that buyers have low bargaining power.
It is false because buyers normally tend to have higher Bargaining power.
Bargaining power is the relative capability of parties in an argumentative situation to ply influence over each other. However, also they will have equal logrolling power, similar to an impeccably competitive request If both parties are on an equal footing in a debate.
If buyers are more concentrated than merchandisers – if there are many buyers and numerous merchandisers – also buyer power is high. It is the pressure that consumers put on businesses.
Whereas, if switching costs – the cost of switching from one dealer's product to another dealer's product – are low, the logrolling power of buyers is high.
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Suppose a perfectly competitive firm in the short run sells its product for a price that is less than the
minimum point on its ATC curve. Which of the following statements is true?
a. The firm will shut down in the short run since it is not covering all of its costs.
b. Some firms in this industry will exit the industry in the long run, and the exiting will continue until the
market price increases and is equal to the break-even point on the ATC curve.
c. The firm will shut down in the short run only if the price is greater than the shutdown price but less than the
break-even price.
d. Some firms in this industry will exit the industry in the long run, and the exiting will continue until the
market price increases and is equal to the shut-down price on the ATC curve.
A perfectly competitive firm in the short run sells its product for a price that is less than the minimum point on its ATC curve then, b) some firms in this industry will exit the industry in the long run, and the exiting will continue until the market price increases and is equal to the break-even point on the ATC curve.
In this perfectly competitive industry, firms experience short-term economic losses if the price is below the average total cost. Over time, these low economic profits will cause some businesses to leave the market, until the businesses that remain generate no economic profits. This indicates that the price will be equal to the break-even point or the minimum point of the ATC curve.
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consider a restaurant that wants to avoid kitchen fires. the restaurant could make many investments both to avoid the fires in the first place and to quickly and safely put them out if they do occur. suppose that the marginal cost (mc) and marginal benefit (mb) of these investments in fire control technologies is illustrated in the following figure.
(A) The insurance company paid 50% of any damages, so Q50% would provide the amount of investment that was purchased.
(B) The MC curve shifts downward and the equilibrium is at Q(discount) with 50% insurance and discounts.
A) The MB to the restaurant of investments in fire control technology would reduce by half, or the MB would be half as high at all levels of investment, if the insurance company paid 50% of any damages. Consequently, Q50% would provide the amount of investment that was purchased.
B) We can imagine that the MC to the company would be reduced if the insurance provider provided discounts to businesses that implemented fire suppression technologies. As a result, the MC curve shifts downward and the equilibrium is at Q(discount) with 50% insurance and discounts.
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The right question is given below:
database reports are useful in many ways; one way a report is used is to provide details about individual records and to create .
Database reports are useful in many ways; one way a report is used is to provide details about individual records and to create labels.
A database report is the prepared output of a database query and includes information that may be used for analysis and decision-making. A reporting tool is typically included in good business applications; it consists of a front-end interface that calls or executes back-end database queries that have been structured for user-friendly application operation.
A database report can be divided into the following 3 categories:
Reports of all types, including detail, group, crosstab, column, query, data entry, etc.Aggregate reports: a variety of erroneous reports, such as complicated billsDashboard reports: A multi-dimensionally analyzed visual report based on the display of business indicatorsLearn more about database reports here brainly.com/question/4252154
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recapitalization tartan industries currently has total capital equal to $4 million, has zero debt, is in the 25% federal-plus-state tax bracket, has a net income of $1 million, and distributes 40% of its earnings as dividends. net income is expected to grow at a constant rate of 3% per year, 200,000 shares of stock are outstanding, and the current wacc is 12.30%.
Recapitalization tartan industries currently the current stock price is $16.99, stock price = current dividend per share *(1 + dividend growth rate) / (required return - dividend growth rate).
Recapitalization is the process of restructuring a corporation's debt and equity mixture, typically to stabilize a company's capital structure. the method in the main involves the exchange of 1 sort of finance for another, corresponding to removing preferred shares from the corporate's capital structure and replacing them with bonds.
Recapitalization may be a strategy a company will use to boost its money stability or overhaul its financial structure. To accomplish this, the company should change its debt-to-equity ratio by adding additional debt or more equity to its capital. When a company's debt decreases in proportion to its equity, it's less leverage. Its earnings per share (EPS) ought to decrease following the change.
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on april 2 a corporation purchased for cash 5,000 shares of its own $10 par common stock at $16 a share. it sold 3,000 of the treasury shares at $19 a share on june 10. the remaining 2,000 shares were sold on november 10 for $12 a share.
So, On Nov. 10 24,000 cash and 32,000 Treasury Stock would sld according to the given data.
The given data is,
purchased for cash 5,000 shares
share=$16
Apr. 2,
Treasury Stock = 16*5000=80,000
Cash= 80,000
June 10
Cash=3,000*19= 57,000
Paid-In Capital from Sale of Treasury Stock=3000*3=9,000
Treasury Stock =57,000-9,000
=48,000
Nov. 10
Cash =2000*12=24,000
Paid-In Capital from Sale of Treasury Stock=2000*4= 8,000
Treasury Stock =24,000+8,000
=32,000.
Here in question, On Apr. 2 Treasury Stock 80,000 and Cash 80,000 were sold.
(on June 10, Cash 57,000 sand Treasury Stock 48,000 were sold.
So, On Nov. 10 Cash 24,000 and Treasury Stock 32,000 would be sold according to above statements.
What Is Treasury Stock?
The number of shares outstanding on the open market declines as a result of issuing new shares, or reacquired stock.
Treasury stock denotes previously outstanding stock that the issuing business has acquired from stockholders.
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on october 1, 20a1, borah, inc., a calendar year-end firm, invested in a derivative designed to hedge the risk of changes in fair value of certain assets, currently valued at $1.5 million. the derivative is structured to result in an effective hedge. however, some ineffectiveness may result. on december 31, 20a1, the fair value of the hedged assets has decreased by $350,000; the fair value of the derivative has increased by $325,000. borah should recognize a net effect on 20a1 earnings of:
Borah should recognize a net effect on 20a1 earnings of $5,000. The accounting risk of a company is addressed by balance sheet hedging because management want to remove accounting.
FX gains and losses from their financial statements. gains or losses on the remeasurement of financial assets and liabilities in foreign currencies. A net effect called inventory turnover is used to gauge how effectively a company is controlling its stock levels. It is derived by dividing the accounting inventory for the period by the cost of goods sold for that period, and it shows how frequently the inventory changed hands during that time.
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which of the following is one of the qualitative forecasting technique? (refer to chapter 12) group of answer choices moving average weighted moving average exponential smoothing executive judgment
Qualitative forecasting techniques are based on the judgment and opinion of experts and consumers and are only appropriate in the absence of historical data.
Market research, Delphi method, and informed opinion and judgment are a few examples of qualitative forecasting techniques. The qualitative forecasting methods that are most frequently employed are Delphi, market research, panel consensus, and visionary forecast. Sales teams utilize quantitative forecasting, a data-based statistical method, to analyze performance and project future sales based on past trends and data. Businesses may make educated judgments about strategies and procedures to ensure ongoing success by forecasting results.
Some of the most popular qualitative techniques are as follows: Observations: writing down in-depth field notes what you have observed, heard, or come across.
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suppose that two countries share identical level of total factor productivity, identical population growth rate, and identical investment rate. according to the solow growth modelgroup of answer choicesthe country with the smaller initial level of output per worker will grow more rapidly than the country with the larger initial level of output per worker.
In comparison to the nation with the higher initial level of output per worker, the nation with the lower initial level of output per worker will see faster growth.
How does the Solow model handle the expanding population?The Solow model states that while a higher population growth rate accelerates total production growth, it has no long-term effects on per-person output growth. As the pace of population growth increases, the steady-state level of per capita output declines.
What factors influence the growth and development of the country's economy?The size of the country's population, the state of the world, international cooperation, the priorities the country has set for its economy, etc. are just a few of the many variables that affect economic development.
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a speculator determines that a movement of fx rates was not related to prior exchange rate values, this implies that a is not valuable for speculating on expected exchange rate movements.
A speculator tend to determine that a movement of FX rates was not related to prior exchange rate values.
If many speculators sell the currency in the forward market, this will then signal that the currency is considered to be overvalued, and people will begin selling the currency in the spot market. Thus, the speculators are people who tend to engage in speculative investments.
However, the speculation tends to involve trading a financial instrument which is involving high risk, in expectation of significant returns. Thus, the exchange rate fluctuations will affect the value of international investment.
Hence, the speculation is a risky investment strategy.
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the traditional approach to strategic control is sequential. which of the following is not one of the steps in the sequence?
lower and middle management set strategic corporate goals is not one of the steps in the sequence.
The purpose of strategic controls is to direct the organisation in the direction of its long-term strategic goals.
After a strategy has been chosen, it is gradually put into practise to help a company navigate a quickly changing environment.
The assumptions made by management regarding a variety of yet-to-happen events form the basis of strategies, which are forward-looking.
A standard is used as a benchmark in traditional techniques to control. After finishing the task at hand, the manager assesses it and makes use of the results to guide subsequent efforts. Although not worthless, this tactic is not the best way to keep a strategy under control.
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Which of the following line items would be found on a statement of stockholders equity that would not be on the statement of retained earnings?
Common stock
Additional Paid-In Capital
treasury stock
Common stock, Additional Paid-In Capital, and treasury stock line items would be found on a statement of stockholders' equity that would not be on the statement of retained earnings.
Commonplace stock is a security that represents ownership in an agency. Holders of not-unusual inventory select the board of directors and vote on company regulations. This shape of equity possession generally yields higher fees for going back a long time. common inventory is more uncovered to the dangers of the business than bonds or favored inventory, it gives an extra capacity for capital appreciation. Over the long term, common shares have a tendency to outperform greater comfortable investments, despite their short-time period volatility.
The proprietors of common inventory no longer own any unique belongings of the corporation, which belong to all the shareholders is not unusual. An employer may issue both regular and choice stocks, wherein case the preference shareholders have precedence to get hold of dividends. in the occasion of liquidation, ordinary shareholders get hold of any ultimate funds after bondholders, lenders (along with employees), and preference shareholders are paid. while the liquidation occurs through financial disaster, the regular shareholders generally receive nothing.
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you have just installed a second monitor for a salesperson's workstation. the user wants to clone the display so that both monitors show the exact same image. this will allow them to see one of the displays while their customer sees the other from across their desk. when you connect the second monitor and clone the display, the second monitor displays text twice as large as the other monitor. which of the following settings should you configure? group of answer choices
The correct is resolution. The number of distinct pixels that can be displayed in each dimension is known as the display/screen resolution.
What is screen resolution?It can be a confusing term, especially since projection displays that use fixed picture-element arrays, flat-panel displays, including liquid-crystal displays, and cathode ray tube displays, all regulate resolution differently.
It is typically stated as width height, using pixels for the units.
One definition of display resolution is the actual number of columns and rows of pixels used to create the display.
This definition applies to fixed-pixel-array displays like plasma display panels (PDP), liquid crystal displays (LCD), projectors using digital light processing (DLP), OLED displays, and related technologies.
As a result of having a fixed-grid display, all displays require a "scaling engine" to adapt the incoming picture format to the display when using multi-format video inputs.
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For control purposes, the quantities of materials ordered may be omitted from the copy of the purchase order that is
a. Forwarded to the accounting department.
b. Retained in the purchasing department’s files.
c. Returned to the requisitioner.
d. Forwarded to the receiving department.
For control purposes, the quantities of materials ordered may be omitted from the copy of the purchase order that is d) Forwarded to the receiving department.
Purchase Order:A purchase order is a commercial document, the first official offer from a buyer to a seller specifying the type, quantity and agreed price for products or services. Used to manage purchases of products and services from external suppliers. Orders may be an important part of ordering from your product management system. Orders are not contracts. In the absence of a prior agreement, a contract is formed between Buyer and Seller upon Seller's acceptance of the order.
The documents are Forwarded to the Receiving department and the Goods receipt notifications are used to document the contents of shipments to our company. The form is completed by the company's receptionist who accepts the delivered goods. The following information is typically included in the receipt report:
The date and time the package was receivedThe name of the carrier that delivered the goodsThe name of each item receivedThe quantity of each item receivedThe authorization order shipping document or number if provided on the box Condition of goods received. This could be a negative entry showing only damaged goods.
A master copy of each incoming report is kept in the receiving department. Copies are sent to other departments according to company procedures. A copy sent to Accounts Payable to document the receipt.
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The safety convenience of...has made checkable deposits a large component of the M1 money supply.
The safety convenience of checks has made checkable deposits a large component of the M1 money supply.
M1 is the term used to describe the money supply, which is made up of cash, demand deposits, and other liquid deposits, such as savings accounts.
Because it encompasses assets and currencies that are either already cash or can be changed into it rapidly, M1 includes the parts of the money supply that are the most liquid.
Although they fall under M2 and M3, "near money" and "near, near money" cannot be changed to currency as rapidly.
Federal Reserve bills or paper money, as well as coins that are in use outside of the vaults of depository institutions and the Federal Reserve Banks, make up the M1 money supply. The most important element of a country's money supply is paper money.
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Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 9% rate. Dozier's weighted average cost of capital is WACC = 15%. Year 1 2 3 Free cash flow ($ millions) -$20 $30 $40 What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in millions of dollars. $ million What is the current value of operations for Dozier? Round your answer to two decimal places. Round intermediate calculations to two decimal places. Enter your answer in millions of dollars. $ million Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share? Round your answer to the nearest cent. Round intermediate calculations to two decimal places. $
Dozier's Horizon value is $60 million. The expected worth of a security or investment at some point in the future is known as a horizon value.
The worth of a security or asset at a specific future time is referred to as the horizon value or terminal value. For analysis and cash flow models, the horizon value is employed. Divide the annual cash flow by the discrepancy between the needed rate of return and the growth rate to determine the horizon value. The value of future cash flows that occur after a projection period of several years can be included, and many of the issues associated with valuing such cash flows are adequately resolved, thanks to the terminal value. In discounted cash flow analysis, the terminal value is determined using a stream of anticipated future free cash flows. There are two methods for determining the Terminal Value for whole-company valuation.
Horizon value = (Free cash flow for last year × Growth rate) ÷
(WACC - Growth rate)
It is given that free cash flow for last year = $40
Growth rate = 9% = 0.09
WACC = 15% = 0.15
Thus, Horizon value = (40 × 0.09) ÷ (0.15 - 0.09)
= 3.6 ÷ 0.06
= 60 million
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the company sold 25,000 units in the east region and 10,000 units in the west region. it determined that $250,000 of its fixed selling and administrative expense is traceable to the west region, $150,000 is traceable to the east region, and the remaining $96,000 is a common fixed expense. the company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product. prepare a contribution format segmented income statement that includes a total column and columns for the east and west regions.
The total net income is $85000 as per the given information.
Contribution Format Segmented Income Statement
East Region | West Region | Total
Revenue $625,000 | $250,000 | $875,000
Less: Variable Costs $400,000 | $160,000 | $560,000
Contribution Margin $225,000 | $ 90,000 | $315,000
Less: Fixed Costs $150,000 | $250,000 | $400,000
Net Operating Income $ 75,000 | ($160,000) | ($ 85,000)
An income statement shows a company's revenues, expenses and profitability over a period of time. It is also sometimes called a profit-and-loss (P&L) statement or an earnings statement. It shows your: revenue from selling products or services.
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in the united states, the industry with the highest number of work-related injuries per year is (u.s. bureau of labor statistics 2014, 2015)
• Contractors working in the construction and extraction industries accounted for more than half (54 percent) of all fatal occupational injuries. Construction and extraction workers made for 17% of all fatal occupational injuries among all workers, contractors included.
•Compared to 4 percent of all fatal occupational injuries, 15% of contractor fatal workplace injuries included construction workers.
•In 2011, contractors accounted for more than half of all structural iron and steel workers and electricians (56 percent and 52 percent, respectively).
•Falls to a lower level were a factor in nearly a third (31%) of fatal workplace accidents involving contractors.
•Of the 72 pedestrian vehicular events, 28 involved being struck by a vehicle that was backing up and 44 happened in a work zone.
•Of the 69 "hit by item" cases, nine contractors died after being tragically struck by trees in 2011.
•Of the 58 cases of electricity exposure, 41 of the deceased were exposed to more than 220 volts of electricity, and 31 of the decedents had direct touch with the electrified object.
•Forklifts were used in four of the 32 non-roadway occurrences.
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The firm's problem Consider a competitive firm that produces bots. Labor (L) and capital (K) are the only two inputs of production; each unit of labor is paid the market wage (w), and each unit of capital is rented at the rental price of capital (r). Output (Y) is therefore a function of labor and capital, or Y = f (K, L), and is sold at the market price (P). The goal of this firm is to maximize profit given the price of bots, the wage rate, the rental rate of capital, and production technology by choosing its labor and capital inputs. Fill in the following equations with the firm's profit maximization problem: Profit Revenue - Labor Cost - Capital Cost Labor Cost + Capital Cost - Revenue Profit-maxi Revenue - Labor Cost iring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the Revenue - Labor Cost - Capital Cost marginal p h bot sells for the market price (P), the change in revenue from hiring an additional worker is Revenue - Capital Cost w Fill in the following equations with the firm's profit maximization problem: Profit = Revenue - Labor Cost - Capital Cost Pf (K, L) – WL – rK Pf (K, L) – WL – rK Profit-maxi rmine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring wL+ rK – Pf (K, L) bor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal p Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is Pf(K, L) – WL in cost is Pf(K, L) – rK W Firms will continue to hire workers until the change in profit is Given this condition, which of the following equations correctly Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MPL). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is W P MPL F ntinue to hire workers until the change in profit is Given this condition, which of the following equations correctly Y P profit-maximizing labor choice of the firm? PXY MPL PL = ? W W PX MPL PL = MPL MPL Р III Profit-maximizing firms must determine how hiring an additional unit of labor will affect profit. To do this, the firm can compare the change in revenue from hiring an additional unit of labor against the cost of that extra worker. The additional output produced by an extra unit of labor is equal to the marginal product of labor (MPL). Because each bot sells for the market price (P), the change in revenue from hiring an additional worker is and the change in cost is W I W Firms will continue to hire workers until the rofit is Given this condition, which of the following equations correctly describes the profit-maximizing labor choice W X Y MPL = P W MPL = W Р W X MPL W= MPL Р Given this condition, which of the following equations correctly Firms will continue to hire workers until the change in profit is describes the profit-maximizing labor choice of the firm? positive MPL: Р W negative OMPL= W Р equal to zero W = MPL P MPL = w XP Demonstrate your understanding of the previous concepts in the following example. Suppose the price of a bot is equal to $2, and the market wage rate is $12. Moreover, suppose the marginal product of labor for this firm is equal to the following: MPL = 14-L On the graph, use the blue line (circle symbol) to show the firm's demand for labor. Then, place the black point (plus symbol) on the graph to indicate the real wage and the profit-maximizing quantity of labor. Note: Dashed drop lines will automatically extend to both axes. ? 20 O 18 Labor 16 14 12 Real w, labor UNITS OF OUTPUT (Bots) PER UNIT OF LABOR 10 8 0 0 2 4 6 14 16 18 20 10 12 UNITS OF LABORPrevious question
1) Revenue minus labour and capital costs equals profit.
2) 45 bots can be made with a maximum of 5 units of capital.
1) It is important to remember that businesses aim to maximise the difference between total revenue and total cost when maximising their profits. Therefore, the area where TR - TC = Maximum or where Marginal Cost = Marginal Revenue of producing an additional unit occurs is where the maximum profit is made. (Bot in this instance)
Consequently, the response is:
Profit = Revenue - Labour Cost - Capital cost
2) Consider an output Y and a price P now.
Revenue R = Y * P
ΔR = ΔY * P (Given that P is constant.)
Since ΔY is now just MPK (as will be discussed below), the equation is now:
ΔR = MPK * P
It is obvious that businesses will increase labour and/or capital expenditures to increase profits until their marginal revenue exceeds their marginal cost. In this case, a company that seeks to maximise profits will keep producing until the value of additional output equals the cost of additional capital. Detailed Below
MPK extra units of output are produced by an Extra Unit of Capital.
This value = P * MPK
Cost of an additional unit of capital = r (rental rate)
P*MPK = r OR MPK = r/P
Equation Solution:
MPK = 14-K
r/P = 14-K
18 / 2 = 14-K (R and P's values are provided in the question)
K = 14-9 = 5
As P*MPK = r over here, this indicates that at 5 units of capital, we have the most efficient use of capital. The company won't use more than 5 units of capital because at that point, MC will start to outweigh MR.
Now, keep in mind the following as well:
Output = Value Added = Income (Payments to the production's inputs)
Nominal value of output = P x Y = W N + R K = Wages + Total Profits
or: Y = (W/P) N + (R/P) K = w N+ r K (Where real wage and real rental rate are w and r, respectively.)
Here r = R/P = 18/2 = 9 (which, in essence, is MPK)
So we can take Y here. = (R/P) * K
which is equivalent to Y. = MPK * K
therefore Y = 9 * 5 = 45
Therefore, at a maximum quantity of 5 units of capital, 45 bots will be produced.
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