The description that best fits the definition of income effect is; The idea that a higher price means the buying power of income has been reduced. Option C is correct.
The income effect refers to the impact that a change in price has on the purchasing power of a consumer's income. When the price of a good or service increases, it effectively reduces the consumer's real income because they must allocate more of their budget towards purchasing that particular item.
As a result, the consumer's ability to purchase other goods and services decreases. Conversely, when the price of a good decreases, the consumer's real income increases, allowing them to potentially purchase more of that good or other goods.
Therefore, the income effect focuses on how changes in prices affect the consumer's purchasing power and overall affordability of goods and services.
Hence, C. is the correct option.
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--The given question is incomplete, the complete question is
"Which description best fits the definition of income effect? A) The state in which the ratio of the prices of goods is equal to the ratio of the marginal utilities. B) The idea that consumers replace costly goods with more affordable goods as prices change. C) The idea that a higher price means the buying power of income has been reduced. D) A decision to consume a specific combination of goods to optimize satisfaction."--
Which of the following is likely to lead to an increase in inflation? O A. An increase in taxes. O B. Monetary and credit policies that reduce private consumption. OC. More efficient public activities. O D. An increase in money-financed spending by government. OE. None of the above.
Option (D) is the right choice. An increase in money-financed spending by the government .Inflation is the consistent and persistent rise in the general price level over time. The rate at which prices are increasing is used to describe inflation.
To describe the situation in which prices are declining over time, we use the term deflation. Inflation is measured as a percentage increase in the overall price level.The central bank or the government can stimulate economic growth by expanding the money supply and lowering interest rates.
Because of the link between the amount of money in circulation and the general price level, this policy can result in higher inflation. An increase in money-financed spending by the government can lead to inflationary pressure. How can inflation be reduced The government must take some measures to reduce inflationary pressure. Some measures are given below :Increase in taxes Reduce the money supply Increase the interest rates Improve the efficiency of public activities These measures can lead to the reduction of inflation.
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To develop a portfolio that provides the best return possible with a minimum risk, the linear programming model will have an objective function which
minimizes the maximum risk.
minimizes total risk.
maximizes return and minimizes risk.
maximizes the minimum return.
Question 37 (1.25 points)
The volume that results in total revenue being equal to total cost is the
break-even point.
marginal volume.
marginal cost.
profit mix.
Question 38 (1.25 points)
Let x1, x2, and x3 be 0-1 variables whose values indicate whether the projects are not done (0) or are done (1). Which answer below indicates that at least two of the projects must be done?
x1+x2+x322
X1+X2+x32
To develop a portfolio that provides the best return possible with a minimum risk, the linear programming model will have an objective function which maximizes return and minimizes risk.
The linear programming model will have an objective function that maximizes return and minimizes risk. The volume that results in total revenue being equal to total cost is the break-even point. The volume that results in total revenue being equal to total cost is the break-even point.
Let x1, x2, and x3 be 0-1 variables whose values indicate whether the projects are not done (0) or are done (1). The answer that indicates that at least two of the projects must be done is `x1+x2+x3 ≥ 2`. Answer: `x1+x2+x3 ≥ 2`.
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Deborah Kellogg buys Breathalyzer test sets for the Denver Police Department. The quality of the test sets from her two suppliers is indicated in the following table: Percent Defective 1% Probability
A Breathalyzer is a device that detects the alcohol content in a person's bloodstream through the exhaled breath. Deborah Kellogg purchases Breathalyzer test sets for the Denver Police Department. Supplier A's test kits have a higher quality than Supplier B's test kits, making them a better choice.
A good quality Breathalyzer test kit should give accurate results and help to identify individuals who are over the legal drinking limit. However, Deborah Kellogg is encountering a problem because both of her suppliers' test sets are defective to some degree. One of the suppliers is clearly providing a better quality product than the other.
Supplier A's test kits have a 1% defective rate, which means that there is a 1% chance that a test kit will be defective. Supplier B's test kits, on the other hand, have a 5% defective rate, which means that there is a 5% chance that a test kit will be defective. The probability of getting a non-defective test kit from Supplier A is therefore 99%, whereas the probability of getting a non-defective test kit from Supplier B is 95%.
Based on these numbers, Deborah should switch to Supplier A because their test kits are more reliable. If Deborah purchased 100 test kits from Supplier A, there would be a 99% chance that all 100 would be non-defective. If she purchased 100 test kits from Supplier B, there would be a 95% chance that only 95 of them would be non-defective. In other words, Supplier A's test kits have a higher quality than Supplier B's test kits, making them a better choice.
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8. If a pill were invented that made workers twice as productive but their wages did not change, what would happen to the position of the short-run aggregate supply curve?
If a pill were invented that made workers twice as productive but their wages did not change, it would lead to an increase in the overall efficiency and productivity of the workforce. In terms of the short-run aggregate supply (SRAS) curve, this would result in a shift to the right.
The SRAS curve represents the relationship between the aggregate output and the price level in the short run, assuming other factors remain constant. When workers become more productive without a corresponding increase in wages, firms can produce more output at the same cost. This leads to an increase in aggregate supply, shifting the SRAS curve to the right. As a result, the economy would be capable of producing a higher level of output at the same price level, reflecting the increased productivity of the workforce.
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Race One Motors is an Indonesian car manufacturer. At its largest manufacturing facility, in Jakarta, the company produces subcomponents at a rate of 619 per day, and it uses these subcomponents at a rate of 22,361 per year (of 250 working days in a year). Holding costs are $5 per item per year, and ordering (setup) costs are $ 88 per order. What is Economic Production Order Quantity?
The Economic Production Order Quantity for Race One Motors is 626.12.
Economic Production Order Quantity (EOQ) refers to the order quantity that minimizes total holding and ordering costs for a demand and set of costs per unit.
The EOQ formula can be used to calculate the Economic Production Order Quantity.
Race One Motors is an Indonesian car manufacturer that produces subcomponents at a rate of 619 per day at its largest manufacturing facility in Jakarta. It uses these subcomponents at a rate of 22,361 per year (of 250 working days in a year).
Holding costs are $5 per item per year, and ordering (setup) costs are $88 per order.
The Economic Production Order Quantity formula is below:
EOQ = sqrt(2SD / H)Where S is the annual demand, D is the cost of placing an order, and H is the holding cost per unit per year.
The EOQ can be calculated as follows:
EOQ = sqrt(2SD / H)
EOQ = sqrt(2 * 22,361 * 88 / 5)
EOQ = sqrt(391,808)EOQ = 626.12
Therefore, the Economic Production Order Quantity is 626.12.
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examine the freshdirect business model and list reasons for its competitive advantage using the porter's five forces model
Fresh Direct is an online grocery delivery service that sources food directly from manufacturers and farms and delivers them to customers' doors. Using Porter's Five Forces Model, we can analyze its business model and list the reasons for its competitive advantage.
Porter's Five Forces Model examines five competitive forces that shape a company's environment: the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and competitive rivalry. Here's how FreshDirect's business model fares in each of these forces:
1. Threat of New Entrants: FreshDirect faces a high barrier to entry due to its complex supply chain network and customer base. It has established relationships with suppliers and customers that would be hard to replicate.
2. Bargaining Power of Suppliers: FreshDirect has established partnerships with various suppliers. It purchases products directly from farmers and manufacturers, which allows it to offer better prices to customers while still generating revenue.
3. Bargaining Power of Buyers: FreshDirect's business model of sourcing food directly from suppliers allows it to offer competitive prices to customers. It also offers various promotions and discounts, which increases its bargaining power with customers.
4. Threat of Substitutes: While there are substitutes like traditional grocery stores and other online grocery delivery services, FreshDirect's unique business model of sourcing food directly from suppliers is hard to replicate, which gives it a competitive advantage.
5. Competitive Rivalry: FreshDirect faces competition from other online grocery delivery services like Amazon Fresh, Instacart, and Peapod. However, its unique business model and established supplier relationships make it stand out in the market.
In conclusion, FreshDirect's business model has a competitive advantage due to its established supplier relationships, low bargaining power of buyers, and the uniqueness of its business model. These factors help FreshDirect overcome some of the challenges posed by Porter's Five Forces Model.
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II- M == ¹= a₁ + a₂Y+ α³R + α; P+u (1) MB1 + B₂Y + e (2) M = M³= M* (3) In this system of equations, Mª represents money demand, M³ money supply, Y national income, R interest rate, and P
In the given system of equations,$M_d$ represents the money demand and it depends on four variables: national income, price, interest rate and a random error term.
$M_b$ represents the supply of money and it depends on two variables, national income and a random error term.$M_s$ is the amount of money supplied by the central bank, which is assumed to be equal to the demand for money. Equation (1) represents the demand for money and it is a linear equation in $Y$ and $R$. $a_2$ is the marginal propensity to hold money and $α_3$ is the sensitivity of money demand to changes in the rate of interest.
Equation (2) represents the supply of money and it is also a linear equation in $Y$. $B_2$ is the marginal propensity to supply money.The equation (3) is a simple assumption, which states that the supply of money is equal to the demand for money.In the long run, the central bank can control the supply of money, but in the short run, the demand for money depends on a number of factors, such as income, price level, and interest rate.In summary, the given system of equations is a simple model of the money market, which assumes that the demand for money depends on income, price level, and interest rate, while the supply of money depends on income.
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A "Dominant Strategy" is one that
gives the best result depending on the strategy the other party chooses
guarantees that both players get the best possible outcome
gives the best result regardless of what strategy the other party chooses
can only be calculated if one knows ahead of time the decision made by the opponent
none of these answers is correct
A dominant strategy is a choice that yields the best result for a player regardless of the strategies chosen by others, making it a powerful concept in analyzing strategic decision-making in game theory.
A "Dominant Strategy" is a strategy that gives the best result regardless of what strategy the other party chooses. It is a concept in game theory where each player selects the option that maximizes their own payoff, regardless of the actions taken by the other player.
In a game with dominant strategies, each player has a clear choice that guarantees the best possible outcome for them, regardless of the decisions made by the opponent.
This means that the player does not need to consider the opponent's strategy when making their own decision.
For example, in a simplified game of "Prisoner's Dilemma," if one player has a dominant strategy to confess regardless of what the other player does, it means that player will always choose to confess for their own benefit, irrespective of the other player's choice. This guarantees the best possible outcome for that player.
It is important to note that the concept of a dominant strategy assumes rationality and complete information on the part of the players. However, in some situations, there may not be a dominant strategy, and players need to consider the strategies of others to make optimal decisions.
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The first random sample of 25 students was taken from 2nd year students in 2017 and the second random sample of 25 students was taken from 2nd year students in 2016. Their midterm exam scores have been recorded. The summary statistics are as in the following table. 2017 sample 2016 sample 160 125 N (population size) n (sample size) 25 25 45 55 X (sample mean) 15 12 (population standard deviation) 18 20 s (sample standard deviation) (a) Test at the 5% significance level that the null hypothesis that the population mean score for 2017 is greater than or equal to 60 against the alternative that it is less than 60 for the following two cases. Case 1: Population standard deviation is known to be 12. Case 2 Population standard deviation is unknown. Sample standard deviation is computed as 18. Include null and alternative hypotheses, decision rules and your decisions. Interpret your result. Compute p-value for Case 1 (b) (c) (d) Compute the probability of Type II error when the true population mean is 53 for Case 1 Draw a figure of the hypothesis test from part (a), p-value from part (b) and Type II error from part (c). Include (i) Rejection Region, (ii) Critical Value, (iii) Sample Mean, (iv) P-value and (v) Type II error. (e) Test at the 5% significance level that the difference between the mean exam scores from two years [set it as #2017-2016) is 0 against the alternative that it is not 0 for the following two cases. Case A: Consider these sample data as independent sample. The population variances are known. Case B Consider these sample data as independent sample. The population variances are unknown (no equality assumption). Use v= 40.
a) Case 1Population standard deviation is known to be 12.Null Hypothesis H0: µ ≤ 60Alternative HypothesisH1: µ > 60Level of Significanceα = 0.05 Critical value at α = 0.05 and degree of freedom (df) = n-1 = 25-1 = 24 is 1.711.
First, we need to find out the Z-value for the given data set. We use the below formula:z = (X - µ) / σz = (160 - 60) / 12z = 8.33The calculated Z-value is 8.33. It is greater than the critical value of 1.711. Therefore, we can reject the null hypothesis. In other words, we have enough evidence to support the alternative hypothesis. Conclusion: The population mean score for 2017 is less than 60. Case 2Population standard deviation is unknown. Sample standard deviation is computed as 18.
Null HypothesisH0: µ ≤ 60Alternative HypothesisH1: µ > 60Level of Significanceα = 0.05Critical value at α = 0.05 and degree of freedom (df) = n-1 = 25-1 = 24 is 1.711.The test statistic for the given data set is as follows:t = (X - µ) / (s/√n)Where s = 18, X = 160, µ = 60, n = 25t = (160 - 60) / (18/√25)t = 5.56The calculated value of t is 5.56. It is greater than the critical value of 1.711.
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PROBLEM 2 -3 D, E and F share partnership profits in the ratio of 2:3:5. On September 30, F opted to retire from the partnership. The capital balances on this date follow: D, Capital - P25,000 E, Capital - P40,000 F, Capital - P35,000 a. How much is to be debited from D, assuming F is paid P39,000 in full settlement of his partnership interest (bonus method)? b. How much is the capital of E after the retirement of F? c. Assuming asset revaluation method, how much is the capital of D after the retirement of F? d. Assuming asset revaluation method, how much is the capital of E after the retirement of F?
a. To calculate the debit from D using the bonus method, we need to determine the bonus amount for F and then allocate it among the partners according to their profit-sharing ratio.
1. Determine F's bonus amount:
F's capital balance: P35,000
Settlement amount: P39,000
Bonus amount: Settlement amount - F's capital balance
Bonus amount: P39,000 - P35,000 = P4,000
2. Allocate the bonus among the partners:
D's share of the bonus = (2/10) * Bonus amount
Debit from D = D's share of the bonus
D's share of the bonus = (2/10) * P4,000 = P800
Therefore, P800 will be debited from D.
b. To calculate the capital of E after the retirement of F, we need to deduct F's capital balance from E's capital balance.
E's capital balance: P40,000
F's capital balance: P35,000
Capital of E after retirement = E's capital balance - F's capital balance
Capital of E after retirement = P40,000 - P35,000 = P5,000
Therefore, the capital of E after the retirement of F is P5,000.
c. Assuming the asset revaluation method, the capital of D after the retirement of F will be the same as D's capital balance before the retirement.
Capital of D after retirement = D's capital balance = P25,000
Therefore, the capital of D after the retirement of F is P25,000.
d. Assuming the asset revaluation method, the capital of E after the retirement of F will be the same as E's capital balance before the retirement.
Capital of E after retirement = E's capital balance = P40,000
Therefore, the capital of E after the retirement of F is P40,000.
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Russia, Poland, Hungary, and other Eastern European nations have turned away from communism and toward economic systems governed by supply and demand rather than by central planning. O True O False
The statement "Russia, Poland, Hungary, and other Eastern European nations have turned away from communism and toward economic systems governed by supply and demand rather than by central planning" is true.
After the end of World War II, most of the countries of Eastern Europe were occupied by Soviet troops, and communist-led governments were put in place. These countries underwent rapid industrialization and economic development, with centrally planned economies and significant state control over industry and agriculture.
Russia, Poland, Hungary, and other Eastern European countries have since then abandoned communism and shifted toward economic systems that are governed by supply and demand rather than by central planning.
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Which of the production process provides high flexibility but have a low utilization of equipment:
Process Focus
Repetitive Focus
Product Focus
Mass customization
The process focus provides high flexibility but have a low utilization of equipment. A process-focused process is a manufacturing approach in which a business provides a variety of products to a particular market or consumer group.
It has the following characteristics:
There are many different processing activities involved in the production of a product.There are many different steps in the manufacturing process that are frequently connected in a non-linear fashion.It often necessitates the use of adaptable tools and equipment.There is a higher level of operational flexibility in a process-focused system than in a product-focused one.The advantages of a process-focused production system are as follows:
It enables a higher degree of operational flexibility and adaptation to changing consumer demands, thereby improving the company's responsiveness.It allows for the utilization of a wide range of equipment and technologies, resulting in a wider range of goods and services that can be produced.It may help to spread risk across a broad range of products and consumers by providing a variety of goods and services that are tailored to different market demands.Learn more about process-focused system here: https://brainly.com/question/30004982
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Amy Company sold merchandise of $8,000 to Tory Turnbull with terms 2/10, n/30. Amy Company recorded this transaction using the gross method. If Tory Turnbull paid for all the merchandize within the discount period, the journal entry that Amy Company will make to record the collection of cash would include a: a. Credit to Sales Discount of $160 b. Credit to Account receivable $7,840 c. Debit to Sales Discount of $160 d. Credit to Cash of $160 Use the following information to answer the questions 18 & 19. Alicia Corporation was established on 1/1/2011. The ending balance of Allowance for doubtful account was $2,000 on 12/31/2011. During 2012, the company experienced the following: Beginning balance of Accounts receivable account was $50,000 credit sales $100,000 collections on credit sales $60,000 aging analysis of accounts deemed uncollectible at 12/31/2012 shows $8,000 of potentially uncollectible accounts. No accounts receivable was determined to be uncollectible during 2012. 18. What is Alicia's net book value of accounts receivable on January 1, 2013? a. $100,000 b. $32,000 c. $82,000 d. $40,000 e. $90,000 19. Assuming that Alicia uses the aging approach to estimate uncollectible accounts, what is the amount of bad debt expense for 2012? a. $6,000 b. $7,000 c. $8,000 d. $9,000 e. $12,000
The journal entry that Amy Company will make when Tory Turnbull, who bought merchandise totaling $8,000 with terms 2/10, n/30, pays within the discount period using the gross method, can be summarized.
Firstly, Amy Company will debit the Accounts Receivable account with $8,000, reflecting the amount owed by Tory Turnbull. Then, a credit of $160 will be made to the Sales Revenue account, representing the discount allowed (2% of $8,000). Additionally, a credit entry of $7,840 will be recorded in the Cash account, representing the actual cash received from Tory Turnbull after deducting the discount. By making these journal entries, Amy Company recognizes the revenue, records the discount given, and reflects the receipt of cash from the transaction.
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--The complete Question is, What would be the journal entry made by Amy Company if Tory Turnbull, who purchased merchandise worth $8,000 with terms 2/10, n/30, paid for the entire amount within the discount period, using the gross method of recording transactions?--
Intro The following table shows historical beginning-of-year prices for two stocks. 4+ decimals A 1 Year 2 2014 3 2015 4 2016 5 2017 6 2018 7 2019 8 2020 9 2021 10 2022 Submit B Stock A Part 1 Attempt
The prices are rounded to four decimal places:Part 1: AttemptGiven the historical beginning-of-year prices for two stocks shown in the table, let us focus on Stock A. From the table, we have the following information: Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 Price of Stock A 5.8136 7.9181 7.7088 6.9623 6.1125 7.0645 9.2218 9.4492 8.7391The price of Stock A has fluctuated over the years.
From 2014 to 2015, the price rose from 5.8136 to 7.9181, an increase of 2.1045. From 2015 to 2016, the price dropped slightly from 7.9181 to 7.7088. From 2016 to 2017, the price dropped further from 7.7088 to 6.9623. This decrease is 0.7465. From 2017 to 2018, the price dropped again from 6.9623 to 6.1125. This decrease is 0.8498. From 2018 to 2019, the price increased slightly from 6.1125 to 7.0645. From 2019 to 2020, the price increased significantly from 7.0645 to 9.2218. This increase is 2.1573. From 2020 to 2021, the price increased slightly from 9.2218 to 9.4492. From 2021 to 2022, the price dropped from 9.4492 to 8.7391.
This decrease is 0.7101.The above information can be summarized in the following table:Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 Price of Stock A 5.8136 7.9181 7.7088 6.9623 6.1125 7.0645 9.2218 9.4492 8.7391Increase/Decrease in Price 2.1045 -0.2093 -0.7465 -0.8498 0.9520 2.1573 0.2274 -0.7101
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Gugulethu plans to purchase a car that depreciates (loses value) at a rate of 14% per year. The initial cost of the car is R258 400. Which equation represents the value, v, of the car after three year
The value of the car after three years is R0.01.
The value of a car that depreciates at a rate of 14% per year, if Gugulethu plans to purchase a car whose initial cost is R258 400 can be calculated using the equation for straight-line depreciation (which assumes that the car depreciates by the same percentage each year).
Straight-line depreciation is calculated as:
Annual Depreciation = (Initial Cost - Salvage Value) / Number of Years of Useful Life
Therefore, the annual depreciation for this car is:
Annual Depreciation = (R258 400 - 0) / 3 = R86 133.33
The salvage value is assumed to be zero since the question does not provide that information.
Using the straight-line depreciation method, the value of the car after three years can be calculated as:
V = Initial Cost - Total Depreciation after Three Years
V = R258 400 - (R86 133.33 * 3)V = R258 400 - R258 399.99
V = R0.01
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You are an investor in Purple Beast Ltd, an Australian manufacturer of petrol-driven sports cars.
The firm has embarked on a major expansion plan and will need to raise $120 million to finance this expansion. The firm has announced that it will do this by issuing short-term debt securities, long-term bonds and shares.
The bonds will be issued in the U.S., denominated in Australian dollars. How would you describe these bonds?
a.
Domestic bonds
b.
American bonds.
c.
Eurobonds
d.
Foreign bonds
Eurobonds can be described as bonds will be issued in the U.S., denominated in Australian dollars. The right answer is c.
A bond type known as a eurobond is one that has been issued in a currency distinct from the one of the nation or market where it is sold. It has nothing to do with Europe or the euro currency, despite its name. A company's entry into an overseas market could be financed by a eurobond offering.
Without taking on foreign exchange risk, the bond raises the necessary funds in the required currency. While making an investment in a well-established domestic business, an investor may have exposure to a global market.
The correct answer is option c.
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Ann's risk preference is represented by the following expected utility formula: U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª. = = = Consider the following lotteries: L₁ (0.8, $100; 0.2, $0), L2 (0.6, $140; 0.4, $0), L3 (0.4, $200; 0.6, $0), and L3 = (0.5, $150; 0.5, $0). Suppose Ann strictly prefers L₁ over L₂ and she also strictly prefers L3 over L4. Find all possible a that are consistent with Ann's preferences.
The value of 'a' must be greater than zero in order to be consistent with Ann's preferences.
Ann's risk preference is represented by the following expected utility formula:
U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª
Consider the following lotteries: L₁ (0.8, $100; 0.2, $0), L2 (0.6, $140; 0.4, $0), L3 (0.4, $200; 0.6, $0), and L3 = (0.5, $150; 0.5, $0).
Suppose Ann strictly prefers L₁ over L₂ and she also strictly prefers L3 over L4.
We are to find all possible a that are consistent with Ann's preferences.
L₁ (0.8, $100; 0.2, $0) and L₂ (0.6, $140; 0.4, $0)U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª for L₁ and L₂π (C₁)ª + (1 − π) (C₂)ª > π'(C₁)ª + (1 − π') (C₂)ª
Therefore, Ann strictly prefers L₁ over L₂.U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª for L₃ and L₄π (C₁)ª + (1 − π) (C₂)ª > π'(C₁)ª + (1 − π') (C₂)ª
Therefore, Ann strictly prefers L3 over L4.
Considering L₁ and L₂:
U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª= 0.8(C₁)ª + 0.2(C₂)ª ….. (1)U(T, C₁; 1T, C₂) = π' (C₁)ª + (1 − π') (C₂)ª= 0.6(C₁)ª + 0.4(C₂)ª …. (2)
Since Ann strictly prefers L₁ over L₂, U(T, C₁; 1T, C₂) > U(T, C₁; 1T, C₂) = 0.6(C₁)ª + 0.4(C₂)ª
By substituting the given values, we get
0.8(C₁)ª + 0.2(C₂)ª > 0.6(C₁)ª + 0.4(C₂)ª0.2(C₁)ª > 0.2(C₂)ª(C₁/C₂)ª > 1
Taking log on both sides
ln (C₁/C₂)ª > 0
a ln (C₁/C₂) > 0
Now we consider L₃ and L₄:
U(T, C₁; 1T, C₂) = π (C₁)ª + (1 − π) (C₂)ª= 0.4(C₁)ª + 0.6(C₂)ª ….. (1)
U(T, C₁; 1T, C₂) = π' (C₁)ª + (1 − π') (C₂)ª= 0.5(C₁)ª + 0.5(C₂)ª …. (2)
Since Ann strictly prefers L3 over L4, U(T, C₁; 1T, C₂) > U(T, C₁; 1T, C₂) = 0.5(C₁)ª + 0.5(C₂)ª
By substituting the given values, we get
0.4(C₁)ª + 0.6(C₂)ª > 0.5(C₁)ª + 0.5(C₂)ª(0.1/0.5)(C₁)ª - (0.1/0.5)(C₂)ª > 0(C₁/C₂)ª > 1
We obtain: a ln (C₁/C₂) > 0 => a > 0
Therefore, the value of 'a' must be greater than zero in order to be consistent with Ann's preferences.
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Consider the following statements: (a) Investing activities in a statement of cash flows are concerned with the raising and repayment of long term debt and equity financing of an entity. (b) In a healthy business, the operating cash flows are normally negative. (c) Statement of cash flows measures profitability (d) Cash accounting is adopted in the preparation of statement of cash flows Select one: a.(a)True: (b)False: (c) False: and (d)True b. (a)True: (b)True: (c)True: and (d)False c. (a)False: (b)True: (c)True: and (d)False d. (a)False: (b)False: (c)False: and (d)True
The correct option is c. (a)False: (b)True: (c)True: and (d)False. Consider the following statements and their explanations:Investing activities in a statement of cash flows are concerned with the raising and repayment of long term debt and equity financing of an entity.
This statement is not correct because investing activities are related to the purchases and sales of long-term assets or investments. This has no direct relationship with long-term debt or equity financing of the company.In a healthy business, the operating cash flows are normally negative.This statement is incorrect because in a healthy business, operating cash flows are usually positive. They represent the cash generated from the entity's core business activities.Statement of cash flows measures profitability.
This statement is incorrect because the statement of cash flows explains the entity's cash inflows and outflows, not the profitability of the entity. Cash accounting is adopted in the preparation of the statement of cash flows.This statement is incorrect because cash accounting is not used in the preparation of the statement of cash flows. Instead, the accrual basis of accounting is used.
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Utilitarianism means compelling a CEO to support actions that produced the greatest good for the organization.
a. true
b. false
b. false Utilitarianism is an ethical theory that focuses on producing the greatest overall happiness or well-being for the greatest number of people.
It does not specifically compel a CEO to support actions that solely benefit the organization. Instead, utilitarianism considers the consequences of actions on all stakeholders involved, including employees, customers, and the wider community. The aim is to maximize overall happiness, not just organizational success. Utilitarianism encourages decision-making that considers the broader impact and promotes the greatest good for all, rather than prioritizing the interests of a single entity or organization.
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Question 1: (Cost Types, Cost behaviour, Pricing) (20 Marks)
You are the manager of Bellow Manufacturers (Pty) Ltd. The company operates as a jobbing shop and manufactures Bellows for the Petroleum industry. The company operates a Just in Time inventory system with only minimum stock levels of consumable stock being maintained. Material used in the manufacturing of a bellow consists mainly of Stainless Steel and Mild steel. Stainless steel is imported, and mild steel is locally available. The company outsource the draughtman’s function. The company does have its own machine shop, however certain machining tasks are being outsourced. Bellows are being graded depending on where they will be used in the petroleum plant. Heat and pressure are the main deciding factors. Although the company does have its own quality control department, depending on the grade of the Bellow, final quality needs to be signed off by an independent qualified engineer. The company has 18 Employees of which 10 is directly involved in the production of Bellows. Overtime is at time and a half and Sunday and Public Holidays at double time. Nonproduction staff consists of the general Manager, accountant, buyer, sales staff, and general administration staff. The company operates a consumable store. The storeman is also responsible for the receiving of all material on site. The company does have it own fleet of vehicles, but they are only being used for collection and delivery of light weight items. External transporters are being used for the collection of material and the final delivery of the bellows. The factory has its own 24-hour security guard. This function is being outsourced. Selling pricing is based on a gross profit percentage of 45%. The company calculates gross profit as follows: Gross profit = Selling price – production cost.
Recently, the company received a Request for Quote" RFQ, from customer. All the required specifications are listed, and the company needs to submit a quote. The company estimated the following costs to manufacture the bellow:
1. Draughtman to draught the drawings R 2500.
2. Stainless steel: import 25m2 (square meters) of stainless steel at a cost of R1,500 per m2 .
3. Import cost: The company uses an outside transporter to deliver the stainless steel to site. The cost of delivery is R1,000 per ton. (1 m2 = 100kg)
4. Mild Steel: purchase 35 m2mild steel at a cost of R150 per m2 . The supplier will deliver to site.
5. 100kg’s of welding wire (consumable stock) needed for the job. The total cost of the welding wire issued is R 900.
6. Total estimated production hours are 150 normal hours and 25 overtime hours. Included in the overtime hours are 9 hours to be worked on a public holiday. The average rate of wages is R60 per hour.
7. The job will require the final sign off from an independent engineer. The cost will be R5,000.
8. Outsourced machining: R 2,500.
9. The storeman monthly salary is R9,000 and the factory security is R 7,500.
10. The general manager’s salary is R20,000 per month.
11. Manufacturing overheads are being allocated based on the total number of manufacturing hours. The current allocation rate is R80 per hour.
12. The company receives a quote to the value of R 2,750 as delivery cost to the customer.
Required: 1. Calculate the estimated selling price of the Bellow. If you exclude any item, please provide the reason. Marks will be allocated to all the items. Use the following table in your workings. Show all your calculations as marks will be awarded for calculations.
Description Material R Labour R Manufacturing Overhead. R Total Cost
To calculate the estimated selling price of the bellow, we need to determine the cost of each item and sum them up. Based on the information provided, we can calculate the estimated selling price as follows:
Draughtsman: R 2,500
Stainless steel:
Import cost: 25m2 x R1,500/m2 = R 37,500
Import delivery cost: R 1,000 per ton (1 m2 = 100kg)
Weight of 25m2 of stainless steel = 25m2 x 100kg/m2 = 2,500kg
Delivery cost: (2,500kg / 1,000kg) x R 1,000 = R 2,500
Total stainless steel cost = R 37,500 + R 2,500 = R 40,000
Mild steel: R 150/m2 x 35m2 = R 5,250
Welding wire (consumable stock): R 900
Labour cost:
Normal hours: 150 hours x R 60/hour = R 9,000
Overtime hours: 25 hours x R 60/hour = R 1,500
Public holiday overtime: 9 hours x R 60/hour x 2 (double time) = R 1,080
Total labour cost = R 9,000 + R 1,500 + R 1,080 = R 11,580
Independent engineer cost: R 5,000
Outsourced machining: R 2,500
Storeman's salary: R 9,000
Factory security: R 7,500
General manager's salary: R 20,000
Manufacturing overhead:
Normal hours: 150 hours x R 80/hour = R 12,000
Overtime hours: 25 hours x R 80/hour = R 2,000
Public holiday overtime: 9 hours x R 80/hour = R 720
Total manufacturing overhead = R 12,000 + R 2,000 + R 720 = R 14,720
Delivery cost to the customer: R 2,750
Total Cost = Sum of all the above costs = R 2,500 + R 40,000 + R 5,250 + R 900 + R 11,580 + R 5,000 + R 2,500 + R 9,000 + R 7,500 + R 20,000 + R 14,720 + R 2,750
Estimated Selling Price = Total Cost / (1 - Gross Profit Percentage)
Gross Profit Percentage = 45% = 0.45
Estimated Selling Price = Total Cost / (1 - 0.45)
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Anthony, Bridgette and Coleen entered into a partnership. They invest $80,000, $ 100,000 and $ 200,000 respectively. At the end of the first year, Bridgette withdraws $ 40,000, while at the end of the second year, Coleen withdraws $80,000. In what ratio will the profit be shared at the end of 3 years? Select one: a. 6:7:8 b. 6:4:7 c. 12:16:28 d. 12:11:26 e. 12:7-8
The ratio in which the profit willl be shared at the end of 3 years is c. 12:16:28.
How to solveAnthony invested $80,000, while Bridgette contributed $100,000 and Coleen invested $200,000.
The distribution of profits will be based on the product of the investors' capital and the duration of investment.
Anthony: 80,000 * 3 = 240,000
Bridgette: 100,000 * 1 + 60,000 * 2 = 160,000
Coleen: 200,000 * 2 = 400,000
Therefore, the profit will be shared in the ratio of 240,000:160,000:400,000, which is equal to 12:16:28.
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A company limited by shares incorporated with two directors. One of them died of a heart attack during the pandemic of COVID19. Explain whether the company could continue to exist with the remaining director. Support your answer based on the Companies Act 2016.
The company limited by shares incorporated with two directors can continue to exist with the remaining director. This is in accordance with the Companies Act 2016, which states that a private company can operate with only one director.
Thus, the remaining director can continue to run the company without any legal impediment. However, the company must still follow the regulations and provisions outlined in the Companies Act 2016, including maintaining proper records and filing annual returns.
Under Section 122(1) of the Companies Act 2016, a private company must have at least one director, while a public company must have at least two directors. The death of one of the directors does not necessarily mean that the company must be dissolved or that the remaining director cannot continue to operate the business. As long as the company is properly registered and follows the regulations outlined in the Companies Act 2016, it can continue to operate with a single director. However, it is advisable to appoint a new director to ensure that the company has adequate leadership and management.
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Comparative Advantage: The countries of Cali and Fornia have different cost ratios for salami and cheese:
Cali: 1 pound of salami = 5 pounds of cheese
Fornia: 1 pound of salami = 7 pounds of cheese
Assuming that the two countries could trade with each other, in what product should each nation specialize in producing? Assume that both countries want to consume both salami and cheese. Please write you answer in the following way:
Fornia should specialize in (your answer)
Cali should specialize in (your answer)
Cali is better suited to produce cheese than Fornia.
Comparative Advantage: The countries of Cali and Fornia have different cost ratios for salami and cheese. Cali: 1 pound of salami = 5 pounds of cheese; Fornia: 1 pound of salami = 7 pounds of cheese.Assuming that the two countries could trade with each other, the country that can produce a product at a lower opportunity cost will have a comparative advantage in producing the product.
Cali has a lower opportunity cost for producing cheese, while Fornia has a lower opportunity cost for producing salami.Fornia should specialize in producing Salami, while Cali should specialize in producing cheese. Fornia has a lower opportunity cost for producing salami. In other words, Fornia has to give up only 1/7 pounds of cheese for producing 1 pound of salami while Cali has to give up 1/5 pounds of cheese for producing 1 pound of salami.
Cali has a lower opportunity cost for producing cheese. In other words, Cali has to give up only 1/5 pounds of salami for producing 1 pound of cheese while Fornia has to give up 1/7 pounds of salami for producing 1 pound of cheese.
So, Cali is better suited to produce cheese than Fornia.
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Which of the following statements is FALSE?
A) A firm's cash cycle is the length of time between when the firm pays cash to purchase its initial inventory and when it receives cash from the sale of the output produced from that inventory.
B) The longer a firm's cash cycle, the more working capital it has, and the more cash it needs to carry to conduct its daily operations.
C) Most firms buy their inventory on credit, which increases the amount of time between the cash investment and the receipt of cash from that investment.
D) Any reduction in working capital requirements generates a positive free cash flow that the firm can distribute immediately to shareholders.
The false statement among the options provided is: Any reduction in working capital requirements generates a positive free cash flow that the firm can distribute immediately to shareholders.
The correct answer is option D.
Working capital refers to the funds a company requires to meet its day-to-day operational needs. It is calculated by subtracting current liabilities from current assets. Working capital requirements depend on various factors such as industry, seasonality, and business operations.
While it is true that reducing working capital requirements can free up cash, it does not necessarily mean that the firm can distribute that cash immediately to shareholders. Free cash flow refers to the surplus cash generated by a company after covering all expenses, including working capital needs. It represents the cash available for distribution to shareholders, debt repayment, or reinvestment.
A reduction in working capital requirements can contribute to positive free cash flow, but it does not automatically guarantee immediate distribution to shareholders. The firm may have other financial obligations or investment opportunities to consider. Additionally, the decision to distribute cash to shareholders is subject to various factors, including the firm's dividend policy, debt obligations, growth plans, and capital allocation strategies.
Furthermore, firms often aim to strike a balance between maintaining adequate working capital to support their operations and minimizing excess cash tied up in working capital. While reducing working capital requirements can improve cash flow, it must be done prudently to avoid negatively impacting the firm's ability to meet its obligations or invest in future growth opportunities.
In summary, while reducing working capital requirements can contribute to positive free cash flow, it does not guarantee immediate distribution to shareholders. The decision to distribute cash depends on various factors, and firms must carefully manage their working capital to strike a balance between operational needs and cash flow optimization.
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In a six-firm market, if all firms charge the monopoly price, the per-period industry profit equals $500,000. In that same six-firm market, if all firms charge the prevailing price, the perperiod industry profit is $250,000. If the pricing period is one-month long, what is the maximum discount rate required for each firm to have an incentive to independently price at the monopoly level?
The discount rate (r) cannot be negative, the maximum discount rate required for each firm to have an incentive to independently price at the monopoly level is 0%.
To determine the maximum discount rate required for each firm to have an incentive to independently price at the monopoly level, we need to compare the profits from charging the monopoly price and the prevailing price. Let's denote the maximum discount rate as "r."
Monopoly Pricing:
If all firms charge the monopoly price, the per-period industry profit is $500,000. Since there are six firms in the market, the profit per firm can be calculated as:
Profit per firm = Per-period industry profit / Number of firms
Profit per firm = $500,000 / 6
Profit per firm = $83,333.33
Prevailing Pricing:
If all firms charge the prevailing price, the per-period industry profit is $250,000. Again, dividing this by the number of firms gives us the profit per firm:
Profit per firm = $250,000 / 6
Profit per firm = $41,666.67
Now, we can calculate the maximum discount rate (r) required for each firm to have an incentive to independently price at the monopoly level.
The formula to calculate the present value of a future cash flow is given by:
Present Value = Future Value / (1 + r)^n
Where:
Future Value is the expected cash flow in the future.
r is the discount rate.
n is the number of periods.
In this case, we will consider a one-month pricing period, so n = 1.
Let's denote the present value of the profit per firm from charging the monopoly price as PV_monopoly and the present value of the profit per firm from charging the prevailing price as PV_prevailing.
PV_monopoly = Profit per firm from charging the monopoly price / (1 + r)^n
PV_monopoly = $83,333.33 / (1 + r)^1
PV_prevailing = Profit per firm from charging the prevailing price / (1 + r)^n
PV_prevailing = $41,666.67 / (1 + r)^1
To have an incentive to independently price at the monopoly level, the present value of the profit per firm from charging the monopoly price should be greater than the present value of the profit per firm from charging the prevailing price.
PV_monopoly > PV_prevailing
Substituting the values, we get:
$83,333.33 / (1 + r) > $41,666.67 / (1 + r)
Cross-multiplying and simplifying:
$83,333.33 * (1 + r) > $41,666.67
Solving for r:
1 + r > $41,666.67 / $83,333.33
1 + r > 0.5
r > 0.5 - 1
r > -0.5
Since the discount rate (r) cannot be negative, the maximum discount rate required for each firm to have an incentive to independently price at the monopoly level is 0%. In other words, no discount rate is required for firms to choose monopoly pricing over prevailing pricing if the per-period industry profit is $500,000 compared to $250,000 when all firms charge the prevailing price.
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A firm has a P/E ratio of 50 and a price-to-sales (P/Sales)
ratio of 5. What should be the profit margin?
a. 100%
b. 1%
c. 10%
d. 25%
The profit margin should be 1% for a firm with a P/E ratio of 50 and a price-to-sales (P/Sales) ratio of 5. So, the correct option is B.
The percentage of revenue that is turned into profit is represented by the profit margin, which serves as a gauge of a company's profitability. We must comprehend the connection between the P/E ratio, P/Sales ratio, and profit margin in order to calculate the profit margin in this case.
By dividing the share price by the earnings per share (EPS), the P/E ratio is determined. Considering that the P/E ratio in this instance is 50, it can be concluded that stockholders are prepared to pay 50 times the company's earnings per share.In contrast, the market capitalization is divided by the company's revenue to determine the P/Sales ratio. The P/Sales ratio in this instance is 5, indicating that investors are placing a 5 times the company's yearly revenue value on it.To find the profit margin, we will use the formula, then we will get:
Profit Margin = (Net Income / Revenue) * 100
We must assume based on the available data because we don't have the net income or revenue figures. Investors likely have high expectations for the company's possible future earnings given the high P/E and P/Sales ratios.Considering this, a profit margin of 1% seems reasonable. This indicates that for every dollar of revenue generated, the company can convert 1 cent into profit. It reflects a relatively low-profit margin, which suggests that the company may have higher operating costs or lower profit margins compared to its competitors.
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Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping’s cost of capital is 7.03 percent. What is the NPV of a project if the initial costs are $1,415,854 and the project life is estimated as 8 years? The project will produce the same after-tax cash inflows of $467,188 per year at the end of the year.
Round the answer to two decimal places.
If the initial costs are $1,415,854 and the project life is estimated as 8 years, NPV would be $1,370,548.65
For calculating the Net Present Value(NPV), after-tax cash inflows of $467,188 per year at the end of the year need to be discounted at the given discount rate of 7.03% for 8 years and the initial investment would be deducted from that.
Year 1 - 467,188 × 0.9343 = 436493.74
Year 2 - 467,188 × 0.8729 = 407808.40
Year 3 - 467,188 × 0.8156 = 381038.53
Year 4 - 467,188 × 0.7620 = 355997.25
Year 5 - 467,188 × 0.7120 = 332637.86
Year 6 - 467,188 × 0.6652 = 310773.46
Year 7 - 467,188 × 0.6215 = 290357.34
Year 8 - 467,188 × 0.5807 = 271296.07
Total discounted inflows = $2786402.65
NPV = Present Value of Cash Inflows - Initial Investment
NPV = $2786402.65 - $1,415,854
NPV = $1,370,548.65
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"Development has a negative impact on our environment" Motivate why you agree with the
statement
[8]
industrial lead to water pollution
Which expense is a direct cost in the product costing of a fabric manufacturer?
Α.cost of cotton
B.electricity
C.water supply
D.salaries of employees
Answer:
A and D
Explanation:
Direct expenses are operational expense that can be straightforwardly applied to creating a particular expense object, similar to a decent or administration. Cost objects are things that expenses are allotted to. Instances of direct expenses incorporate direct work, direct materials, and assembling supplies.
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Blanchard Company manufactures a single product that sells for $184 per unit and whose total variable costs are $138 per unit. The company's annual fixed costs are $699,200. (1) Prepare a contribution
To prepare a contribution margin income statement, we need to calculate the contribution margin, subtract the fixed costs, and calculate the net income. Here's how you can do it:
Calculate the contribution margin per unit:
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $184 - $138
= $46
Calculate the contribution margin ratio:
Contribution margin ratio = (Contribution margin per unit / Selling price per unit) * 100
= ($46 / $184) * 100
= 25%
Calculate the total contribution margin:
Total contribution margin = Total sales * Contribution margin ratio
= Total sales * (1 - Variable cost ratio)
= Total sales - Total variable costs
= Total sales - (Total sales * Variable cost ratio)
= Total sales * (1 - Variable cost ratio)
Calculate the break-even point:
Break-even point in units = Fixed costs / Contribution margin per unit
Now let's prepare the contribution margin income statement:
Contribution Margin Income Statement
Sales revenue $X
Variable costs:
Variable cost of goods sold (X)
Contribution margin $Y
Fixed costs (699,200)
Net income $Z
To fill in the values, we need additional information about the total sales. Once we have that information, we can calculate the contribution margin, net income, and break-even point.
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