Answer:
Explain forecasting
Explanation:
This implies that I will have to let the other person know that it possible to judge how successful a project would be by doing what is called forecasting.
Forecasting allows one to project to a reasonable extent what the success level of a project would be, especially in terms of it's revenue, overall expenses before the project is carried out. A good forecasting tool is Forecast web application which provides future estimates of budget and task duration.
Which of the following ratios indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
A. Margin of safety ratio
B. Costs and expenses ratio
C. Profit ratio
Answer:
The correct answer is the option A: Margin of safety ratio.
Explanation:
To begin with, the name of "Margin of Safety", in the field of business and accounting, is refered to a ratio whose main purpose is to establish the point in where the company knows that it has to sale obligately due to the fact that at that point the company can be sure that they have covered the fixed costs of it and after that point every sale will became a profit for the company. So that is why that this ratio indicates the percentage of each sales dollar that is available to cover those costs.
Your Competitive Intelligence team is predicting that the Digby Company will invest in adding capacity to their Deal product this year. Assume Digby's product Deal invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year
Answer:
13,288
Explanation:
The computation of the amount that industry produced in the core segment is shown below:
It can be determined in two ways i.e.
= 6,444 + 6,444
= 13,288
And, the other method is
= 6,444 × 2
= 13,288
In both the methods, the answer would remain the same
Hence, the 13,288 should be produced by the industry for the next year production
Coney Island Entertainment issues $1,300,000 of 5% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.
Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:
Required:
1. The market interest rate is 5% and the bonds issue at face amount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
Issue price
Date Cash Paid Interest Expense Increase in Carrying value Carrying value
1/1
6/30
13/31
2. The market interest rate is 6% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
3. The market interest rate is 4% and the bonds issue at a premium. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors.)
Answer:
1) The market interest rate is 5% and the bonds issue at face amount.
Dr Cash 1,300,000
Cr Bonds payable 1,300,000
Year Interest payment Book value of bonds
June/1 $32,500 $1,300,000
Dec/1 $32,500 $1,300,000
June/2 $32,500 $1,300,000
2) The market interest rate is 6% and the bonds issue at a discount.
price of bonds:
PV of face value = $1,300,000 / (1 + 3%)³⁰ = $535,582.79
PV of coupons = $32,500 x 19.600 (PV annuity factor, 3%, 30 periods) = $637,000
market price = $1,172,582.79
Dr Cash 1,172,582.79
Dr Discount on bonds payable 127,417.21
Cr Bonds payable 1,300,000
discount amortization per coupon payment = $127,417.21 / 30 = $4,247.24
Year Cash paid Interest Amortization Bond Book
expense bond discount discount value
June/1 $32,500 $36,747.24 $4,247.24 $123,169.97 $1,176,830.03
Dec/1 $32,500 $36,747.24 $4,247.24 $118,922.73 $1,181,077.27
June/2 $32,500 $36,747.24 $4,247.24 $114,675.49 $1,185,324.51
3. The market interest rate is 4% and the bonds issue at a premium.
price of bonds:
PV of face value = $1,300,000 / (1 + 2%)³⁰ = $717,692.16
PV of coupons = $32,500 x 22.396 (PV annuity factor, 2%, 30 periods) = $727,870
market price = $1,445,562.16
Dr Cash 1,445,562.16
Cr Bonds payable 1,300,000
Cr Premium on bonds payable 145,562.16
discount amortization per coupon payment = $145,562.16 / 30 = $4,852.07
Year Cash paid Interest Amortization Bond Book
expense bond discount premium value
June/1 $32,500 $27,647.93 $4,852.07 $140,710.09 $1,440,710.09
Dec/1 $32,500 $27,647.93 $4,852.07 $135,858.02 $1,435,858.02
June/2 $32,500 $27,647.93 $4,852.07 $131,005.95 $1,431,005.95
Ballpark has shares of par common stock outstanding. Ballpark announces a stock split of for1. What is the effect of the split?
Answer:
The answer is 'it increases the number of shares outstanding'
Explanation:
Stock split increases the number of shares outstanding. It causes dilution of earnings per share.
For example, ABC Inc. has 50,000 shares outstanding and it announces a stock split of 3-for- 1.
This means that any shareholder that has 1 will exchange that 1 share for 3 shares. So at the end of the stock split the total number of shares outstanding will be 150,000 shares (50,000 x 3)
Bronn and Jaime make a written contract where Jaime will sell Bronn his armor and sword for $1,200.
Which of the following is not a defense to the formation of the contract?
Group of answer choices
A. fraud
B. illegality
C. incapacity
D. unconscionability
E. mirror image rule
Answer: Mirror image rule
Explanation:
It should be noted that the contract formation defenses are fraud, illegality, incapacity, unconscionability, duress and statute of Frauds.
The mirror image rule is not among the defense to the formation of w contract. It implies that an offer should be accepted with no changes made to the offer.
Match the definition with the term.
a. It is a collection of all accounts with their activity and balances that exist in a business.
b. It is a book of original entry that includes a chronological record of all transactions that Have occurred within a business during a period occurred
c. It is a list of each account and its balance at any given time and is used to verify that debits = credits
d. It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account
1. A general ledger
2. A chart of accounts
Answer:
a. It is a collection of all accounts with their activity and balances that exist in a business. - A general ledger
The General Ledger is the central record in an accounting system and contains a record of all financial transactions in the company.
b. It is a book of original entry that includes a chronological record of all transactions that Have occurred within a business during a period occurred. - A Journal
When a transaction takes place in a business, it is recorded first in a Journal. As such, a journal contains a chronological record of all transactions that have occurred within a business during a period occurred.
c. It is a list of each account and its balance at any given time and is used to verify that debits = credits . - Trial Balance
The Trial Balance helps a business balance its debits and credits by listing them so then equating them to verify that indeed the debits match the credits.
d. It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account . - A chart of accounts
Perkins Company own 85% of Sheraton Company. Perkins Company sells merchandise to Sheraton Company at 20% above cost. During 2008 and 2009, such sales amounted to $450,000 and $486,000, respectively. At the end of each year, Sheraton Company had in its inventory one-third of the amount of goods purchased from Perkins during that year.
Prepare the workpaper entries necessary to eliminate the effects of the intercompany sales for 2008 and 2009.
Answer:
2008
Correct Overstatement
Cost of Sales $450,000 (debit)
Revenue $450,000 (credit)
Correct Unrealized Profit in Inventory
Cost of Sales $25,000 (debit)
Inventory $25,000 (credit)
2009
Adjustments of Opening Balances
Retained Earnings $25,000 (debit)
Cost of Sales $25,000 (credit)
Correct Overstatement
Cost of Sales $486,000 (debit)
Revenue $486,000 (credit)
Correct Unrealized Profit in Inventory
Cost of Sales $27,000 (debit)
Inventory $27,000 (credit)
Explanation:
The Sale of merchandise by Perkins Company (Parent) to Sheraton Company (Subsidiary) is an Intragroup transaction since the companies form a group.
This results in the Cost of Goods Sold and Revenue being overstated for each intra-sale transaction and an unrealized profit resulting in the inventory that has not been sold at the end of the period.
The above are the necessary adjustments that are required to correct the overstatement and unrealized profits.
Milano Gallery purchases the copyright on an oil painting for $510,000 on January 1, 2017. The copyright legally protects its owner for 12 more years. The company plans to market and sell prints of the original for 19 years.
Requried:
Prepare entries to record the purchase of the copyright on January 1, 2017, and its annual amortization on December 31, 2017.
Answer:
See journal entries below.
Explanation:
The copy right is known as an intangible asset that is purchased to a business hence debited to factor in its purchase value while the bank is credited for the payment for the purchase.
Although the copyright is amortized for 12 years, the copyright protection expires after 12 years - which is the legal year irrespective of its plan to market and sell the painting for 19 years.
• Entries to record to record the purchase of copyrights on January 1, 2017.
Date
January 1,2017
Copyright Dr $510,000
Bank Cr $510,000
(Being purchase of 12 years painting copyrights)
• Annual amortization on December 31, 2017
December 31, 2017
Amortization Dr $42,500
Copyright Cr $42,500
(Being annual amortization cost on 12 years painting copyright)
You have risen through the ranks of a coffee comany, from the lowly green-apron barista to the coveted black apron, and all the way to CFO. A quick internet check shows that your company's beta is 0.6. The risk-free rate is 4.1% and you believe the market risk premium to be 5.2%. What is your best estimate of investors' expected return on your company's stock (its cost of equity capital)?
Answer:
The cost of equity capital or expected rate of return is 7.22%
Explanation:
The expected rate of return or the required rate of return is the minimum rate of return required by the investors to invest in a stock or a portfolio of stock based on the systematic risk that a stock carries as represented by a stock's beta. The expected rate of return (r) of a stock can be calculated using the CAPM equation.
The CAPM equation is,
r = rRF + Beta * rpM
Where,
rRF is the risk free raterpM is the risk premium on marketr = 0.041 + 0.6 * 0.052
r = 0.0722 or 7.22%
Wookie Company issues 8%, five-year bonds, on January 1 of this year, with a par value of $108,000 and semiannual interest payments.
Semiannual Period-End Unamortized Premium Carrying Value
(0) January 1, issuance $8,271 $116,271
(1) June 30, first payment 7,444 115,444
(2) December 31, second payment 6,617 114,617
Use the above straight-line bond amortization table and prepare journal entries for the following:
a) The issuance of bonds on January 1.
b) The first interest payment on June 30.
c) The second interest payment on December 31.
Answer:
See the journal entries and explanation below.
Explanation:
The journal entries will look as follows
a) The issuance of bonds on January 1.
Date Accounts title Debit ($) Credit ($)
Jan. 1 Cash 111,671
Premium on Bonds Payable 8,271
Bonds Payable (w.1) 108,000
(To record issuance of bonds.)
b) The first interest payment on June 30.
Date Accounts title Debit ($) Credit ($)
Jun. 30 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.2) 827
Cash (w.3) 4,320
(To record first interest payment)
c) The second interest payment on December 31.
Date Accounts title Debit ($) Credit ($)
Dec. 31 Interest Expense (w.4) 3,493
Premium on Bonds Payable (w.5) 827
Cash (w.6) 4,320
(To record second interest payment)
Workings:
w.1: Bond payable = Cash - Premium on Bonds Payable = $111,671 - $8,271
w.2: Premium on Bonds Payable = January 1 Unamortized Premium - June 30 Unamortized Premium = $8,271 - $7,444 = $827
w.3: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.4: Interest expense = w.3 - w.2 = $4,320 - $827 = $3.493
w.5: Premium on Bonds Payable = June 30 1 Unamortized Premium - December 31 Unamortized Premium = $7,444 - $6,617 = $827
w.6: Cash = $108,000 * 8% * (6 / 12) = $4,320
w.7: Interest expense = w.6 - w.5 = $4,320 - $827 = $3,493
The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure.
_________ is the symbol that represents the cost of preferred stock in the weighted average cost of capital (WACC) equation.
Bryant Co. has $2.3 million of debt, $1.5 million of preferred stock, and $1.8 million of common equity. What would be its weight on common equity?
A. 0.32
B. 0.24
C. 0.22
D. 0.30
Answer:
Option A is the correct answer
Weight of equity =0.32
Explanation:
Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund.
The weight is the market value of nominal value of the source of fund as a proportion of the total capital funds.
Total capital funds = Debt funds + Preferred Funds + Equity funds
= ($2.3 + $1.5 + $1.8 ) million = $5.6 million
Weight of equity = Equity capital/Total capital funds
= 1.8/5.6 =0.32
Weight of equity =0.32
Daniel owns his own computer repair shop. Business has not been good, so Daniel's credit limit has been exhausted, and he needs a short-term loan to help him stay in business. Which institution, known as the lender of last resort, would Daniel most likely turn to for a loan
The institution that is called the lender of the last resort is the finance company.
The following information should be relevant:
Daniel should be converted into a finance company where the business provides short-term loans at high-interest rate as compared to the banks. Due to the high-interest rate, the financial companies should be treated as the lender of last resort for an individual & the businesses where the credit limit could be exhausted having poor credit ratings.So, the rest of the options are incorrect.
Therefore we can conclude that the institution that is called the lender of the last resort is the finance company.
Learn more about the credit limit here: brainly.com/question/8243881
Rose dies with passive activity property having an adjusted basis of $156,400, suspended losses of $50,048, and a fair market value at the date of her death of $218,960. Of the $50,048 suspended loss existing at the time of Rose's death, how much is deductible on her final return or by the beneficiary
Answer:
12512 dollars that she have
A small ice cream business earns $26538 profit during the two months of July and August. This represents 35% of the annual profit. Find the annual profit. Round to the nearest whole number.
Let the annual profit be x.
profit earned in July and August is 35% of the annual profit
=> $26538 = 35% of x
=> $26538 = (35/100) × x
=> $26538 × (100/35) = x
=> $2653800/35 = x
=> $530760/7 = x
So, the profit is $530760/7.
The annual profit is $75,823.
Given that,
Two months profit is $26,538.This two month profit represents 35% of annual profit.We need to find annual profit.According to the scenario, computation of the given data are as follows,
Let annual profit be X.
So, X [tex]\times[/tex] 35% = 26,538
X = 26,538 [tex]\div[/tex] 0.35
X = 75,822.86 or 75,823
Hence annual profit = $75,823.
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Using the same information from before, please calculate the WACC of Correct Inc. assuming a risk free rate of 2.5%, a company Beta of 1.2 and a market risk premium of 6%.
Answer:
WACC = 21.7%
Explanation:
The firm is an all-equity finance firm which implies that the company uses only equity funds to finance its its operation without the use of debt. Therefore, the cost of the equity of the firm would be the same as its cost of capital (WACC)
The WACC can be determined using the the capital asset pricing model (CAPM). The CAPM relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c
Using the CAPM , the required rate of return is given as follows:
E(r)= Rf +β(Rm-Rf)
E(r) - required return
β- Beta
Rm- Return on market
Rf- Risk-free rate
Rm-Rf- Market risk premium
DATA
E(r) =? , Rf- 2.5%, Rm-Rf- 6% , β- 1.2
E(r) = 2.5% + 1.2× (16%) = 21.7 %
Cost of equity = 21.7%
WACC = 21.7%
Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 205,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $1.73 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. Use MM Proposition I to find the price per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the value of the firm under each of the two proposed plans? ((Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
Answer:
a) $21.63
b) $4,433,125
Explanation:
plan I, total stocks outstanding = 205,000
plan II, total stocks outstanding = 125,000, and $1,730,000 in debt ($1,730,000 x 8% = $138,400 in interests)
under MM proposition I, a firm's total value is equal whether it uses external financing (debt) or not:
205,000P₀ = 125,000P₀ + $1,730,000
205,000P₀ - 125,000P₀ = $1,730,000
80,000P₀ = $1,730,000
P₀ = $1,730,000 / 80,000 = $21.625 = $21.63
the firm's total value = $21.625 x 205,000 = $4,433,125
Suppose the Federal Reserve purchases $1,000,000 worth of foreign assets.
a. if the Federal Reserve purchases the foreign assets with 51,000,000 in currency, show the effect of this open market operation, using T-accounts. What happens to the monetary base?
b. if the Federal Reserve purchases the foreign assets by selling 51,000,000 in T-bills, show the effect of this open market operation, using T-accounts. What happens to the monetary base?
Answer:
A. Federal Reserve
Assets Liabilities
Foreign Assets $1,000,000 Currency in circulation $51,000,000
The federal liabilities increase by $51,000,000 in currency because it uses that money to purchase foreign assets which increase the foreign assets category by an equivalent amount. The monetary base is defined as the sum of currency circulating in the public and commercial banks reserve with the central bank
Since, the currency in circulation has increased. Thus, the monetary base will increase by $51,000,000
B. Federal Reserve
Assets Liabilities
Securities T-bill - $51,000,000
Foreign Assets $1,000,000
The federal is basically swapping T-bills with foreign assets. It did not use currency to make this purchase and the composition of assets changes, but the total does not.
Thus, the monetary base does not change
When modeling the right to develop an oil property as a real option, and in the presence of fixed costs, using oil price volatility in the option-pricing model will
Answer:
overestimate because the value of the option depends on the volatility of revenue
Explanation:
The greater the market volatility, the greater the range that would be needed to determine the option premium. This would end up causing an overestimation of the premium value.
Therefore making use of oil price volatility in the option-pricing model will overestimate as value of option is dependent on how volatile the revenue is.
A project requires an investment of $10 million and offers an annual after-tax cash flow of $1,250,000 indefinitely. If the firm's WACC is 12.5% and the project is riskier than the firm's average projects, should it be accepted?
Answer:
No.It should not be Accepted.
Explanation:
Weighted Average Cost of Capital (WACC) is the minimum return that is expected from a project. It shows the risk of the entity. If a project gives a return below the WACC, it is regarded as very risk and must not be accepted.
What problems does the Singaporean system of emphasizing health savings accounts most directly address?
Answer:
I. The funding gap in the health care sector
II. Universal health care coverage
III. Access to medical care
Explanation:
The Singaporean health care savings account system has really helped to solve the problems associated with health care funding in the country, it has also helped the country to attain a universal health care for its citizens as it was rated in 2014 by Bloomberg as the country with the most efficient health care system in the world. The system has helped to address the issues of non-catastrophic health outcomes and helped to increase the life expectancy of its citizens.
A small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of
Complete Question:
A small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of?
Group of answer choices.
A. Offshoring
B. Centralized work surveillance.
C. Outsourcing.
D. Telecommuting.
Answer:
Outsourcing.
Explanation:
When a small distribution organization uses a payroll company to provide employee compensation services and keep timesheet records and employee attendance history. This situation is an example of outsourcing.
Outsourcing can be defined as a contractual agreement in which a company contracts another firm (third-party) to be responsible for providing certain job functions, tasks or services rather than use employees or departments within the company.
In this scenario, the outsourcing firm or company is saddled with the responsibility of providing employees compensation services, keep timesheet records, and manage the attendance history of employees working at the outsourced distribution organization.
g If the risk-free rate is 5%, return on the market is 8%, and beta is 0.5, a stock with a return of 7% is likely: Group of answer choices Correctly valued Undervalued None of the options Overvalued
Answer:
The stock is undervalued. As the required rate of return (6.5%) on market is less than the actual return (7%), the stock is said to be undervalued as it provides an actual return greater than the required rate of return.
Explanation:
To check if a stock is over valued, undervalued or correctly valued, we simply compare the required rate of return on a stock as measured by CAPM with the actual return on the stock.
We can calculate the required rate of return using CAPM equation. The formula for required rate of return under CAPM is,
r = rRf + Beta * (rM - rRF)
Where,
rRf is the risk free raterM is the return on marketr = 0.05 + 0.5 * (0.08 - 0.05)
r = 0.065 or 6.5%
As the required rate of return on market is less than the actual return, the stock is said to be undervalued as it provides an actual return greater than the required rate of return.
Answer:
Undervalued
Explanation:
to determine if the stock is overvalued or undervalued, we have to determine the expected rate of return using the CAPM and compare it with the return of the stock
Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)
5% + 0.5(8% - 5%) = 6.5%
the stock is undervalued because 6.5% is less than 7%
Ernest is applying for a carpentry apprenticeship program. He must take a test involving mathematical calculations including working with fractions and geometry. This is illegal because carpentry is a manual labor job and these tests are cognitive and not job-related.
A. True
B. False
Answer:
B. False
Explanation:
Since in the question, it is mentioned that Erney applied for a carpentry apprenticeship program. Also he took the test. This is not a illegal as if he wants to work in two specialized field than he could co but the work should be legal in nature and both the work are legal itself
Hence, the given statement is false
During 2021, Deluxe Leather Goods issued 707,000 coupons which entitles the customer to a $5.00 cash refund when the coupon is submitted at the time of any future purchase. Deluxe estimates that 71% of the coupons will be redeemed. 261,000 coupons had been processed during 2021. Deluxe recognizes coupon expense in the period coupons are issued. At December 31, 2021, Deluxe should report a liability for unredeemed coupons of:
Answer:
Deluxe should report a liability for unredeemed coupons of $1,204,850
Explanation:
Estimated coupons to be redeemed $501,970
(707,000 * 71%)
Less: Coupons redeemed $261,000
Coupons unredeemed $240,970
X Cost per Coupon 5.00
Liability for unredeemed Coupons $1,204,850
g An arbitrage opportunity arises when... Group of answer choices An investment has a high risk-return ratio. disparity between 2 or more prices allow investors to yield a sure profit the risk-free rate generates a positive alpha. a net investment is taken place within a portfolio
Answer:
disparity between 2 or more prices allow investors to yield a sure profit
Explanation:
Arbitrage is defined as the practice where there is simultaneous buying and selling of an asset so as to benefit from a price difference.
Usually the price differences occur in different markets, so the arbitrator acts as a supplier of the goods to market where goods are to be sold.
For example if a company buys fertiliser from a whole seller and immediately sells the goods to a farmer's cooperative at higher price this is arbitrage.
So abitrage opportunity is when disparity between 2 or more prices allow investors to yield a sure profit
Cash $38,600 Short-term investments 9,000 Accounts receivable 40,000 Inventory 240,000 Prepaid expenses 17,400 Accounts payable 87,200 Other current payables 22,300 Multiple Choice 0.96 and 3.96. 2.99 and 1.25. 3.15 and 0.80. 3.15 and 0.32.
Answer:
Current ratio and Acid-test ratio (3.15 and 0.80)
Explanation:
Note: The missing part of the question is "Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio:"
i. Current ratio = Current assets/Current liabilities
Current assets = 38,600 + 9,000 + 40,000 + 240,000 + 17,400
Current assets = $345,000
Current liabilities= 87,200 + 22,300
Current liabilities = $109,500
Current ratio = $345,000 / $109,500
Current ratio = 3.15
ii. Acid-test ratio = {Current assets - (Inventory + Prepaid expenses)}/Current liabilities
Acid-test ratio = 345,000- (240,000 + 17,400 ) / 109,500
Acid-test ratio = 87,600 / 109,500
Acid-test ratio = 0.80
The company currently markets McDog T-bone, Lapdog Lunchtreats, Rover's Potroast, and Puppy Porterhouse in the dog food market. Prime Cuts will be an addition to the
Answer:
company's product line in the dog food market
Explanation:
In the description provided, it can be said that Prime Cuts will be an addition to the company's product line in the dog food market. A product line is a group of related products all marketed under a single brand name and are sold by the same company to the same targeted group of consumers. Such as in this scenario, all of the products listed are dog treats/food with different ingredients and are all sold by the same company to people looking for dog food.
Competitive markets ______ goods with positive externalities and ______ goods with negative externalities. Group of answer choices overprovide; underprovide underprovide; overprovide overprovide; overprovide underprovide; underprovide
Answer:
underprovide; overprovide
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation
If I currently sell 10,000 units, and my use of Formula 1 indicates that I will need to sell 500 additional units to justify my suggested change to the marketing mix, what percentage of sales does that represent
Answer:
It represents a 5% change to the marketing mix.
Explanation:
The change = 500/10,000 x 100 = 5%.
Company A's change in a variable can be compared with another index, by expressing the change (addition) as a percentage of the index. For instance, the sale of 10,000 units is an index. The additional 500 units that is needed to be sold represent the change. In percentage terms, the change can be divided by the index and then multiplied by 100.
People decide to save 20 percent of their incomes. The value of the marginal propensity to consume is ________ and the value of the spending multiplier is ________.
Answer: 0.8; 5
Explanation:
From the question, we are informed that people decide to save 20 percent of their incomes. We should note that the addition of the marginal prospensity to consume(MPC) and the marginal prospensity to save(MPS) will be equal to 1.
Therefore, the value of the marginal propensity to consume will be:
= 1 - 20%
= 1 - 0.2
= 0.8
The value of the spending multiplier will be calculated as:
= 1/MPS
= 1/0.2
= 5