Answer:
1. There might be different levels of price levels between the countries. The citizens in the country with the higher inflation would enjoy less economic wellbeing
2. Different populations. If GDP is the same and the population is different, the standard of living of citizens of the country with the higher population would be lower when compared with the standard of living of the country with the lower population
3. Different level of non-market activities. The country with the higher level of non-market activity would have more goods and services available for its citizens and this increases the standard of living of the citizens
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Nominal GDP is GDP calculated using current year prices while Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation. It reflects the value of goods and services produced in an economy.
Factors that would make two countries with the same nominal GDP have the different level of wellbeing includes :
1. There might be different levels of price levels between the countries. The citizens in the country with the higher inflation would enjoy less economic wellbeing.
For example in country A, the real GDP is 20 while price level is $2. In country B, the real GDP is 10 while price level is $4. Nominal GDP in both countries is $40 but the price levels are different. Citizens in country A would have a higher standard of living when compared with citizens of country B
2. Different populations. If GDP is the same and the population is different, the standard of living of citizens of the country with the higher population would be lower when compared with the standard of living of the country with the lower population.
For example, the GDP of country A and B is 100. The population of country A is 10 while that of B is 20. The nominal GDP per capita in A is 10 and 5 in B. Citizens in country A would enjoy a higher standard of living when compared with citizens in country B
3. Different level of non-market activities. The country with the higher level of non-market activity would have more goods and services available for its citizens and this increases the standard of living of the citizens
Thomlin Company forecasts that total overhead for the current year will be $12,300,000 with 150,000 total machine hours. Year to date, the actual overhead is $8,270,500, and the actual machine hours are 97,300 hours. If Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is a.$291,900 overapplied b.$291,900 underapplied c.$158,100 overapplied d.$158,100 underapplied
Answer:
b. $291,900 underapplied
Explanation:
With regards to the above information, we will calculate the predetermined overhead rate first.
Predetermined overhead rate = Estimated total overhead / Total machine hours
= $12,300,000 / 150,000
= $82 per machine hours
Total overhead = Predetermined overhead rate × Actual total machine hours
= $82 × 97,300
= $9,798,600
Then,
Overhead = Total overhead - Actual overhead
= $9,798,600 - $8,270,500
= $291,900 underapplied
1. The process of establishing the image or identity of a brand or product so that customers perceive it in a certain way is the definition of which of the following terms?
A. Marketing Strategy,
B. Social Media,
C. Marketing Position,
D. Target market
2. Anton's Coffee positions itself to provide the highest quality and most unique coffee drinks in the area. This is an example of which of the following?
A. Marketing Strategy
B. Social Media
C. Target Market
D. Marketing Postion
Answer:
Answer of your question is Marketing PositionExplanation:
Market positioning refers to the process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way. For example, a car maker may position itself as a luxury status symbol.Assume that an analyst is using the constant dividend growth model to value a stock. Which of the following scenarios would be certain to cause her to decrease her estimate of the stock's value (assuming, of course, that all other factors are held constant)?
A. She believes the company has become riskier, and therefore increases her required rate of return for the stock.
B. She increases her estimate of the company’s next year’s dividend.
C. She increase her estimate of the expected annual rate of growth in the company’s dividends.
D. She decreases her required rate of return for the stock.
E. None of the above would cause her to decrease her estimate of the stock’s value.
Answer: A. She believes the company has become riskier, and therefore increases her required rate of return for the stock.
Explanation:
The formula for the Constant dividend growth model of valuing stock is:
= Next dividend / (Required return - growth rate)
From the formula above, one can tell that if the required return is higher, it would result in a lower value for stock because it would divide the numerator more.
If the analyst believes that the company is riskier and increases the required return, the value would therefore reduce if other measures are kept constant.
Colorado Cleaning has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new washing machine and must choose between two alternative ones. The first machine requires an initial investment of $25,000 and generates annual after-tax cash inflows of $6,500 for each of the next 8 years. The second machine requires an initial investment of $75,000 and provides an annual cash inflow after taxes of $9,500 for 15 years.
Required:
a. Determine the payback period for each machine.
b. Comment on the acceptability of the machines, assuming that they are independent projects.
c. Which machine should the firm accept? Why?
d. Do the machines in this problem illustrate any of the weaknesses of using payback? Discuss.
Answer:
a) Payback period = period up to which cumulative cash flow is negative +
(negative cumulative cash flow /cash flow succeeding
the above period)
Project A - Up to year 4 ,cash flow recovered = 3000 * 4 = 12,000
Payback period =14,000/3,000 = 4.67 years
Project B= Cash flow recovered up to year 5 = 4000 * 5 = 20000
Payback period = 21,000/4,000 =5.25 years
b) On the basis of the Payback period, Project A should be selected, as it has a lower payback period and is also within the maximum acceptable payback period. back period.(4.67 < 5)
Project B should not be selected as its payback recovery is not within the maximum acceptable payback period (5.25 >5 )
c) Machine A should be selected as it has a lower payback period. than machine B.
d)The payback period ignores the life present value of cash flow and also the life of the machine each project has.
so the decision on the basis of the payback period may not be accurate.
the baking department started the month with 23,500 units in its beginning work in process inventory. An additional 216,000 units started into production during the month to begin processing. There were 193,900 units in completed and transferred to the next processing department during the month. How many units were in ending work in process inventory at the end of the month
Answer:
45,600 units
Explanation:
Calculation to determine How many units were in ending work in process inventory at the end of the month
Using this formula
Units in ending work in process = Units in beginning work in process + Units started into production – Units transferred to the next department
Let plug in the formula
Units in ending work in process= 23,500 units + 216,000 units – 193,900 units
Units in ending work in process= 45,600 units
Therefore the number of units that were in ending work in process inventory at the end of the month is 45,600 units
A firm has estimated Free Cash Flows of $300,000, $310,000 and $360,000 for the next three (3) years. If this firm has a WACC of 9.40% and expects these cash flows to grow by 2.10% in perpetuity, then what is the Terminal Value of these expected perpetual cash flows.
Answer: $5,035,068.49
Explanation:
Terminal value is calculated based on the last cashflow and the growth rate in perpetuity.
The Gordon Growth Model is best used here:
= Free Cash Flow₄ / (WACC - Growth rate)
= (FCF₃ * (1 + growth rate) ) / (WACC -Growth rate)
= (360,000 * (1 + 2.10%)) / (9.40% - 2.10%)
= 367,560 / 7.3%
= $5,035,068.49
Your firm is considering a project with a discount rate of 9%. If you start the projecttoday, your firm will incur an initial cost of $490 and will receive cash inflows of$365 per year for 3 years. If you instead wait one year to start the project, the initial cost will rise to $530 and the cash flows will increase to $405 a year for the following 3 years. Would your firm be better off starting the project now or waiting to start the project in a year? Explain clearly including an estimate of the value of the option to wait.
Answer:
If the company start the project today then NPV of the project,
Year Cash Flow PV of Cash flow
0 -490 -490
1 365 365/1.09= 334.86
2 365 365/1.09^2 = 307.21
3 365 365/1.09^3= 281.85
NPV = 433.92
NPV of Project0= $ 433.92
If a company start a project after one year,
Year Cash Flow PV of Cash flow
0 0 0
1 -530 -530/1.09= -486.24
2 405 405/1.09^2 =340.88
3 405 405/1.09^3 = 312.73
4 405 405/1.09^4 = 286.91
NPV = 454.28
NPV of Project1= $ 454.28
Here for project start after one year has more Net Present Value of cash flow compared to which start now.
So, Starting a project after one year is more profitable.
You have just made your first $5,837 contribution to your retirement account. Assume you earn a return of 9.8 percent per year and make no additional contributions. What will your account be worth when you retire in 45 years
Materials Variances Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.5 ounces of aluminum per can. During the month of April, 300,000 cans were produced using 1,240,000 ounces of aluminum. The actual cost of aluminum was $0.18 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable. Materials Price Variance$fill in the blank 1 Material Usage Variance$fill in the blank 3
Solution :
Variance Calculations Result
Direct material 0.08(300,000 x 4.5 - 1,240,000) 8,800 favorable
usage variance
Direct material 1,240,000 x (0.08 - 0.18) 124,000 unfavorable
price variance
The standard quantity = actual production x standard quantity per unit
= 300,000 x 4.5
= 1,350,000
Question 18
What would be the best appraisal approach to use in estimating the market value of an athletic stadium?
a) Sales comparison
b) Cost
c) Direct capitalization
d) Yield capitalization
Answer:
It's option B. cost
I recently learned about it in my marketing course.
Explain the manufacturing flow management process and the relationship among manufacturers' production capabilities and costs, suppliers, shippers, and demand for goods. Briefly define and explain the differences between lean and agile supply chain strategies.
Answer:
The difference between lean and agile is the fluidity with the response to the market. A lean supply chain focuses on cutting costs by producing high volumes of products with low variability. An agile supply chain focuses on responding to the market demand with smaller, customizable batches of items.
A lean supply chain prioritizes cost reduction by producing goods in large quantities and with little variation. An agile supply chain focuses on producing things in smaller, more individualized quantities in response to market demand.
What is a supply chain?The entire process from when a consumer places an order to when the goods or service is delivered and paid for is known as the supply chain. The value and supply chains are coordinated and optimized by the supply chain manager.
He is in charge of ensuring the flawless operation of every process, from the acquisition of raw materials to production, logistics, and client delivery.
As a result, the company, its customers, and its customers' customers are all included in the supply chain. A supply network accounts for the possibility that one of the providers is also a supplier to a customer or even the final consumer.
The monitoring of all resources, data, and finances used in the production process, from the supplier to the manufacturer to the merchant and consumer, is referred to as supply chain management (SCM) or supply chain management.
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On January 2, 2021, L Co. issued at face value $22,000 of 3% bonds convertible in total into 1,400 shares of L's common stock. No bonds were converted during 2021. Throughout 2021, L had 1,400 shares of common stock outstanding. L's 2021 net income was $4,000. L's income tax rate is 30%. No potential common shares other than the convertible bonds were outstanding during 2021. L's diluted earnings per share for 2021 would be:
Pick the correct statement from below. Multiple Choice Project analysis should only include the cash flows that affect the income statement. A project can create a positive operating cash flow without affecting sales. The depreciation tax shield creates a cash outflow for a project. Interest expense should always be included when analyzing cost-cutting projects. A bid price maximizes profits on a project for the bidding firm.
Answer:
A project can create a positive operating cash flow without affecting sales.
Explanation:
A project cash flow analysis permits to look the cash inflows and cash outflows that are along with the existing or upcoming project. Also it addressed the opportunity cost
So as per the given situation, it involved that project in which it establish the positive operating cash flow without impacting the sales
Therefore as per the given options, the above statement represent an answer
Compound value solving for n) How many years will the following take? a. $ to grow to $ if invested at percent compounded annually b. $ to grow to $ if invested at percent compounded annually c. $ to grow to $ if invested at percent compounded annually d. $ to grow to $ if invested at percent compounded annually
Answer:
Note: The complete question is attached below as picture
A = P(1+r/100)^n Where A is future value, P is present value, r is rate of interest and n is time period
1. A = P(1+r/100)^n
1042.51 = 480(1.09)^n
(1042.51/480) = 1.09^n
Taking log on both sides
log(1042.51/480) = n*log 1.09
n = log(1042.51/480)/log 1.09
n = 9 years.
2. A = P(1+r/100)^n
53.26 = 31(1.07)^n
(53.26/31) = 1.07^n
Taking log on both sides
log(53.26/31) = n*log 1.07
n = log(53.26/31)/log 1.07
n = 8 years
3. A = P(1+r/100)^n
383.59 = 100(1.13)^n
(383.59/100) = 1.13^n
Taking log on both sides
log(383.59/100) = n*log 1.13
n = log(383.59/100)/log 1.13
n = 11 years.
4. A = P(1+r/100)^n
66.91 = 53(1.06)^n
(66.91/53) = 1.06^n
Taking log on both sides
log(66.91/53) = n*log 1.06
n = log(66.91/53)/log 1.06
n = 0.10121516027 / 0.025306
n = 3.9997
n = 4 years.
Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Which department has the greatest departmental contribution to overhead (in dollars) and what is the amount contributed
Answer: Department 3 had the greatest contribution to overhead of $362,000
Explanation:
Contribution to overhead = Sales - Cost of Goods sold - Direct expense
Department 1:
= 1,140,000 - 714,000 - 114,000
= $312,000
Department 2:
= 540,000 - 164,000 - 54,000
= $322,000
Department 3:
= 840,000 - 314,000 - 164,000
= $362,000
g provides the following income statement for 20X9: Net Sales $240,000 Cost of Goods Sold 110,000 Gross Profit $130,000 Operating Expenses: Selling Expenses 45,000 Administrative Expenses 12,000 Total Operating Expenses 57,000 Operating Income $73,000 Other Income and (Expenses): Loss on Sale of Capital Assets (29,000) Interest Expense (1000) Total Other Income and (Expenses) (30,000) Income Before Income Taxes $43,000 Income Tax Expense 5000 Net Income $38,000 Calculate the times-interest-earned ratio.
Answer: 44 times
Explanation:
Times interest earned ratio aims to show just how much the company is able to cover its interest obligations using its operating income.
Times interest earned ratio = Net income before interest / Interest expense
Net income before interest = Operating income loss on sale of capital assets
= 73,000 - 29,000
= $44,000
Times interest earned ratio = 44,000 / 1,000
= 44 times
Shelton Co. purchased a parcel of land six years ago for $860,500. At that time, the firm invested $132,000 in grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $47,500 a year. The company is now considering building a warehouse on the site as the rental lease is expiring. The current value of the land is $912,000. What value should be included in the initial cost of the warehouse project for the use of this land
The value should be included in the initial cost of the warehouse project for the use of this land is $912,000.
When embarking on a project, the value of the assets to be used should be their current market value because they reflect the current state of the assets at the time the project was embarked on thereby allowing for more accurate analysis for instance in terms of depreciation or net worth of the project.
The current market price of the parcel of land as the firm is about to embark on a project is $912,000 so this should be the considered the initial cost of project in terms of land.
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Vincent corporation has 100,00 shares of 100 par common stock outstanding. on june30 ,Vincent corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record july15. the market price of the stock was $132 a share on June 30. journalize the entries required on June 30 and july30
The common stock that is seen here would be $500000
What is the common stock outstanding?This is the term that would simply be used to refer to all of the shares that the shareholders of a company as well as the people that are the insiders in the company would own.
How to solve for the journal entriesThe retained earnings is given as
$132 * 0.05
= $6.6
= 6.6 x 100000
= 660000
The debit is $660000
The credit is 100000 x 5 = 500000
paid in capital in excess of par = 660000 - 500000
= $160000
The stock dividend distributable = $500000
common stock is given as $500000
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Gotiable sells straw hats for $24 each. The April inventory purchases are summarized below. Gotiable sold 142 hats at a hat festival on April 28. Units Cost each Dollars Beg. Inv. 84 3 252 April 2 75 4 300 April 14 66 7 462 April 23 52 8 416
Assume that Gotiable uses the average cost method for inventory costing.
1. What is the average cost of one hat? (Round to the nearest penny (2 decimal points)).
2. What will be the dollar value of the inventory on the April 30th balance Sheet? (Round to the nearest dollar)
3. What will Gotiable report as Gross margin for the hats for the month of April? (Round to the nearest dollar)
Answer and Explanation:
The computation is shown below:
1.
Particulars Units Unit Cost Dollars
Beg. Inv. 84 $3 $252
Apr-02 75 $4 $300
Apr-14 66 $7 $462
Apr-23 52 $8 $416
Total 277 $1,430
Average cost of one hat is
= Total cost of purchases ÷ Units purchased
= $1,430 ÷ 277 units
= $5.16
2.
Ending Inventory in Units = Units purchased - Units sold
= 277 units - 142 units
= 135 units
Now
Value of Ending Inventory = Units in Ending Inventory × Average cost per unit
= 135 units × $5.16
= $696.60
= $697
3
Gross Margin = Units sold × (Selling Price - Cost of goods sold)
= 142 units × ($24 - $5.16)
= $2,675.28
= $2,675
Huffman Corporation constructed a building at a cost of $30,000,000. Weighted-average accumulated expenditures (WAAE) were $12,000,000, actual interest was $1,200,000, and avoidable interest was $1,600,000. If the salvage value is $2,400,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is
a. $690,000
b. $705,000.
c. $720,000.
d. $735,000.
Answer:
$730,000
Explanation:
Calculation to determine what depreciation expense for the first full year using the straight-line method is
Using this formula
Depreciation expense=Costs of Building+Avoidable interest-Salvage value)/Useful life
Let plug in the formula
Depreciation expense=( $30,000,000 + $ 1,600,000- $2,400,000) / 40 years
Depreciation expense=$29,200,000/40 years
Depreciation expense= $730,000
Therefore depreciation expense for the first full year using the straight-line method is $730,000
a. Sunland Cosmetics acquired 12% of the 287,500 shares of common stock of Elite Fashion at a total cost of $14 per share on March 18, 2019. On June 30, Elite declared and paid a $80,200 dividend. On December 31, Elite reported net income of $228,100 for the year. At December 31, the market price of Elite Fashion was $16 per share.
b. Culver Inc. obtained significant influence over Kasey Corporation by buying 25% of Kasey's 29,100 outstanding shares of common stock at a total cost of $11 per share on January 1, 2020. On June 15, Kasey declared and paid a cash dividend of $38.500. On December 31, Kasey reported a net income of $122.900 for the year.
Required:
Prepare all the necessary journal entries for 2020 for Culver Inc.
Answer:
Mar 18
Dr Available for sales Securities $4,025,000
Cr Cash $4,025,000
June 30
Dr Cash $9624
Cr Dividend Revenue $9624
Dec-31
Dr Securities Fair value Adjustment $575,000
Cr Unrealised gain or Losss- income$575,000
B. Jan 1
Dr Investment in Culver stock $80,025
Cr Cash $80,025
Jan 15
Dr Cash $9,625
Cr Investment in Culver stock $9,625
Dec, 31
Dr Investment in Culver stock $30,725
Cr Revenue $30,725
Explanation:
Preparation of all the necessary journal entries for 2020 for Culver Inc.
Mar 18
Dr Available for sales Securities $4,025,000
(287,500*$14)
Cr Cash $4,025,000
June 30
Dr Cash $9624
Cr Dividend Revenue $9624
($80,200*12%)
Dec-31
Dr Securities Fair value Adjustment $575,000
Cr Unrealised gain or Losss- income$575,000
[(287,500*($16-$14)]
B. Jan 1
Dr Investment in Culver stock $80,025
(29,100*25%*$11)
Cr Cash $80,025
Jan 15
Dr Cash $9,625
($38,500*25%)
Cr Investment in Culver stock $9,625
Dec, 31
Dr Investment in Culver stock $30,725
($122,900*25%)
Cr Revenue $30,725
Based on predicted production of 26,000 units, a company anticipates $507,000 of fixed costs and $448,500 of variable costs. The flexible budget amounts of fixed and variable costs for 24,000 units are (Do not round intermediate calculations):
Answer:
u may do addition I think from that process
Stine Inc. had 1,000,000 shares of common stock issued and outstanding at December 31, 2020. On July 1, 2021 an additional 1,000,000 shares were issued for cash. Stine also had stock options outstanding at the beginning and end of 2021 which allow the holders to purchase 300,000 shares of common stock at $28 per share. The average market price of Stine's common stock was $35 during 2021. The number of shares to be used in computing diluted earnings per share for 2021 is
The number of shares to be used in computing diluted earnings per share for 2021 is 1,560,000
Diluted earnings per share=(1,000,000* 6/12) + (2,000,000 *6/12) + [((35 – 28) ÷35) *300,000]
Diluted earnings per share=500,000+1,000,000+60,000
Diluted earnings per share= 1,560,000
Therefore The number of shares to be used in computing diluted earnings per share for 2021 is 1,560,000
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On July 1, 2022, Cullumber Company sells equipment for $146000. The equipment originally cost $480000, had an estimated 5-year life and an expected salvage value of $50000. The Accumulated Depreciation account had a balance of $301000 on January 1, 2022, using the straight-line method. The gain or loss on disposal is
Answer:
Accumulated depreciation = ($480,000 - $50,000)/5 *6/12 + $301,000
Accumulated depreciation = $43,000 + $301,000
Accumulated depreciation = $344,000
Date Account titles & Explanations Debit Credit
Cash $146,000
Accumulated depreciation $344,000
Gain on disposal $10,000
Equipment $480,000
So, the gain on disposal is $10,000
JacksonIndustries produces two products. The products' estimated costs are as follows:
Product A Product B
Direct Materials $20,000 $15,000
Direct Labor $30,000 $10,000
The company's overhead costs of $200,000 are allocated based on labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the total amount of production costs that would be assigned to Product A? (Do not round intermediate calculations.)
a. $200,000
b. $75,000
c. $50,000
d .$150,000
e. $114,285.71
Answer:
Total production cost= $200,000
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 200,000 / (30,000 + 10,000)
Predetermined manufacturing overhead rate= $5 per direct labor cost
Now, we can allocate overhead to Product A:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5*30,000
Allocated MOH= $150,000
Finally, the total production cost for Product A:
Total production cost= 150,000 + 20,000 + 30,000
Total production cost= $200,000
Tái chế không phải 1 phương pháp hoàn hảo để giải quyết vấn đề ô nhiễm mt
Answer:
ý thức về việc xả rác, ngưng xả rác , bỏ rác đúng nơi quy định
The ultimate goal of contract damages is: Multiple Choice Put the nonbreaching party where it was before the contract was formed. Return any costs incurred by the nonbreaching party. Put the nonbreaching party where it was prior to breach. Put the nonbreaching party in the best position possible. Give the nonbreaching party the benefit of its bargain.
Answer:
Give the nonbreaching party the benefit of its bargain.
Explanation:
A contract can be defined as an agreement between two or more parties (group of people) which gives rise to a mutual legal obligation or enforceable by law.
There are different types of contract in business and these includes: fixed-price contract, cost-plus contract, bilateral contract, implies contract, unilateral contract, adhesion contract, unconscionable contract, option contract, express contract, executory contract, etc.
Mutual assent is a legal term which represents an agreement by both parties to a contract. When two parties to a contract both have an understanding of the parameters, terms and conditions surrounding a contract, it ultimately implies that they are in agreement; this is generally referred to as mutual assent.
In contract law, damages can be defined as an amount of money that is paid to a claimant (innocent party) as a compensation for a breach of contractual agreement and it's based on the amount of interest he or she has vested in the contract. Thus, it covers the incurred by the nonbreaching party (claimant or innocent party) due to a breach of contract by the other party.
Hence, the ultimate goal of contract damages is to give the nonbreaching party the benefit of its bargain.
You are considering investing in the stock of PartyWagon, Inc. You expect a dividend of $1.25 next year, $1.31 in year 2, and $1.38 in year 3. At the end of three years, you expect to be able to sell the stock for $65. If you can purchase the stock for $32, what rate of return do you expect to earn
Answer: 29.93%
Explanation:
You can use Excel to solve for this.
Bear in mind that when given a series of cashflows, the expected return is the Internal Rate of Return (IRR).
Initial investment = $32
First cashflow = $1.25
Second cashflow = $1.31
Third cashflow = $1.38 + $65 selling price = $66.38
IRR = 29.93%
What is choice ? Choice is problem how
Answer:
Problem of choice refers to the allocation of various scarce resources which have alternative uses that are utilized for the production of various commodities and services in the economy for the satisfaction of unlimited human wants.
Show what happens to the firm's output choice and profit if the price of the product falls from $52 to $42. If the market price falls from $52 to $42, then the firm's output will decrease or increase from _____units to _____ units. (Enter your responses using integers.)
Answer: The firm's output will therefore decrease from 9 units to 8 units.
Explanation:
This firm most likely operates in a competitive market where price is the same as marginal revenue.
In such a market, firms will try to maximize output by selling at a level where Price is equal to Marginal cost and if they cannot get here, they try to make them as close as possible so long as marginal cost does not exceed price.
As this is the case, when the price was $52, the closest Marginal cost that isn't higher than price was $45 for an output level of 9 units.
If the product falls to $42, the closest marginal cost that isn't higher than the cost is $38 for 8 units.
The firm's output will therefore decrease from 9 units to 8 units.
