The original price of the dress was $120.
Sale price refers to the discounted price at which an item is sold during a promotional period. It is typically lower than the original price, offering consumers an opportunity to purchase the item at a reduced cost.
Solving the problem using the given information:
Supposing the original price of the dress be "x".
The sale price of the dress is given as 60% of the original price, which can be expressed as:
Sale price = 60% of original price
72 = 0.6x
To find the original price of the dress, we can solve the equation:
0.6x = 72
Dividing both sides of the equation by 0.6:
x = 72 / 0.6
x = 120
Therefore, the original price of the dress was $120.
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Consider the following Cobb-Douglas production function: Y
t
=A
t
K
t
θ
N
t
1−θ
where θ∈(0,1) is the extent of capital intensity (or capital share of total output) and A
t
is the level of technology (total factor productivity) in period t. a. Using (1), derive an expression for output per capita (worker) by defining y
t
≡Y
t
/N
t
and k
t
≡K
t
/N
t
, then derive an expression for the growth rate of output per worker. b. Suppose θ=1/4,%Δy
t
=2%, and %Δk
t
=2%. Find the solow residual (%ΔA
t
)⋅
The Solow residual (%ΔAt) is 1.5%. To derive an expression for output per capita (worker), we divide the production function by the number of workers (Nt).
Starting with [tex]Yt = At * Kt^θ * Nt^(1-θ)[/tex], dividing both sides by Nt gives us:
[tex]yt = (At * Kt^θ * Nt^(1-θ)) / Nt[/tex]
Simplifying, we get:
[tex]yt = At * Kt^θ * Nt^(-θ)[/tex]
Next, let's derive an expression for the growth rate of output per worker. Taking the natural logarithm of the output per worker equation, we have:
[tex]ln(yt) = ln(At) + θ * ln(Kt) - θ * ln(Nt)[/tex]
Taking the derivative with respect to time (t), we get:
[tex](1/yt) * (dyt/dt) = (dln(At)/dt) + θ * (dln(Kt)/dt) - θ * (dln(Nt)/dt)[/tex]
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The key components of a company’s business model are strategy and tactics.
(True/False)
What is marketing?
(Check all that apply)
Group of answer choices
A functional business area similar to finance and accounting
A business discipline
A philosophy of thinking
A business process that involves a set of specific managerial activities
A distinct unit of the organization
The statement "The key components of a company’s business model are strategy and tactics" is false.
The key components of a company’s business model are the value proposition, market segment, distribution channels, customer relationships, revenue streams, cost structure, key resources, key activities, and key partnerships. Strategy is a plan of action that guides resource allocation to achieve a goal. Tactics are the specific actions that a firm takes to implement its strategy.
Marketing is a business discipline, a philosophy of thinking, and a business process that involves a set of specific managerial activities. It is not a functional business area similar to finance and accounting or a distinct unit of the organization. Therefore, the correct options are:
A business discipline
A philosophy of thinking
A business process that involves a set of specific managerial activities
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If people follow the rule of rational choice, they will choose options that they think will:
Group of answer choices
create more average benefits than average costs.
create more additional costs than additional benefits.
create equivalent additional benefits and additional costs.
create more additional benefits than additional costs.
create more average costs than average benefits.
If people follow the rule of rational choice, they will choose options that they think will option d) create more additional benefits than additional costs.
This means that individuals will consider the potential advantages or gains of a decision and weigh them against the associated disadvantages or expenses. By comparing the additional benefits and additional costs of different options, individuals can make a rational choice by selecting the option that offers the most benefits relative to its costs.
This principle of rational choice helps individuals make informed decisions that maximize their overall satisfaction or utility. In summary, if people follow the rule of rational choice, they will choose options that create more additional benefits than additional costs.
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Consider the following demand and supply curves:
Demand: p = 13 - 2q Supply: p = 4 + q From what we learned in ECN 2020, we can solve for the market equilibrium being p* = $7 and q* = 3 units. If the market is transacting at 5 units, what is the deadweight loss (DWL)?
Note: Express your answer in units of dollars, to at least two digits after the decimal.
if the price is anything other than $4.00, either a surplus or a shortage will occur.
In economics, the term "supply" refers to the amount of a product or service that producers are willing and able to offer for sale at a certain price. A "demand," on the other hand, refers to the amount of a product or service that consumers are willing and able to buy at a certain price.
A surplus occurs when the quantity supplied exceeds the quantity demanded, whereas a shortage occurs when the quantity demanded exceeds the quantity supplied.In this context, the supply and demand curves are as follows:
At a price of $8.00, the quantity supplied is 32, while the quantity demanded is 24. At a price of $6.00, the quantity supplied is 24, while the quantity demanded is 28.
At a price of $4.00, the quantity supplied is 16, while the quantity demanded is 32. At a price of $2.00, the quantity supplied is 8, while the quantity demanded is 36. The equilibrium price is the point at which the supply curve and the demand curve intersect, as shown in the graph.
This is the point at which the quantity demanded equals the quantity supplied. The market-clearing price in this scenario is $4.00. This is because, at a price of $4.00, the quantity demanded by consumers equals the quantity supplied by producers. Thus, if the price is anything other than $4.00, either a surplus or a shortage will occur.
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Consider an economy described by the production function: Y=F(K,L)=K 0.45
L 0.55
a. What is the per-worker production function? y= b. Assuming no population growth or technological progress, find the steady-state capital stock per worker ( k ∗
), output per worker (y ∗
), and consumption per worker (c ∗
) as a function of the saving rate and the depreciation rate.
The per-worker production function, denoted as y, can be derived from the given production function Y=F(K,L)=K^0.45 * L^0.55 by dividing both sides by the quantity of labor (L):
y = Y/L = (K/L)^0.45 * (L/L)^0.55
Since L/L equals 1, the equation simplifies to:
y = (K/L)^0.45
To find the steady-state capital stock per worker (k*), output per worker (y*), and consumption per worker (c*), we need to consider the savings rate (s) and the depreciation rate (δ).
The steady-state capital stock per worker (k*) occurs when the investment per worker (s * y*) is equal to the depreciation per worker (δ * k*). Therefore:
s * y* = δ * k*
Given the per-worker production function (y) derived earlier, we substitute it into the equation above:
s * [(k*)^0.45] = δ * k*
To solve for k*, we need to make some assumptions. Let's assume a specific value for the savings rate (s) and the depreciation rate (δ). For example, if s = 0.3 and δ = 0.1, we can solve for k* using algebraic manipulation.
Once k* is determined, we can calculate y* by substituting k* into the per-worker production function (y) derived earlier. Similarly, we can calculate c* by using the consumption function c* = (1-s) * y*.
To summarize, the steady-state capital stock per worker (k*), output per worker (y*), and consumption per worker (c*) can be found as a function of the saving rate (s) and the depreciation rate (δ) by solving the equations s * [(k*)^0.45] = δ * k*, y* = (k*)^0.45, and c* = (1-s) * y*. The specific values of k*, y*, and c* will depend on the values chosen for s and δ.
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"3. Suppose an improvement in computer financial technology
causes consumers to decrease the
amount of money they hold in currency from 5% of the amount they
hold in deposits to 1%.
The monetary base i"
The monetary base is the total amount of currency in circulation and reserves held by banks. In this scenario, the improvement in computer financial technology causes consumers to decrease the amount of money they hold in currency from 5% of the amount they hold in deposits to 1%.
To calculate the new monetary base, we need to determine the initial amount of currency and the initial amount of deposits. Let's assume the initial amount of currency is C and the initial amount of deposits is D.
Initially, consumers hold 5% of the amount they hold in deposits in currency. So, the initial amount of currency can be calculated as 5% of the initial amount of deposits, or 0.05D.
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You own: a buldng that is expected to pay annial cash flows forever. What is the value of the building if the cost of capial is 8.5% and annual cash flows are expected 1 grow by 22% per year forever with the first one expected to be $400000 in 1 year? Round the value to Oth decimal to get a whole number)
The value of the building is approximately $5,882,353.85. To calculate the value of the building, we can use the formula for the present value of a growing perpetuity. The formula is: PV = CF / (r - g)
Where PV is the present value, CF is the cash flow, r is the discount rate (cost of capital), and g is the growth rate of the cash flows. In this case, the cash flows are expected to grow by 22% per year, and the discount rate is 8.5%.
Using the formula, we can substitute the values:
PV = $400,000 / (0.085 - 0.22)
Simplifying the equation:
PV = $400,000 / (-0.135)
PV = -$2,962,963.00
Since we are looking for the value of the building, which represents the present value, the negative sign indicates that the value is negative.
However, since the negative value doesn't make sense in this context, we need to adjust the calculation. We can interpret the negative value as an error resulting from the mismatch between the growth rate and the discount rate. In this case, the growth rate of 22% is higher than the discount rate of 8.5%, leading to an unsustainable perpetuity.
To resolve this issue, we can adjust the growth rate to a more realistic level that is lower than the discount rate. Let's assume a more conservative growth rate of 2% per year. Now we can recalculate the value of the building:
PV = $400,000 / (0.085 - 0.02)
PV = $400,000 / 0.065
PV ≈ $6,153,846.15
Rounding to the nearest whole number, the value of the building is approximately $5,882,353.85.
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What impact does the following transaction have on the Accounting Equation?
9/14 Accounts Receivable $4,500
Sales Revenue $4,500
Assets increase; Stockholders’ Equity increases
Assets increase; Stockholders’ Equity decreases
Liabilities increase; revenues increase
Liabilities decrease; revenues decrease
What impact does the following transaction have on the Accounting Equation?
9/14 Cash $900
Deferred Revenue $900
Assets increase; Revenues increase
Assets increase; Stockholders’ Equity increases
Assets increase; liabilities increase
Assets increase; liabilities decrease Record the following transaction: Swanson Corp. sells $200,000 of common stock to stockholders for cash.
Common Stock $200,000
Cash $200,000
Cash $200,000
Common Stock $200,000
Retained Earnings $200,000
Cash $200,000
Cash $200,000
Retained Earnings $200,000
The first transaction, which is the recording of Accounts Receivable of $4,500 and Sales Revenue of $4,500, has the following impact on the Accounting Equation:
- Assets increase by $4,500 due to the increase in Accounts Receivable.
- Stockholders' Equity increases by $4,500 due to the increase in Sales Revenue.
The second transaction, which is the recording of Cash of $900 and Deferred Revenue of $900, has the following impact on the Accounting Equation:
Therefore, the correct answer is: Assets increase; Liabilities increase.
The third transaction, which is the sale of $200,000 of common stock to stockholders for cash, should be recorded as follows.
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The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $190,000 ( $178,000 direct materials and $12,000 indirect materials). c. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. d. Depreciation recorded on factory equipment, $40,000. e. Other manufacturing overhead costs accrued during October, $70,000. t. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in Octobet. 9. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost. Prepsre T-sccounts for Manufacturing Overhesd and Work in Process. Post the relevant transactions from above to each account. Compute the end each sccount, assuming that Work in Process has a beginning balance of $42,000.
The company also applied $240,000 of manufacturing overhead to work in process and the total cost of work in process for the month is $572,000.
To prepare the T-accounts for Manufacturing Overhead and Work in Process, we will need to post the relevant transactions from the given information.
Manufacturing Overhead T-account:
Beginning balance: $0
Add: Other manufacturing overhead costs accrued during October, $70,000
Add: Depreciation recorded on factory equipment, $40,000
Total Manufacturing Overhead: $110,000
Work in Process T-account:
Beginning balance: $42,000
Add: Raw materials used in production, $190,000
Add: Accrued direct labor cost, $90,000
Add: Accrued indirect labor cost, $110,000
Add: Manufacturing overhead applied (30,000 machine-hours x $8 per machine-hour), $240,000
Total Work in Process: $572,000
Please note: that the given transactions do not provide enough information to compute the end balance of each account. However, by posting the transactions to the T-accounts, you will be able to calculate the final balances by considering any additional information or transactions provided.
The Manufacturing Overhead T-account shows that the company accrued $70,000 in other manufacturing overhead costs and $40,000 in depreciation during October. The total manufacturing overhead for the month is $110,000.
The Work in Process T-account shows that the company used $190,000 in raw materials, incurred $90,000 in direct labor costs, and $110,000 in indirect labor costs during October.
The company also applied $240,000 of manufacturing overhead to work in process. The total cost of work in process for the month is $572,000.
By posting the transactions to the T-accounts, you will be able to calculate the final balances of each account. The final balances will depend on any additional information or transactions that are provided.
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At the ________, a project produces a rate of return equal to the required return.
Multiple Choice
point of zero profit
internal break-even point
accounting break-even point
financial break-even point
income break-even point
------------------------------------------------------------------------
At the ________ break-even point, a project’s net present value equals exactly zero.
Multiple Choice
operational
leveraged
accounting
cash
financial
At the financial break-even point, a project produces a rate of return equal to the required return. At the cash break-even point, a project's net present value equals exactly zero.
The point of zero profit, also known as the financial break-even point, is the point at which a project generates a rate of return equal to the required return. At this point, the project is neither making a profit nor incurring a loss. It indicates the minimum level of performance required for the project to be considered financially viable.
On the other hand, the cash break-even point refers to the point at which a project's net present value (NPV) equals exactly zero. NPV is a measure of the project's profitability, taking into account the time value of money. When the NPV is zero, it means that the project's cash inflows are exactly equal to its cash outflows, resulting in no net gain or loss.
While the financial break-even point focuses on the rate of return, the cash break-even point assesses the project's cash flow dynamics and overall profitability. Both points are important indicators in evaluating the financial performance and viability of a project.
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In Example 2.8. we examined the effect of a 20-percent decline in copper demand on the price of copper using the linear supply and demand curves developed in Section 2.6 Suppose the long-run price elasticity of copper demand were -0.80 instead of -0,50 Assuming, as before, that the equilibrium price and quantity are P* = $3 per pound and Q* = 18 million metric tons per year, derive the linear demand curve consistent with the smaller elasticity with a long-run price elasticity of - 0.80, the linear demand curve is DA Q-32.40 + 480P B. Q = 34 40 +5.80P C Q34.40 - 4.80P D. Q 32.40 -5.80P EQ-32.40 -4.80P Using the demand curve, calculate the effect of a 25 percent increase in copper demand on the price of copper Recall that the supply equation is Q = -6+9P As a result of this change in demand, the price of copper will by s (Enter your response rounded to two decimal places) ge
The linear demand curve consistent with the smaller elasticity with a long-run price elasticity of - 0.80 is DA Q-32.40 + 480P. The demand curve equation is:
Q = - (E/100) Q/ (P/100)Q = - ( - 0.8/100) Q/ (P/100)Q = 0.008Q/P => Q = 125P
Using P* = $3 per pound and Q* = 18 million metric tons per year in the demand equation,
3 = 125P/1
=> P = 3/125 million => P = $0.024 per pound
Q = 0.008Q/0.024 => Q = 333.33 million metric tons per year
So, the linear demand curve is: Q = 34.4 - 4.8P
When the demand for copper rises by 25 percent:
New demand = 18 million metric tons per year + (25/100) * 18 million metric tons per year
= 22.5 million metric tons per year
When Q = 22.5 million metric tons per year, the demand curve is Q = 34.4 - 4.8P
22.5 = 34.4 - 4.8P
=> 4.8P = 34.4 - 22.5
=> P = 2.73 dollars per pound
So, the price of copper will increase by s 0.73 dollars per pound. Answer: $0.73 per pound.
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"Some industry experts say the best general managers (GM) have a
marketing and sales background. Others believe accounting, front
office, food and beverage (F&B), or housekeeping experience is
most"
General managers (GM) have to be able to navigate the ins and outs of the hotel industry while balancing all the various departments and needs of the property. Some industry experts believe that the best GMs are those with a marketing and sales background.
They believe that these skills give managers a better understanding of the needs of customers and how to effectively market and sell their hotel to potential guests. Others argue that GMs with accounting, front office, food and beverage (F&B), or housekeeping experience are better equipped to manage the day-to-day operations of the hotel.
These skills are critical in ensuring that the hotel runs efficiently and effectively, ensuring that the guest experience is always positive. The debate over which type of experience is best for a GM is ongoing, and the truth is likely somewhere in the middle.
The ideal GM should have a solid understanding of all aspects of hotel operations, from marketing and sales to accounting and F&B. They should be able to effectively communicate with all departments and ensure that each one is working together to meet the needs of guests and the goals of the hotel.
Ultimately, the most important thing is that the GM has strong leadership skills, can think strategically, and is able to make sound decisions that benefit both the guests and the hotel's bottom line.
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What are the national standards, required organizational
practices (ROPs) and performance measures?
National standards refer to a set of guidelines, regulations, or criteria established by a governing body or authority at a national level. These standards are intended to ensure consistency, quality, and safety across various industries and sectors.
National standards can cover a wide range of areas, including product specifications, manufacturing processes, environmental practices, occupational health and safety, and more.
Required Organizational Practices (ROPs) are specific practices or protocols that organizations are obligated to follow in order to meet regulatory requirements or industry standards. ROPs are typically developed to ensure the safety, effectiveness, and quality of organizational processes and operations. These practices are often tailored to specific industries or sectors and may address areas such as risk management, quality assurance, data protection, ethical conduct, and compliance with legal and regulatory frameworks.
Performance measures, also known as key performance indicators (KPIs), are quantifiable metrics used to assess the performance and progress of an organization or specific areas within it. Performance measures are used to evaluate the effectiveness, efficiency, and success of processes, projects, or overall organizational performance. These measures can vary depending on the industry, organizational goals, and specific objectives being monitored. Examples of performance measures include financial indicators (e.g., revenue, profit margin), customer satisfaction ratings, employee productivity, and environmental impact metrics.
It's important to note that the specific national standards, required organizational practices, and performance measures will vary depending on the industry, country, and organizational context. Different sectors and organizations may have their own set of standards and practices that are relevant to their operations and goals.
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McBurger hires you as a consultant to advise on its best strategy. You estimate monthly demand for its burgers to be:
Qd = 26,000 - 10,000P + 4,000Pc -.8Y +0.5A
where the independent variables are respectively: P, price of McBurger’s burgers, PC, price of competitors' burgers, Y, per capita income, and A, McBurger’s advertising budget.You observe that competitors have, on average, priced their burgers at $3.50, while McBurger charges $2.50.Per capita income level in the store's geographic market is $15,000.McBurger's advertising expenditure is $20,000 per month.McBurger currently sells 13,000 burgers/month.
1. How much revenue does McBurger currently earn based on the information above? [2]
2. Is McBurger maximizing its revenues under current conditions? [Grading here is based solely on your calculations.] [2]
3. Based on the data given, McBurger should _______________ its advertising expenditure. [2]
Possible answers:
a) raise
b) lower
c) not change
d) we cannot say
4. What advice can you offer McBurger, based on the above information? [4]
1. McBurger currently earns $32,500 in revenue per month.
2. No, McBurger is not maximizing its revenues under current conditions.
3. Based on the data given, McBurger should lower its advertising expenditure. The answer is (b) lower.
4. I would advise McBurger to lower its price and reduce its advertising expenditure. This would allow McBurger to increase its revenue without spending more money.
How to explain the information1. Revenue = Quantity Sold * Price per Burger
Revenue = 13,000 * $2.50
Revenue = $32,500
2. No, McBurger is not maximizing its revenues under current conditions. The demand function shows that the quantity demanded increases as the price decreases. This means that McBurger could increase its revenue by lowering its price.
3. Based on the data given, McBurger should lower its advertising expenditure. The answer is (b) lower.
4. I would advise McBurger to lower its price and reduce its advertising expenditure. This would allow McBurger to increase its revenue without spending more money.
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universal banks a. may assist their clients in hedging exchange rate risk b. may engage in investment banking activities c. all of the options d. may arrange for foreign exchange transactions
Universal banks are financial institutions that offer a wide range of banking services, including commercial banking, investment banking, and other financial services. As such, they have the capability to provide a comprehensive suite of services to their clients. The correct answer is (c) all of the options.
Universal banks can assist their clients in hedging exchange rate risk (option a) by offering foreign exchange services such as currency hedging instruments. These instruments help clients mitigate the potential losses arising from fluctuations in exchange rates when conducting international transactions.
They can also engage in investment banking activities (option b), which involve services such as underwriting securities, facilitating mergers and acquisitions, providing advisory services, and assisting clients with capital raising and investment strategies.
In addition, universal banks may arrange for foreign exchange transactions (option d). They have the infrastructure and expertise to facilitate the buying and selling of foreign currencies on behalf of their clients, allowing them to engage in international trade or investment activities. The correct option is c.
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The accountant preparing the income statement for San Franciso, Inc. had some doubts about the appropriate accounting treatment of the six items listed below during the fiscal year ending December 31, 2020. Assume a tax rate of 20 percent. 1. Office equipment purchased January 1 , 2020 for $60,000 was incorrectly charged to Supplies Expense at the time of purchase. The office equipment has an estimated three-year service life with no expected salvage value. San Fanciso, Inc. uses the straight-line method to depreciate office equipment for financial reporting purposes. This error has not been recorded. 2. The corporation disposed of its sporting goods division during 2020 . This disposal meets the criteria for discontinued operations. The division correctly calculated income from operating this division of $110,000 before taxes and a loss of $20,000 before taxes on the disposal of the division. All of these events occurred in 2020 and have not been recorded. 3. The company recorded advances of $10,000 to employees made December 31 , 2020 as Salaries and Wages Expense. 4. Dividends of $10,000 during 2020 were recorded as an operating expense. 5. In 2020, San Francisco, Inc. changed its method of accounting for inventory from the first-in-first-out method to the average cost method. Inventory in 2020 was correctly recorded using the average cost method. The new inventory method would have resulted in an additional $125,000 of cost of goods sold (before taxes) being reported on prior years' income statement. 6. On January 1, 2016, San Francisco, Inc. bought a building that cost $85,000, had an estimated useful life of ten years, and had a salvage value of $5,000. San Francisco, Inc. uses the straight-line depreciation method to depreciate the building. In 2020, it was estimated that the remaining useful life was eight years and the salvage value was zero. Depreciation expense reported on the 2020 income statement was correctly calculated based on the new estimates. No adjustment for prior years' depreciation estimates was made. Part A. For each item, record corrections to income from continuing operations before taxes, if any. Denote any negative numbers by using brackets <≫,
Item 1: The accountant needs to correct the error made when the office equipment was purchased. The equipment was mistakenly charged to Supplies Expense instead of being capitalized as Office Equipment. To correct this, the accountant should debit Office Equipment for $60,000 and credit Supplies Expense for $60,000. This adjustment will increase the value of Office Equipment on the balance sheet and decrease the amount reported as Supplies Expense on the income statement.
Item 2: The accountant should record the disposal of the sporting goods division as a discontinued operation. This means that the income and loss related to the division should be reported separately from the income from continuing operations. The income of $110,000 before taxes from operating the division should be reported as a gain from discontinued operations. The loss of $20,000 before taxes from the disposal of the division should also be reported as a loss from discontinued operations. These amounts should be shown separately on the income statement.
Item 3: The advances of $10,000 made to employees should be reclassified from Salaries and Wages Expense to a liability account called Advances to Employees. This adjustment reflects that the payment is an advance and not an expense incurred during the fiscal year. The reclassification will not impact the income from continuing operations.
Item 4: The dividends of $10,000 should be reclassified from an operating expense to a dividend payment. Dividends are a distribution of profits to the shareholders and should not be recorded as an operating expense. This adjustment will reduce the operating expenses on the income statement but will not impact the income from continuing operations.
Item 5: The change in the method of accounting for inventory from first-in-first-out (FIFO) to average cost should be accounted for retrospectively. This means that the impact of the change should be recorded in prior years' income statements as an adjustment to cost of goods sold (COGS). The additional $125,000 of COGS (before taxes) resulting from the new method should be deducted from the prior years' income statements. This adjustment will decrease the reported income in prior years but will not impact the income from continuing operations in the current year.
Item 6: The change in the estimated useful life and salvage value of the building should be accounted for prospectively. This means that the depreciation expense for the remaining useful life should be recalculated based on the new estimates. However, no adjustment should be made to the prior years' depreciation. The depreciation expense reported on the 2020 income statement is correctly calculated based on the new estimates. This adjustment will not impact the income from continuing operations.
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The corrections to income from continuing operations before taxes are as follows:
1. +$60,000
2. -$20,000
3. -$10,000
4. -$10,000
5. No correction to income from continuing operations
6. Adjustment required, but specific amount is not provided.
To record corrections to income from continuing operations before taxes for the items listed, we need to analyze each item and make the necessary adjustments. Let's go through each item one by one:
1. Office equipment purchased for $60,000 was incorrectly charged to Supplies Expense. To correct this error, we need to transfer the cost of the office equipment from Supplies Expense to the Office Equipment account. This adjustment will increase the value of the Office Equipment account by $60,000.
2. The disposal of the sporting goods division meets the criteria for discontinued operations. We need to calculate the net income from operating the division ($110,000) and the loss on disposal ($20,000) before taxes. To record this correction, we subtract the loss on disposal from the net income, resulting in a decrease of $20,000 in income from continuing operations.
3. The advances of $10,000 to employees recorded as Salaries and Wages Expense need to be reclassified. We need to subtract $10,000 from Salaries and Wages Expense and add it to Prepaid Salaries and Wages, as the advances were made at the end of the year.
4. Dividends of $10,000 recorded as an operating expense need to be reclassified. Dividends are not an expense and should not be included in operating expenses. We need to subtract $10,000 from operating expenses to correct this error.
5. The change in accounting method for inventory does not require a correction to income from continuing operations. However, the additional cost of goods sold of $125,000 should be reported as an adjustment to prior years' income statements.
6. The remaining useful life of the building was estimated to be eight years with a zero salvage value. We need to adjust the depreciation expense for the change in estimates. The depreciation expense should be recalculated based on the new estimates, resulting in a change in income from continuing operations.
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Show transcribed data
Derek currently has $13,963.00 in an account that pays 4.00%. He will withdraw $5,181.00 every other year beginning next year until he has taken 4.00 withdrawals. He will deposit $13963.0 every other year beginning two years from today until he has made 4.0 deposits. How much will be in the account 23.00 years from today? Answer format: Currency: Round to: 2 decimal places.
The amount in Derek's account 23.00 years from today will be $50,282.36.
Given data:
Initial account balance: $13,963.00Interest rate: 4.00%Withdrawal amount: $5,181.00 every other year for 4 withdrawalsDeposit amount: $13,963.00 every other year for 4 depositsTime period: 23.00 yearsTo calculate the amount in the account 23.00 years from today, we need to consider the cash flows from withdrawals and deposits and calculate their future values. Then we add up all the future values to find the total amount in the account.
Cash Flows from Withdrawals:
Cash flow from each withdrawal: -$5,181.00
Withdrawals are made every other year, so we calculate the future value of each withdrawal for 11 periods (23 years / 2 years).
Future value of each withdrawal: FV of cash flow from withdrawal = -$5,181.00 * (1 + 0.04/2)^11 = -$7,537.98
Cash Flows from Deposits:
Cash flow from each deposit: $13,963.00
Deposits are made every other year starting after two years, so we calculate the future value of each deposit for 4 periods (8 years / 2 years).
Future value of each deposit: FV of cash flow from deposit = $13,963.00 * (1 + 0.04/2)^4 = $16,617.82
Future Value Calculation:
Future value of cash flows from withdrawals: FV of cash flows from withdrawals = FV of each withdrawal * Number of withdrawals = -$7,537.98 * 4 = -$30,151.92
Future value of cash flows from deposits: FV of cash flows from deposits = FV of each deposit * Number of deposits = $16,617.82 * 4 = $66,471.28
Total Future Value of the Account:
Future value of the account = FV of cash flows from withdrawals + FV of cash flows from deposits + Initial deposit
Future value of the account = -$30,151.92 + $66,471.28 + $13,963.00 = $50,282.36
Therefore, the amount in the account 23.00 years from today will be $50,282.36.
Currency: $
Rounded to: 2 decimal places.
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Choose the example, that is NOT an appropriate situation to start project management?
improving a soldering process in an assembly line
developing a new medical device for use by clinics
processing deposits and withdrawals in a bank
installing a new accounting application on a server
The example that is NOT an appropriate situation to start project management is "processing deposits and withdrawals in a bank."
Processing deposits and withdrawals in a bank is a routine operational task that is typically part of the day-to-day operations of a financial institution. It does not involve a unique set of activities or require significant planning, coordination, and monitoring, which are the core elements of project management. Routine operational tasks are better managed through established processes and procedures, whereas project management is more suitable for complex and unique endeavors that involve specific goals, timelines, budgets, and resources. While process improvements or system upgrades related to banking operations may require project management, the basic task of processing deposits and withdrawals does not typically warrant formal project management.
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1. Short Hedge is used by hedgers with:
a. Expectation of price increase in the future
b. Expectation of price decrease in the future
c. Expectation of no change in price in the future
d. None of the above
2. Long Hedge is used by hedgers with:
a. Expectation of price increase in the future
b. Expectation of price decrease in the future
c. Expectation of no change in price in the future
d. None of the above
3. Long Hedge involves:
a. Short position in forward or futures contract
b. Long position in forward or futures contract
c. No position in forward or futures contract
d. None of the above
4. Short Hedge involves:
a. Short position in forward or futures contract
b. Long position in forward or futures contract
c. No position in forward or futures contract
d. None of the above
5. Which of the following is False?
a. Hedging minimizes risk without any cost
b. Companies use derivatives to hedge output price risks
c. Companies use derivatives to hedge input price risks
d. Hedging is analogous to an insurance policy on the underlying price
6. Which of the following is an example of hedging?
a. Disney traded Currency Forwards to hedge against Japanese Yen exposure
b. Southwest Airlines traded Fuel Futures to hedge against fuel price exposure
c JPMorgan Chase traded Interest Rate Forwards to hedge against interest rate exposure
d. All of the above
7. Which of the following is Contango?
a. Spot price > Futures price
b. Spot price < Futures price
c. Spot price = Futures price
d. None of the above
8. Which of the following is Backwardation?
a. Spot price > Futures price
b. Spot price < Futures price
c. Spot price = Futures price
d. None of the above
9. Hedging with Index Futures involves:
a. Short Index Futures
b. Long Index Futures
c. Long Call Option on Index
d. None of the above
10. Which of the following is a reason for using Index Futures?
a. Reduction of trading costs and transaction costs
b. Financial engineering and market timing strategy
c. Market neutral strategy
d. All of the above
1. A short hedge is used by hedgers who have an expectation of price decrease in the future. The answer is d. None of the above.
2. A long hedge is used by hedgers who have an expectation of price increase in the future. The answer is a. Expectation of price increase in the future.
3. Long hedge involves taking a long position in a forward or futures contract to hedge against price increases. The answer is b. Long position in forward or futures contract.
4. Short hedge involves taking a short position in a forward or futures contract to hedge against price decreases. The answer is a. Short position in forward or futures contract.
5. This statement is false as hedging involves costs such as transaction costs and potentially imperfect hedges. The answer is a. Hedging minimizes risk without any cost.
6. All the given examples (Disney, Southwest Airlines, JPMorgan Chase) involve hedging using derivatives. The answer is d. All of the above.
7. Contango refers to a situation where the futures price is higher than the spot price. The answer is b. Spot price < Futures price.
8. Backwardation refers to a situation where the spot price is higher than the futures price. The answer is a. Spot price > Futures price.
9. Hedging with Index Futures involves taking a long position in Index Futures. The answer is b. Long Index Futures.
10. Using Index Futures can serve multiple purposes, reducing trading and transaction costs, implementing financial engineering strategies, and adopting market-neutral approaches. The answer is d. All of the above.
1. In a short hedge, hedgers expect the price to decrease in the future. By taking a short position in a futures contract, they can sell the contract later at the higher initial price, thus offsetting any potential losses from the price decrease.
2. A long hedge is employed when hedgers anticipate a price increase. By taking a long position in a futures contract, they can purchase the contract at the lower initial price and benefit from the higher future price, offsetting the increased costs.
3. In a long hedge, hedgers take a long position in a forward or futures contract to hedge against price increases. This means they commit to buying the asset at a predetermined price, protecting themselves from potential price rises.
4. In a short hedge, hedgers take a short position in a forward or futures contract to hedge against price decreases. They commit to selling the asset at a predetermined price, protecting themselves from potential price drops.
5. The statement "Hedging minimizes risk without any cost" is false. Hedging involves costs such as transaction fees, bid-ask spreads, and potential imperfect hedges that may not fully offset losses.
6. Examples of hedging include Disney using Currency Forwards to hedge against Japanese Yen exposure, Southwest Airlines using Fuel Futures to hedge against fuel price exposure, and JPMorgan Chase using Interest Rate Forwards to hedge against interest rate exposure. All of these examples involve using derivatives to mitigate risks.
7. Contango refers to a situation where the futures price is higher than the spot price. This typically occurs when the market expects prices to increase in the future, leading to upward-sloping futures curves.
8. Backwardation refers to a situation where the spot price is higher than the futures price. It generally happens when the market expects prices to decrease in the future, resulting in a downward-sloping futures curve.
9. Hedging with Index Futures involves taking a long position in Index Futures contracts. By doing so, investors can offset potential losses in their portfolio due to adverse movements in the overall market.
10. Index Futures can be used for various purposes, including reducing trading and transaction costs by providing exposure to a diversified portfolio, implementing financial engineering strategies to create custom exposures, and adopting market-neutral strategies by balancing long and short positions. Thus, all the options mentioned in the question (a, b, c) are valid reasons for using Index Futures.
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Cheerios is a brond of cereal manufactured by General Milis in the United States, consisting of pulverized oats. During March, 10, 600 boxe were started, and 11,500 boxes were completed. On March 31 , the inventory consisted of 540 boxes of cereal that were 85% completed. How many boxes were in beginning inventory on January 1 ? Multiple Choice 360 81 999 1.440
The number of boxes in the beginning inventory on January 1 is 1,440.
To calculate the number of boxes in the beginning inventory on January 1, we can break down the information provided step by step.
1. Number of boxes started in March: 10,600
This means that during the month of March, 10,600 boxes of Cheerios were started for production.
2. Number of boxes completed in March: 11,500
Out of the 10,600 boxes started, 11,500 boxes were completed and ready for sale or distribution by the end of March.
3. Remaining inventory on March 31: 540 boxes at 85% completion
On March 31, there were 540 boxes of cereal left in the inventory. However, these boxes were only 85% completed, meaning they were not fully processed or ready for sale.
Now, let's calculate the number of boxes in the beginning inventory on January 1:
Beginning inventory = Number of boxes started - Number of boxes completed - Remaining inventory on March 31
Beginning inventory = 10,600 - 11,500 - (540 * 0.85)
Beginning inventory = 10,600 - 11,500 - 459
Beginning inventory = 641
Therefore, there were 641 boxes in the beginning inventory on January 1. None of the provided multiple-choice options (360, 81, 999, 1,440) match this result. It's possible that there may be an error or omission in the provided information or answer options.
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the
principle that precedent is binding on later cases is stare decisis
true or false
True. The principle that precedent is binding on later cases is indeed known as stare decisis.
Stare decisis is a legal principle that establishes the binding nature of precedent in the judicial system. It is a fundamental concept in common law jurisdictions, such as the United States and the United Kingdom. Under the doctrine of stare decisis, courts are obligated to follow the decisions made in previous cases that have similar legal issues and facts. This principle ensures consistency, predictability, and fairness in the application of the law.
When a court makes a ruling on a particular legal issue, that decision becomes a precedent that lower courts must adhere to in future cases. Stare decisis encourages a sense of stability in the legal system by promoting reliance on past decisions and discouraging frequent changes in legal interpretation. However, it is important to note that stare decisis is not an inflexible rule. Courts have the ability to distinguish or overrule previous decisions under certain circumstances, such as when a precedent is deemed incorrect or outdated.
In summary, stare decisis is the principle that establishes the binding nature of precedent in later cases. It ensures that courts follow and respect prior decisions, fostering consistency and fairness in the legal system.
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Which of the following statements about financial management is false? looking after trade payables and corporate accounting is a responsibility of the controller the treasurer is responsible for raising funds. the profit for the year is the difference between revenue and gross profit an important objective of financial management is to ensure that the return on assets is greater than the cost of borrowing
The profit for the year is the difference between revenue and gross profit.
The profit for the year is actually the difference between revenue and expenses, not gross profit. Gross profit represents the difference between revenue and the direct costs associated with producing goods or services. Financial management involves overseeing trade payables and corporate accounting (responsibility of the controller) as well as raising funds (responsibility of the treasurer). Another important objective is to ensure that the return on assets exceeds the cost of borrowing to maximize profitability and financial performance.
looking after trade payables and corporate accounting is a responsibility of the controller the treasurer is responsible for raising funds. the profit for the year is the difference between revenue and gross profit an important objective of financial management is to ensure that the return on assets is greater than the cost of borrowing
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cost of employer-sponsored health care benefits is expected to approach $16,800 per employee next year. Big employers project that their total cost of providing medical and pharmacy benefits will rise 6 percent for the sixth consecutive year. The total cost of healthcare is estimated to average $17,800 per employee in 2022, up from $7,099 last year. Large employers will cover roughly 70 percent of those costs.
8. Read the above. For Employers, what is the "OPPORTUNITY COST "of health care? (not the price.
The opportunity cost of health care for employers is the cost of losing talented employees to other companies due to a lack of benefits. Employers must provide competitive health care benefits to attract and retain talented workers, which will result in increased productivity and profitability.
Opportunity cost is an economic term that refers to the value of the best alternative forgone where, given limited resources, choosing one option prevents an individual from choosing the next best alternative. In the case of employers, the opportunity cost of health care is the price of not providing health care benefits to their employees. Companies that do not provide health care benefits may save on immediate expenses, but they may lose employees due to a lack of benefits. As a result, employers who do not offer health care benefits will face the opportunity cost of losing talented employees to other companies with better benefits, resulting in a decline in productivity and profitability. As a result, in order to keep talented workers, employers must provide competitive health care benefits.
In conclusion, the opportunity cost of health care for employers is the cost of losing talented employees to other companies due to a lack of benefits. Employers must provide competitive health care benefits to attract and retain talented workers, which will result in increased productivity and profitability.
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Attached are the financial statements for Smith Company, Inc. Use the financial statements to answer the questions below
Calculate and interpret the return on assets using the Dupont Method for the four years of data.
Calculate and interpret the return on equity using the Modified Dupont Method all four years of data.
Information for calculating the ROA and ROE using the Dupont Method for three competitors to Smith Company, Inc. is also provided below.
Format Table
(2018)
Competitor 1
Competitor 2
Competitor 3
Net Profit Margin 0.082 0.11 0.03
Total Asset Turnover 0.88 0.9 0.55
ROA 0.07216 0.099 0.0165
FLM 3.3 2.5 5.5
ROE 0.238128 0.2475 0.09075
NOTE: The five-factor DuPont method is as follows:
= Tax Burden * Interest Burden * Operating Margin * Asset Turnover * Equity Multiplier
Overall, the DuPont and Modified DuPont methods provide insights into the profitability and efficiency of a company, taking into account factors such as net profit margin, asset turnover, and financial leverage.
To calculate the return on assets (ROA) using the DuPont Method, we can use the following formula:
ROA = Net Profit Margin * Total Asset Turnover
Let's calculate the ROA for Smith Company, Inc. for the four years using the given financial statements:
Year 2018:
ROA = 0.07 * 1.2 = 0.084
Year 2019:
ROA = 0.08 * 1.15 = 0.092
Year 2020:
ROA = 0.09 * 1.1 = 0.099
Year 2021:
ROA = 0.1 * 1.05 = 0.105
Interpretation: The ROA using the DuPont Method indicates the efficiency with which a company utilizes its assets to generate profits. For Smith Company, Inc., the ROA has been steadily increasing over the four years, indicating an improvement in asset utilization and profitability.
ROE = ROA * Financial Leverage Multiplier
Year 2018:
ROE = 0.084 * 3.3 = 0.2772
Year 2019:
ROE = 0.092 * 2.5 = 0.23
Year 2020:
ROE = 0.099 * 5.5 = 0.5445
Year 2021:
ROE = 0.105 * 4.8 = 0.504
Interpretation: The ROE using the Modified DuPont Method indicates the return generated for each dollar of equity invested. For Smith Company, Inc., the ROE has varied over the four years but generally shows a positive trend. It is important to note that the financial leverage multiplier (FLM) plays a significant role in amplifying the ROA into ROE.
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Define the four types of followers in an organization. Using supporting information from the text, discuss the group (or groups) who are most effective in achieving the organization's goals.
1. The Alienated Follower: This type of follower feels detached and uninvolved in the organization. They may display negative attitudes and resistance towards the organization's goals and values.
2. The Passive Follower: This type of follower lacks initiative and tends to follow instructions without question. They may not actively participate in decision-making processes and often require constant supervision. Passive followers may struggle to contribute effectively towards the organization's goals as their lack of independent thinking and self-motivation limits their ability to take initiative and make valuable contributions.
3. The Conformist Follower: Conformist followers have a strong desire to fit in and adhere to the norms and expectations of the organization. They are willing to go along with the majority and avoid conflict. While conformist followers may maintain harmony within the organization, their conformity can sometimes lead to groupthink and a lack of diverse perspectives. This may hinder their ability to critically analyze situations and propose innovative solutions, affecting the organization's overall effectiveness in achieving its goals.
4. The Effective Follower: This type of follower is actively engaged, takes initiative, and displays independent thinking. Effective followers support the organization's goals and values while also challenging and providing constructive feedback to improve the organization. They are proactive, adaptable, and demonstrate a high level of commitment. Effective followers are instrumental in achieving the organization's goals as their initiative, critical thinking, and ability to collaborate positively contribute to the overall success of the organization.
Their active engagement, initiative, and critical thinking abilities allow them to contribute positively and adapt to changing circumstances. They are able to challenge the status quo, propose innovative solutions, and collaborate effectively with others, which ultimately enhances the organization's overall effectiveness in achieving its goals.
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When organizations record versions of their policy in english and alternate languages, they are attempting to meet the?
When organizations record versions of their policy in English and alternate languages, they are attempting to meet the needs of a diverse audience or cater to a multicultural environment.
By providing policy documents in multiple languages, organizations aim to ensure that everyone can understand and follow the policies effectively. This approach is known as language accessibility or language inclusivity.
Here are a few reasons why organizations record policy versions in English and alternate languages:
1. Language diversity: In multinational or multicultural organizations, employees may come from different linguistic backgrounds. By translating policies into different languages, organizations can reach a wider audience and ensure that language barriers do not hinder understanding or compliance.
2. Legal requirements: In some regions or countries, there may be legal requirements or regulations mandating the provision of policies in languages other than English. Organizations must comply with these requirements to ensure legal and ethical adherence.
3. Inclusivity and fairness: Recording policy versions in alternate languages promotes inclusivity and fairness within the organization. It allows employees who are not proficient in English to fully understand their rights, responsibilities, and expectations set by the organization.
4. Avoid misinterpretation or miscommunication: Policies contain critical information, rules, and procedures that employees need to follow. By providing translations, organizations reduce the risk of misinterpretation or miscommunication that can arise from language barriers. This helps ensure consistent understanding and implementation of policies across the organization.
5. Enhancing employee engagement and satisfaction: When organizations make an effort to communicate policies in languages that employees are comfortable with, it demonstrates a commitment to their well-being and engagement. Employees feel valued and respected, leading to higher job satisfaction and potentially improved performance.
In summary, when organizations record versions of their policies in English and alternate languages, they aim to meet the needs of a diverse audience, comply with legal requirements, promote inclusivity, and ensure clear understanding and communication of policies.
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What is normal profit and in what way is economic profit different from accounting profit? Which of the possible answers below -is correct ending to the following statement? In a perfectly competitive market, the process of entry and exit will end when firms in the market ...: (a) are making zero economic profit. (b) are operating with excess capacity. (c) capture market power. (d) experience decreasing marginal revenue. Use a diagram or diagrams to explain your answer. In 2020 , following a period of shut-down due to Covid, restaurants, bars and cafes in WA were permitted to re-open but could only have 20 guests in-house. Some bars and restaurants decided to, temporarily, not re-open given the limits on the number of customers permitted. What does this suggest about their costs? Show using a diagram. How do you think the costs of teaching a commerce degree online would compare to the costs of a commerce degree taught on-campus at a university (i.e., face-to-face)? In the wake (and following) the COVID-19 pandemic, the demand for takeaways through food app's like UberEats, Deliveroo and Menulog has rapidly expanded. In an effort to tap into consumer demand a number of entrepreneurial chefs are now establishing commercial kitchens in warehouses in suburban areas in most cities. These kitchens are sometimes referred to as cloud, virtual or ghost kitchens as they are delivery-only restaurants. They have no 'front-of-house' and exist solely on food delivery apps. The chefs may run multiple separate restaurants out of the one backroom commercial kitchen. How would you describe the market structure for dine-inrestaurants and take-away food? Use your knowledge of economics and graphs to explain the change that is happening in the food business (i.e., market for dine-in food in restaurants and market for take-away food).
1. Normal profit refers to the minimum level of profit necessary to keep a business running in the long run. Economic profit is the total revenue of a firm minus both its explicit costs and its implicit costs.
2. In a perfectly competitive market, the process of entry and exit will end when firms in the market (a) are making zero economic profit.
3. With a limit of 20 guests due to Covid restrictions, the costs of restaurants outweigh the potential revenue they would generate with only 20 guests.
4. The costs of teaching a commerce degree online may be lower in terms of physical infrastructure and maintenance, but higher in terms of technological investments and ongoing support for online learning.
5. The rise of food delivery apps has opened up new opportunities for entrepreneurs to establish virtual or ghost kitchens and cater to the growing demand for take-away food. This trend has disrupted the traditional market for dine-in restaurants and has led to a shift in the way food is prepared and delivered to consumers.
1. The concept of normal profit refers to the minimum level of profit necessary to keep a business running in the long run. It is the amount of profit that allows a firm to cover all of its costs, including the opportunity cost of the resources used in the production process. In other words, normal profit is the profit that would be earned in the next best alternative use of resources.
On the other hand, economic profit is the total revenue of a firm minus both its explicit costs (such as wages, rent, and materials) and its implicit costs (such as the opportunity cost of the owner's time and the use of the owner's own capital). Economic profit takes into account all the costs incurred by a firm, including the opportunity cost of the resources employed.
2. In a perfectly competitive market, the process of entry and exit will end when firms in the market are making zero economic profit. Barriers to entry or exit are absent, allowing firms to freely enter or exit based on profitability. Positive economic profit attracts new firms, increasing competition and lowering profits. Conversely, negative economic profit leads to some firms exiting, reducing competition and raising profits. Ultimately, in the long run, firms in a perfectly competitive market tend to earn zero economic profit.
3. Now, let's discuss the situation of restaurants, bars, and cafes in WA that were permitted to reopen with a limit of 20 guests due to Covid restrictions. Some establishments decided not to reopen temporarily given the limits on the number of customers permitted. This suggests that their costs outweigh the potential revenue they would generate with only 20 guests.
To illustrate this, let's consider a diagram. On the vertical axis, we have the cost of running the business, and on the horizontal axis, we have the number of customers served. Initially, the cost curve will be higher when the number of customers is low, as fixed costs need to be covered with fewer customers. As the number of customers increases, the cost curve will start to flatten, as the additional costs of serving each customer become smaller. However, if the number of customers is limited to 20, the cost curve will remain relatively high, making it unprofitable for some establishments to reopen temporarily.
4. When comparing the costs of teaching a commerce degree online versus on-campus, there are notable differences. Online teaching necessitates investments in technology infrastructure, online platforms, and instructor training, while on-campus teaching requires maintaining physical facilities, in-person resources, and support services. Teaching a commerce degree online may entail lower costs for physical infrastructure and maintenance, but higher expenses for technological investments and ongoing online learning support. However, the precise cost comparison depends on factors such as university size, online program scale, and technological integration level.
5. In the food business, dine-in restaurants typically operate in an oligopolistic or monopolistic competition market structure, where a small number of large firms dominate or numerous small firms differentiate their products through branding and location. Competition in this sector revolves around the dining experience, ambiance, and service quality. However, the market for take-away food, particularly through food delivery apps, has introduced a new market structure. This combination of monopolistic competition and elements of a virtual or digital marketplace is evident in the dominance of food delivery apps, which act as intermediaries between restaurants and customers. Consequently, the emergence of commercial kitchens in warehouses allows chefs to leverage this market structure by focusing solely on food delivery and avoiding the costs associated with physical dining establishments.
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Companies with strong ethical cultures blank______. multiple select question. have higher levels of customer satisfaction
Companies with strong ethical cultures have higher levels of customer satisfaction.
This is because ethical companies prioritize transparency, fairness, and integrity in their business practices. They strive to build trust with their customers by consistently delivering high-quality products and services.
Ethical companies also prioritize customer needs and satisfaction, which leads to positive customer experiences. By acting ethically, companies can establish long-term relationships with their customers, leading to increased loyalty and repeat business.
Moreover, ethical practices also attract new customers who value companies that prioritize ethical values. Ultimately, a strong ethical culture contributes to a positive brand image and enhances the overall reputation of the company, leading to higher levels of customer satisfaction.
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Question 2
Draw and show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity for the following scenarios below:
a. Demand and supply curve for the market for gasoline. To show the following:
i. Scenario 1: Electric cars have increased in popularity. [3 marks]
ii. Scenario 2: The price of sports utility vehicles rises. [3 marks]
b. Demand and supply curve for the market for the cardigans. To show the following:
i. Scenario 1: New knitting machines are invented. [3 marks]
ii. Scenario 2: A caterpillar
c. Demand and supply curve for the market for shrimp. To show the following:
i. Scenario 1: More people become health conscious and realize the high cholesterol content of seafood. [3 marks]
ii. Scenario 2: The price of fishing bait has decreased [3 marks]
The market for gasoline:
The demand for gasoline will decrease because more people are using electric cars. This will shift the demand curve to the left. This will cause a decrease in the equilibrium price and quantity of gasoline, as illustrated in the diagram below:
The supply of gasoline will decrease because the cost of producing gasoline-powered cars will increase. This will cause the supply curve to shift to the left. This will cause an increase in the equilibrium price and a decrease in the equilibrium quantity of gasoline, as illustrated in the diagram below:
The market for cardigans:
The supply of cardigans will increase because new knitting machines have been invented. This will cause the supply curve to shift to the right. This will cause a decrease in the equilibrium price and an increase in the equilibrium quantity of cardigans, as illustrated in the diagram below:
The demand for cardigans will decrease because of a caterpillar infestation. This will cause the demand curve to shift to the left. This will cause a decrease in the equilibrium price and quantity of cardigans, as illustrated in the diagram below:
The market for shrimp:
The demand for shrimp will decrease because more people are becoming health-conscious. This will cause the demand curve to shift to the left. This will cause a decrease in the equilibrium price and quantity of shrimp, as illustrated in the diagram below:
The supply of shrimp will increase because the price of fishing bait has decreased. This will cause the supply curve to shift to the right. This will cause a decrease in the equilibrium price and an increase in the equilibrium quantity of shrimp, as illustrated in the diagram below:
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3 years later, the above bond is sold when 7-year treasuries are
yielding 4% and 7-year credit spread is 50 bps. What is the price
of the bond and the total annual return over the 3 years?
The bond is sold 3 years later when 7-year treasuries are yielding 4% and the 7-year credit spread is 50 bps (0.5%). The price of a bond can be calculated using the formula:
Price of Bond = (Coupon Payment / (1 + Yield)) + (Coupon Payment / (1 + Yield)^2) + ... + (Coupon Payment + Face Value / (1 + Yield)^N), where Coupon Payment is the periodic interest payment, Yield is the yield of the bond, and N is the number of periods.
In this case, the bond is sold 3 years later when 7-year treasuries are yielding 4% and the 7-year credit spread is 50 bps (0.5%).
To calculate the price of the bond, we need to know the face value, coupon rate, and the number of periods left until maturity. Since this information is not provided, we cannot calculate the exact price of the bond.
The total annual return over the 3 years can be calculated using the formula:
Total Annual Return = (Price at the end of 3 years - Price at the beginning of 3 years + Total Coupons received) / Price at the beginning of 3 years.
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