If the monopolist is required by law to meet demand at a price equal to its marginal costs, the firm will make a positive profit smaller than it would have made if it were free to choose its own price.
To determine the outcome for the monopolist, we need to compare the marginal cost (MC) and the inverse demand functions. The marginal cost (MC) function is given as c(q) = 800 + 8q, where q represents the quantity produced. The inverse demand function is 80 - 6q, which represents the price at which consumers are willing to purchase the quantity q.
In a monopoly, profit is maximized when marginal cost equals marginal revenue. Since the firm is required to meet demand at a price equal to its marginal cost, we can equate MC to the inverse demand function:
800 + 8q = 80 - 6q
Simplifying the equation, we get:
14q = -720
q = -720/14
Since the quantity cannot be negative, we disregard this solution.
Therefore, the monopolist will not produce any quantity and will incur a loss of zero profit. The correct option is not listed among the choices.
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Explain FIVE (5) advantages of budgeting and FIVE (5) disadvantages of budgeting.
Budgeting is the method of planning and allocating funds for various purposes, whether personal or corporate. A budget can be either a simple static budget one-page plan or a complex structure with several sections and categories. The following are the advantages of budgeting.
Advantages of budgeting1. Better control and management of financesA budget aids in the management of finances by providing a structure for tracking income and expenses, allowing for better control of financial resources.2. Increased productivity and profitabilityThe budgeting process assists in identifying methods for optimizing resource utilization and streamlining operations, resulting in increased productivity and profitability.
Improved communication and coordination Budgeting necessitates the involvement of all stakeholders, which leads to better communication and coordination across the organization.4. Enhanced decision-makingBudgeting assists in making better decisions by providing a framework for analyzing and assessing available options and choosing the most appropriate one.5. Goal achievementBudgeting establishes goals and outlines the resources required to achieve them, increasing.
The likelihood of goal attainment. Five disadvantages of budgeting are as follows: Disadvantages of budgeting1. RigidityBudgets can be rigid, making it tough to react quickly to changing circumstances or adapt to new circumstances, limiting opportunities to explore new opportunities.2. Time-consumingThe budgeting process is time-consuming and requires considerable effort, which may take away from more critical tasks.
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Common Stock Shares Issued 200,000 Common Stock Par Value $1.00 Stock-buy back price (cost) $30.00 Number of shares purchased 5,000 Common Stock $200,000 APIC-Common Stock $50,000 Resale Price $40.00 Number of shares resold 2,500 "Which of the following is true about the entry to record the RESALE of the Treasury Stock? Select only Correct answers, incorect answers are penaliced "Credit Treasury Stock for $100,000" "Credit Cash for $100,000. Debit Common Stock for $2,500. "Credit PIC, Treasury Stock for $25,000 "Debit PIC, Treasury Stock$25,000- "Credit Common Stock for $75.000 "Credit Treasury Stock for $75,000 "Credit Gain on sale of treasury stock for $25.000 "Debit Cash for $100.000
The correct option is D) Debit PIC, Treasury Stock $25,000.A Treasury stock is the company's own share that it has reacquired from the stockholders. Treasury stocks can be reissued or held for a long time by the company.
The treasury stock is accounted for by recording it at cost (amount paid to reacquire the stock). Any gains or losses are recorded on the sale of treasury stock.To record the resale of the Treasury Stock, we have to: Debit Cash for $100,000.Credit Treasury Stock for $75,000.Credit PIC, Treasury Stock for $25,000.
Hence, the correct answer is option D) Debit PIC, Treasury Stock $25,000.
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To what extent do you agree with the statement that a monopoly
is always a worse situation for public interest
than a perfect competition.
The statement suggests that a monopoly is always worse for the public interest compared to a situation of perfect competition. In perfect competition, there are many firms operating in a market, each having a small market share and no significant market power. On the other hand, a monopoly exists when a single company controls the entire market with no competitors.
In general, there are arguments supporting the notion that monopolies can be detrimental to the public interest. Monopolies often have the ability to set higher prices due to their lack of competition, which can lead to reduced consumer welfare. Additionally, monopolies may have less incentive to innovate or provide high-quality products or services since they face limited competition.
In contrast, perfect competition is often seen as a desirable market structure for public interest. In this scenario, firms compete based on price, quality, and innovation, which can result in lower prices, increased consumer choice, and overall efficiency gains.
However, it's important to note that the impact of monopolies or perfect competition on the public interest can vary depending on the specific market, industry, and context. There may be situations where monopolies can provide certain advantages, such as economies of scale or investment in infrastructure, that benefit the public. Similarly, perfect competition may not always guarantee optimal outcomes, especially in industries with high entry barriers or significant externalities.
Therefore, while there are arguments suggesting that monopolies can be detrimental to the public interest compared to perfect competition, the actual impact depends on various factors. Assessing the effects of market structures on public interest requires careful consideration of the specific industry and context involved.
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Define long and short term employment benefits. Compare and contrast how these should be accounted for under international financial reporting standards (IFRS 2 and IAS 19). Discuss the key issues in the implementation of these standards. Your answer to this question should not be more than 800 words.
Under IFRS 2 and IAS 19, long-term employment benefits are recognized at fair value, and pension obligations are measured at present value, while short-term benefits are expensed immediately.
Long-term employment benefits refer to employee benefits that are expected to be settled beyond one year, such as pension plans and post-employment healthcare. Short-term employment benefits are benefits that are expected to be settled within one year, such as salaries, bonuses, and paid leave.
Under IFRS 2 (Share-based Payment), long-term employee benefits related to share-based payments, such as stock options, are accounted for by recognizing the fair value of the equity instruments granted as an expense over the vesting period. In contrast, IAS 19 (Employee Benefits) governs the accounting for long-term employee benefits such as pension plans and requires the recognition of the present value of the defined benefit obligation and the fair value of plan assets.
Key issues in the implementation of these standards include determining the fair value of equity instruments, estimating the present value of future pension obligations, determining the appropriate discount rate, assessing the expected rate of return on plan assets, and providing sufficient disclosures about the nature and financial implications of these benefits. Compliance with these standards ensures transparent and accurate reporting of long-term and short-term employment benefits, promoting consistency and comparability in financial statements.
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Question B2: Draw the indifference curve of a person who prefers to work for a living to receiving the same income as government relief (e.g., unemployment benefits) that can only be received if he remains unemployed. Hint 1: Carefully draw a graph and read the functions that you draw in them. Hint 2: In this case, there are no endowments affecting the worker's decision to trade off leisure against labor.
The indifference curve of a person who prefers working for a living to receiving government relief can be illustrated on a graph. This individual values the benefits of work over the income received from unemployment benefits.
To draw the indifference curve, we can use a graph with leisure on the x-axis and income on the y-axis. Since the person prefers working for a living, they would value the utility derived from work more than the utility derived from receiving government relief.
Therefore, the indifference curve will be upward sloping, indicating that the individual is willing to trade off leisure time for higher income.
The exact shape and position of the indifference curve will depend on the specific preferences of the individual. It may be relatively steep, indicating a strong preference for work, or it may be more gently sloped, indicating a more balanced trade-off between work and leisure.
The curve will be higher on the graph compared to the curve representing the utility derived from receiving government relief, reflecting the individual's preference for working for a living.
Overall, the indifference curve represents the combinations of income and leisure that provide the individual with the same level of utility or satisfaction. In this case, the curve shows the trade-off between work and leisure, highlighting the individual's preference for work over receiving government relief.
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A) Short Answer Part 1) Write the role risk premium plays in the global financial markets. 2) Current account deficit is a major problem in many countries of the world. Assume you are working for a government that is aiming to close the current account deficit. Write a policy that can be used to close the deficit. 3) One of the major trends of the world economy is the increasing labor mobility from the developed to developing countries. The workers working in developed countries in many cases send at least part of the money they earn, back to their country. To what extend do you think this would have a significant effect in current accounts of the developing and developed countries? Explain your view. 4) Assume in 2001 there was an outflow of capital from Greece, while there was an inflow of capital to the USA and there was neither outflow nor inflow of capital in Germany. In which country the domestic equilibrium interest rate was highest? In which country domestic equilibrium interest rate was lowest? Explain your answer. 5) Long before they have created a common European currency, Euro, each European country implemented policies to fix the value of their currency relative to the currency of other EU countries. What might be the effect of this policy on the European countries? Explain your answer. (Your answer may be based on information you have learned at any chapter you choose in this course, including the last chapter.)
The risk premium plays a crucial role in global financial markets by compensating investors for taking on additional risk when investing in certain assets or countries. It reflects the extra return investors demand for holding risky investments, which can vary based on factors such as political stability, economic conditions, and market volatility.
This may include promoting export-oriented industries to increase exports, reducing import dependency through import substitution policies, encouraging foreign direct investment (FDI) to boost capital inflows, implementing fiscal austerity measures to control government spending, and improving competitiveness through structural reforms and investment in education and infrastructure.
The increasing labor mobility from developed to developing countries, coupled with remittance flows, can have a significant effect on the current accounts of both types of countries. For developing countries, remittances can contribute to a positive current account balance as they represent inflows of foreign currency.
In contrast, developed countries may experience a negative impact on their current account balance due to the outflow of wages and income sent back to the workers' home countries.
In Greece, the domestic equilibrium interest rate would be highest due to the outflow of capital, which reduces the supply of loanable funds and increases borrowing costs.
In the USA, the inflow of capital would result in a lower domestic equilibrium interest rate as the increased supply of loanable funds reduces borrowing costs. In Germany, where there is neither an inflow nor outflow of capital, the domestic equilibrium interest rate would be relatively stable.
The policy of fixing the value of their currency relative to other EU countries could have various effects on European countries. It promotes price stability and reduces exchange rate risk within the Eurozone, fostering trade and investment among member countries.
However, it limits the ability of individual countries to use currency devaluation or appreciation as a tool for addressing economic imbalances. It also requires coordination of monetary policies across the Eurozone, which can pose challenges when countries have different economic conditions.
Additionally, it can lead to loss of control over national monetary policy, as decisions are made collectively by the European Central Bank (ECB) for the Eurozone as a whole.
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When it comes to weak and strong situations influencing the expression of our personality, the example given in class suggested that:
A red traffic light represents a strong situation.
An orange/yellow traffic light represents a weak situation
A green traffic light represents a strong situation
All of the above
Only A and C are correct
When it comes to weak and strong situations influencing the expression of our personality, the example given in class suggested that the answer is: Only A and C are correct.
Red and green traffic lights are both strong situations that can influence the expression of personality. Green is the signal to go ahead or to continue in the present direction, while red indicates stop or danger. Both of these signals can impact behavior and the expression of personality. On the other hand, an orange or yellow traffic light, while it does indicate a change, is a weaker signal and may not have as much influence on behavior and personality expression. These colors indicate slowing down or caution, and they often represent more ambiguous situations that require more careful evaluation. So, A red traffic light and green traffic light represent strong situations, while an orange/yellow traffic light represents a weak situation.
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Which of the following is NOT an advantage of outsourcing? O outsourcing core competencies O accessing outside technology cost savings gaining outside expertise improving operations and service QUESTION 14 Bob the Builder has gone back into the lumber business and uses a weighted moving average method to forecast nail sales. Weight demand, 2.0 to demand two months ago, and 1.50 to demand three months ago. If sales amounted to 1944 pounds of nails in May. pounds in July, what should be the forecast for August? Month Weight Demand May 1.5 1944 June 2.0 1972 July 2.5 2704 August 000
The answer to the question about outsourcing is: "O outsourcing core competencies."
Outsourcing core competencies refers to the practice of delegating key activities or functions to external parties, which can lead to a loss of control over critical capabilities and expertise that differentiate a company from its competitors. By outsourcing core competencies, a company may risk diluting its unique value proposition and competitive advantage.
Advantages of outsourcing include:
Cost savings: Outsourcing certain functions can lead to reduced costs, as external providers may have specialized resources or economies of scale that result in lower expenses.
Accessing outside technology: Outsourcing can provide access to advanced technologies and expertise that may be expensive or difficult to develop in-house.
Gaining outside expertise: Outsourcing allows companies to tap into the knowledge and experience of external specialists, enabling them to benefit from the best practices and domain expertise of the service providers.
Improving operations and service: Outsourcing non-core functions can enable companies to focus on their core competencies, leading to improved operational efficiency and better customer service.
Therefore, the option that is NOT an advantage of outsourcing is "O outsourcing core competencies."
Regarding the second question, the information provided is incomplete. The weight for the August demand is missing, so it is not possible to accurately determine the forecast for August based on the given data.
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Outsourcing core competencies is a disadvantage, as it can mitigate a company's competitive edge by transferring key competencies to an external entity. For the forecast calculation, multiply the weights with their respective months' sales, sum them up and divide by the total weight.
Explanation:The question essentially points towards determining the disadvantages of outsourcing. One option provided is 'outsourcing core competencies.' Unlike the other listed benefits, outsourcing core competencies sits as a disadvantage. This is mainly because core competencies represent unique capabilities or advantages that a company has, which differentiates it from competitors. When a company outsources these, it risks handing over its competitive edge to an outside entity, possibly diminishing its distinctive marketplace position and incurring long-term losses.
The second part of the question regards a weighted moving average forecast. To calculate the forecast for August, multiply the sales of the last three months (May, June, and July) by the respective weights assigned, add the results together, then divide by the sum of the weights. Using the given figures:
[(1.5 * 1944) + (2 * 1972) + (2.5 * 2704)] / (1.5 + 2 + 2.5).
Perform the calculations, and you'll get the forecast for August's pound of nails sales.
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Price Elasticity and Deadweight Loss Using two separate demand and supply graphs, show the difference in deadweight loss between a. a market with inelastic demand and inelastic supply b. a market with elastic demand and supply. Hint: Be sure to keep the tax size the same for both graphs. Also, use the tax wedge style of showing the tax (i.e., don't shift S or D)
Consider two scenarios: one with inelastic demand and inelastic supply (a) and another with elastic demand and supply (b). In both cases, we'll introduce a tax on the market. I'll use the tax wedge style to show the tax. a) Market with Inelastic Demand and Inelastic Supply:
In this scenario, both the demand and supply curves are relatively steep, indicating inelasticity. Here's the graph:
In this graph:- Pe represents the equilibrium price without the tax. Qe represents the equilibrium quantity without the tax. Ps represents the price paid by consumers after the tax.- Qs represents the quantity supplied after the tax.The deadweight loss in this scenario is relatively small because both the demand and supply are inelastic. Due to the inelastic nature of the curves, the tax burden is shared between consumers and producers, and the market adjusts to the new equilibrium relatively smoothly. Consequently, the loss in consumer and producer surplus, represented by the deadweight loss, is minimal.
b) Market with Elastic Demand and Elastic Supply: In this scenario, both the demand and supply curves are relatively flat, indicating elasticity. Here's the graph:
In this graph: - Pe represents the equilibrium price without the tax.- Qe represents the equilibrium quantity without the tax. - Ps represents the price paid by consumers after the tax. - Qs represents the quantity supplied after the tax. The deadweight loss in this scenario is relatively large because both the demand and supply are elastic. Due to the elastic nature of the curves, the tax burden leads to a significant reduction in consumer and producer surplus, resulting in a substantial deadweight loss. The decrease in quantity exchanged (Qe to Qs) is more pronounced, and the loss in economic efficiency is greater compared to the inelastic case.
In summary, the deadweight loss is larger in a market with elastic demand and supply compared to a market with inelastic demand and supply when the same tax is applied. Elasticity determines how much the market can adjust to the tax burden and how efficiently resources are allocated.
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Explore if a physical or electronic market would be the most
successful arena to launch a business idea.（2,000-word Business
Report）
Choosing between physical and electronic markets depends on the business nature, target market, costs, customer preferences, and competition. Both options have pros and cons.
A physical market refers to a traditional brick-and-mortar setting where customers can physically visit a store or location to interact with products or services. Physical markets provide a tangible experience, allowing customers to see, touch, and try products before making a purchase. They also enable face-to-face interactions, personalized customer service, and immediate product availability. However, physical markets can be constrained by geographical limitations, higher overhead costs, and limited reach compared to electronic markets.
On the other hand, electronic markets, also known as e-commerce or online platforms, offer the convenience of buying and selling products or services through the internet. Electronic markets provide global reach, 24/7 accessibility, lower overhead costs, and the ability to target a broader customer base. They offer convenience, ease of comparison shopping, and the opportunity for businesses to gather valuable customer data. However, electronic markets may lack the sensory experience of physical markets and require effective online marketing strategies to stand out among competitors.
Ultimately, the choice between a physical or electronic market depends on the specific business idea, target market, resources, and strategic goals. Conducting market research, evaluating customer preferences, and considering the unique advantages and challenges of each option can help determine the most suitable arena for launching a business idea.
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Dexter Mills issued 20-year bonds a year ago at a coupon rate of 10.2 percent. The bonds make semiannual payments. The yield-to-maturity on these bonds is 9.2 percent. What is the current bond price?
$985.55
$991.90
$1,042.16
$1,089.02
$1,098.00
Dexter Mills issued 20-year bonds a year ago at a coupon rate of 10.2 percent, and these bonds make semiannual payments. The yield-to-maturity on these bonds is 9.2 percent. The current bond price is $1,098.00.What are bonds?A bond is a long-term security that is issued by a corporation, the government, or other entities.
The issuer pays the bondholder a fixed or variable interest rate until the bond reaches maturity, at which time the face value of the bond is repaid to the bondholder .In this particular case, since the bond is a 20-year bond with a coupon rate of 10.2 percent and makes semiannual payments, it means there are 40 payments.
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BHP Group Limited is an Australian conglomerate that engages in the exploration,
development, and processing of iron ore, coal, and copper. Iron ore prices have plunged from
$220 per ton in 2021 to just over $100 per ton in December 2021. Iron ore exports are one
of the fundamental components of the company's revenue. Yet, BHP has just announced
their intention to increase their dividend for 2021.
Required
(i)
What might have motivated BHP to increase their dividend? What are the implications
of BHP's announcement for financial markets? (10 marks)
(li)
BHP board approved the establishment of a Dividend Reinvestment Plan (DRP) for
the final implementation for the final dividend in the 2018 financial year. What are some
of the major reasons BHP may have wished to establish a DRP? What benefits, if
there are any, would a DRP offer to ordinary shareholders? (10 marks)
(ili)
Based on the past years of dividend payment history, how would you describe the
BHP's dividend policy? Is the current dividend policy justified? Why or why not?
Discuss the factors which in your opinion underlie the dividend policy of the
company. If you were to advise the management about the dividend policy for FY
2022, what would you recommend? (10 marks)
(iv)
Critically evaluate BHP's financial and non-financial risks including ESG
(Environmental, Social and Governance) and the way BHP managed those risks in
the past five years.
(i) BHP Group Limited is an Australian conglomerate that engages in the exploration, development, and processing of iron ore, coal, and copper. Iron ore prices have plunged from $220 per ton in 2021 to just over $100 per ton in December 2021. Iron ore exports are one of the fundamental components of the company's revenue.
Yet, BHP has just announced its intention to increase its dividend for 2021. The primary reason for increasing dividend payout is to boost investor confidence in the company. Because a higher dividend payout means that the company is profitable and can afford to give money back to its shareholders. Dividend increases can also aid in the company's efforts to attract more investors. For financial markets, this can be a positive sign, which can cause the company's stock price to rise. Additionally, increased dividend payouts can lead to more investment in the company.
(ii) The establishment of a Dividend Reinvestment Plan (DRP) may have been due to several reasons. Some of the benefits of DRP for ordinary shareholders are: DRP eliminates the need for shareholders to receive cash dividends since they will be reinvested in additional shares of the company; DRP can help investors avoid brokerage and transaction fees associated with purchasing additional shares; DRP can be a more tax-effective method of receiving dividends;Dividend Reinvestment Plan can provide additional liquidity to the company's share market as a result of more shares being issued.
(iii) BHP's dividend payment history shows that it has had a steady dividend policy, with regular increases in the dividend paid to shareholders over the past five years. The current dividend policy is justified because BHP has the cash reserves to pay dividends, and it has increased its payout to shareholders. Additionally, the company has a solid reputation and is financially stable, which makes it a low-risk investment for shareholders.BHP's dividend policy is influenced by a variety of factors, including the company's financial performance, its cash flow, its investment strategy, and its need for funds to pursue growth opportunities. The company should continue to increase its dividend payouts, albeit at a moderate pace, in order to attract more investors.
(iv) Critically evaluate BHP's financial and non-financial risks including ESG (Environmental, Social, and Governance) and the way BHP managed those risks in the past five years.BHP faces a variety of financial and non-financial risks, including commodity price volatility, regulatory changes, environmental risks, social risks, geopolitical risks, and cybersecurity risks. Additionally, the company faces significant ESG risks, particularly with respect to environmental and social risks.BHP has implemented a variety of risk management strategies over the past five years to address these risks. These include increasing investment in renewable energy, improving operational efficiency, and implementing various social and environmental programs. Additionally, BHP has implemented robust governance and risk management frameworks to mitigate financial and non-financial risks.
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The gross domestic product (GDP) of Australia is defined as the market value of all final goods and services produced by resources within Australia in a given year. Based on the above definition, which of the following will be included in (that is, directly increase) the GDP in 2015? Check all that apply. Awake Cafe, an Australian coffee company, produces a latte at its location in Adelaide on 8 January 2015. It sells the latte to a customer immediately. Graincorp, an Australian seed and grain company, produces wheat at a plant in Victoria on 22 September 2015. It sells the wheat to Vegfoods for use in the production of wheat germ that will be made in Australia in December. (Note: Focus exclusively on whether production of the wheat increases GDP directly and ignore the effect of production of the wheat germ on GDP.) An accountant starts a client's 2015 tax return on April 29, 2016, finishing it just before midnight on April 30, 2016. Big Boots, an Australian shoe company, produces a pair of boots at a plant in Thailand on 13 March 2015. Big Boots imports the pair of boots into Australia on 5 May 2015. Chocolate Express, a Swiss chocolate company, produces a chocolate bar at a plant in Victoria on 1 December 2015. A primary school pupil buys the chocolate bar on 15 December 2015.
Gross Domestic Product (GDP) is the measure of the total value of goods and services produced within the country's borders during a specified period. The following are included in the GDP of Australia for the year 2015:
a. Awake Café, an Australian coffee company, produces a latte at its location in Adelaide on 8 January 2015. It sells the latte to a customer immediately.
b. Grain crop, an Australian seed and grain company, produces wheat at a plant in Victoria on 22 September 2015. It sells the wheat to Veg foods for use in the production of wheat germ that will be made in Australia in December.
c. Big Boots, an Australian shoe company, produces a pair of boots at a plant in Thailand on 13 March 2015. Big Boots imports the pair of boots into Australia on 5 May 2015.
d. Chocolate Express, a Swiss chocolate company, produces a chocolate bar at a plant in Victoria on 1 December 2015. A primary school pupil buys the chocolate bar on 15 December 2015. According to the above definition, all final goods and services produced by resources within the country in a given year are included in GDP.
Therefore, a, b, c, and d will be included in (that is, directly increase) the GDP of Australia in 2015. An accountant starting a client's 2015 tax return on April 29, 2016, and finishing it just before midnight on April 30, 2016, will not be included in the GDP of Australia in 2015 because the accountant does not produce any final goods and services, and their activity does not directly generate any income. Therefore, option e is incorrect.
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The Department of Agriculture came out today with its prediction for food price next year-4 to 5 percent increases on top of this year's already steep gains... Eggs, dairy products and cereals are up 10 percent. But the USDA says another big part of the American diet has seen only moderate price increases. Beef, poultry and pork will be up only 3 percent this year." Suppose the price elasticity of demand for beef is elastic. Consumption would then A) decrease by less than 3 percent. B) increase by less than 3 percent. C) decrease by greater than 3 percent. D) increase by greater than 3 percent.
Assuming that the price elasticity of demand for beef is elastic, consumption would decrease by 3 percent, as option c shows.
What is price elasticity?It is an economic concept of elasticity.It is a concept that refers to price changes in a product or service.Considering that the elasticity of demand for beef is elastic, this means that there is a percentage change in the price of beef. This variation will cause a high variation in the demand for that product, that is, there will be a change in the demand for that product according to its elasticity.
Therefore, if the consumption of beef decreased by more than 3%, the percentage reduction in the demand for this meat is expected to be greater than the percentage increase in price, therefore, it is expected that there will be a decrease of more than 3 %.
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8 On 31st March, 2008 Charlie Bank Ltd. finds that (1) On a term loan of $ 2 million, interest for the last three quarters is in arrears beyond the due date. (2)The amount of $. 10 lakhs of a discounted bill was due on 1st January, 2008 but the same has not been received. (3) On a term loan of $. 1 million, interest for the last one quarter is past due. which of the above items will be treated as non- performing assets (NPA) on 31st March, 2008,
Non-performing assets (NPA) are loans or advances that are in arrears or overdue payments. Such assets are considered as low quality since the borrower is delinquent in their payment obligations and the loan or advance is deemed to be in jeopardy. items (1) will be treated as non-performing assets (NPA) on 31st March, 2008.
On 31st March, 2008, Charlie Bank Ltd. found that the following assets were non-performing assets (NPA):1. On a term loan of $2 million, interest for the last three quarters is in arrears beyond the due date.This is considered as NPA as the interest on the term loan has been overdue for more than 90 days.2. The amount of $. 10 lakhs of a discounted bill was due on 1st January 2008, but the same has not been received. items (2) will be treated as non-performing assets (NPA) on 31st March, 2008.
The discounted bill is considered as NPA since it is due and payable for over 90 days and no payment has been made.3. On a term loan of $. 1 million, interest for the last one quarter is past due. This is not considered as NPA since the interest payment is overdue for less than 90 days. Therefore, items (1) and (2) will be treated as non-performing assets (NPA) on 31st March, 2008.
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According to the CAPM, what is the expected risk premium of a stock with a beta of 0.8 if the market risk premium is 8%? Select one: O a. 8% O b. 6% O c. 6.4% O d. 8.4% O e. More information is required to answer this question.
The expected risk premium of a stock with a beta of 0.8 cannot be determined without knowing the risk-free rate. The risk-free rate represents the return on a risk-free investment and is a crucial component in the calculation of expected returns using the Capital Asset Pricing Model (CAPM).
The CAPM formula states that the expected return of a stock is equal to the risk-free rate plus the product of its beta and the market risk premium. Since the risk-free rate is not provided in the question, we cannot accurately calculate the expected risk premium.
The risk-free rate serves as a benchmark against which investors assess the additional return they expect for taking on market risk. Without this information, it is not possible to determine the expected risk premium of the stock with a beta of 0.8.
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the demand and supply for automobiles is given by:
QD = 0.1P – 12,3
QS = 6400Pw -0.5
where p is measured in $/car, i is income, and w is the hourly wage of automobile workers.
The equations represent the demand and supply functions for automobiles.
What do the given equations represent?The given equations represent the demand and supply functions for automobiles. The demand function, QD, is determined by the price of the cars (P) and the income of consumers (i).
It is expressed as QD = 0.1P - 12.3, indicating that as the price of cars increases, the quantity demanded decreases. The negative constant term (-12.3) represents other factors that influence demand, such as consumer preferences or market conditions.
On the other hand, the supply function, QS, depends on the price of cars (P) and the hourly wage of automobile workers (w). It is given as QS = 6400Pw^(-0.5), suggesting that as the price of cars or the wage of workers increases, the quantity supplied also increases.
The exponent of -0.5 indicates the elasticity of supply, where a change in the wage has a smaller impact on quantity supplied compared to a change in price.
These equations provide a framework for understanding the relationship between price, income, and wages in determining the equilibrium quantity and price of automobiles in the market.
By analyzing the demand and supply functions, economists can assess the impact of various factors on the automotive industry and make predictions about market trends.
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according to the functional distribution of income, in the united states
According to the functional distribution of income, in the United States, the income is distributed among the four primary factors of production. These factors are labor, capital, land, and entrepreneurship.
Functional distribution of income refers to the division of national income among the primary factors of production in an economy. It determines the portion of the total income received by different factors of production such as labor, capital, land, and entrepreneurship.In the United States, the largest share of income is earned through labor. The income earned by employees in exchange for their work is known as wages.
As such, most Americans receive their income from labor-related activities, which is the primary source of personal income for most people.
Capital income is the second-largest source of income in the United States. This type of income is earned from ownership of assets like stocks, real estate, bonds, and other investments. People who receive capital income are not directly involved in the production process.
Entrepreneurship income, on the other hand, is earned by individuals who create businesses and take the risk to earn profits or incur losses. This income is not as widespread as the other two types of income.Finally, land income is the income received by landowners for the use of their land. This is considered a minor source of income compared to the other factors.
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In 2018, Canada ranked seventh in the World Happiness Index. The top 10 happiest countries for that year were as follows:
1. Finland
2. Norway
3. Denmark
4. Iceland
5. Switzerland
6. Netherlands
7. Canada
8. New Zealand
9. Sweden
10. Australia
While the United States ranked 14th from 2014–2016, it dropped four places to the 18th spot in 2017, despite having a higher GDP per capita than most countries in the top 10. In 2018, it remained 18th. Since 2008–2010, the five countries that experienced the largest drop in ranking were Ukraine, Yemen, Syria, Malawi, and Venezuela, all of which are countries facing violence, war, and human rights issues. Measuring happiness is not an exact science, as factors other than GDP per capita are considered. Additional factors that could be considered when assessing a country’s overall well-being are the distribution of income in society, the health of citizens, life expectancy, the quality of education, housing and homelessness, pollution, and corruption and violence.
Is there a connection between happiness and economics? Perhaps, since many of the top 10 countries on the World Happiness Index also rank the highest for labour productivity, according to the OECD. So, the next time you encounter GDP per capita in a comparison of countries, remember to think like an economist and consider the limitations of this statistic and consider extra factors that can better measure happiness and well-being.
APPLYING ECONOMIC THINKING
1. Why is GDP per capita a limited statistic when measuring quality of life?
2. Use the Internet to access the latest World Happiness Report. Which countries experienced the greatest increase/decrease on the most recent happiness report? Why? What happened to Canada’s rank?
3. With reference to the World Happiness Index, create a collection of photos on what defines happiness using technology. What photos would you choose to represent what happiness means? Why did you select these images? Write a one-paragraph reflection justifying your photo selections and how they represent well-being. Be sure to properly source all images.
These images represent happiness because they all involve positive social interactions, physical activity, and enjoying nature.
1. GDP per capita is a limited statistic when measuring quality of life because it only takes into account the economic activity of a country and does not consider non-economic factors that also influence people's well-being. Some of these factors may include distribution of income in society, life expectancy, health of citizens, quality of education, housing and homelessness, pollution, and corruption and violence.
Therefore, GDP per capita alone cannot accurately measure the happiness and well-being of a population.2. The latest World Happiness Report was released in March 2021. According to the report, the countries that experienced the greatest increase in happiness from the previous report were Afghanistan, Zimbabwe, Rwanda, and Botswana.
On the other hand, the countries that experienced the greatest decrease in happiness were Venezuela, Maldives, Libya, and Lebanon. Canada's rank remained the same as in 2018, at 7th place.3. This part requires a personal response and cannot be answered. However, some examples of photos that could represent happiness and well-being could be: a group of friends laughing and enjoying a picnic in a park, a family having a meal together, a person practicing yoga on a beach, a couple hiking in a scenic location, etc.
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According to the "General Approach", should the following securities be included in the Expected Credit Loss Model? If so, would there be a difference in their Expected credit loss, and why?
a. $1m Samsung Bond, maturing in 10 years
b. $1m Samsung Bond, maturing in 5 years
C. $1m Samsung Shares
According to the "General Approach," should the following securities be included in the Expected Credit Loss Model? Yes, they should be included in the Expected Credit Loss Model.
There are distinctions in their Expected Credit Losses because they have different maturities. The model for anticipated credit losses should incorporate the influence of time value over the period for which credit danger is assessed.What is the Expected Credit Loss Model?Expected Credit Loss Model is a method for measuring the credit risk of financial assets.
Expected Credit Losses, or ECLs, are projected losses that arise as a result of default or non-payment. ECLs must be calculated and recognized on the balance sheet for all financial instruments that have credit risk.Here are the expected credit loss details for each of the Samsung bonds and shares.
Difference in their Expected credit loss: brainly.com/question/29311125The expected credit loss for the bond will be greater than that of the bond with a shorter maturity since long-term securities have a greater risk of default. Details of the Samsung Bond, maturing in 5 years: Expected Credit Loss Model.
Yes, the bond must be included in the ECL model because it has credit risk with a mid-term maturity of 5 years. As a result, the ECL model will account for the impact of time value on the likelihood of default and expected losses on the bond. Difference in their Expected credit loss, The expected credit loss for the bond will be less than that of the bond with a longer maturity since long-term securities have a greater risk of default. Details of the Samsung Shares: Expected Credit Loss Model, No, the Samsung shares should not be included in the ECL model because equity securities have no fixed maturity, and the notion of credit losses does not apply to them.
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Overview of the South African economy 2004-2007, Overview of the South African economy 2015 to 2019, the focus should be on identifying the major contributors to economic growth and variables of interest students to use graphs and tables in this section
Overview of the South African economy 2004-2007:South Africa's economy experienced strong growth between 2004 and 2007. The economic growth averaged 4.8% annually, which was due to several factors such as low interest rates, stable exchange rates, and low inflation.
economic growth was driven by increased investment and household spending. Key sectors such as manufacturing, mining, and tourism also experienced growth during this period .In the period between 2004-2007, there was a significant increase in foreign investment in South Africa, which led to the development of infrastructure and the creation of jobs.
Overview of the South African economy 2015 to 2019:South Africa's economy experienced weaker growth between 2015 and 2019, with an average growth rate of 1.8%. This was due to several factors such as low investment, low levels of confidence, high unemployment rates, and low commodity prices. These factors negatively affected several sectors, including manufacturing, mining, and agriculture.
Tables and graphs can help to visually present the information. For example, graphs can show the trend in economic growth, while tables can provide detailed data on key sectors such as manufacturing, mining, and agriculture.
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If the ulitity function is: U=121x1 + 120x2 How many units of x1 is the consumer willing to give up to get one more unit of x2? (hint: Remember how to obtain the opportunity cost of x2 using MRS. ENTER THIS NUMBER AS POSITIVE!!! NO NEGATIVE NUMBERS!!!!))
QUESTION 16 The utility function and the prices are the following: U = 53 x1 + 84 x2 P1=38, P2=78 and 1 =3353 What is the MRS?
QUESTION 17 The utility function and the prices are the following: U = 82 x1 + 20 x2 P1=7, P2=87 and 1=1782 What is the amount of maximized utility?
Utility function is a way to express preferences of consumers in terms of utility values assigned to different goods or services. Therefore, the amount of maximized utility is 101640
It is useful to understand how consumers choose to spend their income, based on their preferences for different goods and services, and how much they are willing to pay for them. Consumers' preferences are based on their utility function. Therefore, a utility function is a mathematical equation that describes how consumers' preferences can be measured. It gives an overall satisfaction level to the consumer, given a set of preferences.
If the utility function is U = 121x1 + 120x2, and we need to find out how many units of x1 the consumer is willing to give up to get one more unit of x2, we can use the marginal rate of substitution (MRS). MRS is the amount of x1 that a consumer is willing to give up in exchange for one more unit of x2, while keeping the overall level of satisfaction or utility constant.
MRS = MUx1/MUx2
Where MUx1 and MUx2 are the marginal utilities of x1 and x2, respectively.
Here, MUx1 = 121 and MUx2 = 120, so
MRS = 121/120
MRS = 1.0083
Therefore, the consumer is willing to give up 1.0083 units of x1 to get one more unit of x2.
QUESTION 16:
Given,
U = 53 x1 + 84 x2
P1 = 38, P2 = 78 and 1 = 3353
We need to find out the marginal rate of substitution (MRS).
MRS = MUx1/MUx2
Here,
MUx1 = ∂U/∂x1 = 53
MUx2 = ∂U/∂x2 = 84
MRS = MUx1/MUx2
MRS = 53/84
MRS = 0.6309
Therefore, the MRS is 0.6309.
QUESTION 17:
Given,
U = 82 x1 + 20 x2
P1 = 7, P2 = 87 and 1 = 1782
We need to find out the amount of maximized utility.
We know that the consumer maximizes utility by equating the marginal utility per dollar spent on each good.
MRS = MUx1/MUx2 = P1/P2
82/20 = 7/87
20 x 7 = 82 x 87
140 = 7134
x1 = 50
Substituting x1 = 50 in the utility function, we get
U = 82 x 50 + 20 x 1782
U = 101640
Therefore, the amount of maximized utility is 101640.
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Scenario:
If a virtual business understands who their target client is, it sets a foundation for forecasting sales, estimating expenses, and deciding the best method to communicate to those potential customers. The marketing strategy for your virtual business is the most essential component of the strategic business plan. The group of angel investors is looking forward to better understanding your marketing capabilities and innovative ideas. Most importantly, your pricing strategy for each virtual business product will be critical to thoroughly explain and present. Complete the following requirements for Part 2 of this strategic business planning process for your virtual business:
What would the distribution and logistics of a product such as GPS enabled watches for kids for a business. What are examples of how to penetrate your target market. Explain what kind of placement is necessary to promote your brand and feature your products to your target market.
Describe any key sales activities that is use to build and maintain a sales pipeline
Explain the essential elements of the sales process (i.e., staffing, commissions, and quotas)
Some of the key sales activities used to build and maintain a sales pipeline include lead generation, prospecting, qualification, needs assessment, value proposition, objection handling, closing, and follow-up.
Distribution and logistics of a product like GPS-enabled watches for kids for a business would require third-party providers. Examples of how to penetrate your target market include social media, SEO optimization, content marketing, etc. Product placement and in-store displays, banners, billboards, and signage are some of the necessary placements to promote your brand and feature your products. For the distribution and logistics of a product such as GPS-enabled watches for kids for a business, third-party providers would be required. That means relying on transportation and warehousing companies to move products from warehouses to fulfillment centers and finally to customers or retailers. Product placement and in-store displays, banners, billboards, and signage are some of the necessary placements to promote your brand and feature your products. Examples of how to penetrate your target marketA business can penetrate its target market through various ways, including but not limited to, social media, SEO optimization, content marketing, email marketing, referral marketing, influencer marketing, etc.
By focusing on the content your target audience is interested in, you can drive traffic to your site and products. The essential elements of the sales process, including staffing, commissions, and quotas, play a vital role in a business's sales strategy. These elements help to define the sales team's roles and responsibilities, the amount of compensation they will receive, and their performance metrics, respectively. Staffing is critical to ensure that the sales team is trained, motivated, and productive, while commission and quota are essential for incentivizing sales reps to perform well and align their efforts with the company's goals. By using these activities, sales teams can identify potential customers, build relationships, provide them with the information they need to make a purchase decision and follow up to ensure that they are satisfied with their purchase.
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3.1 Highlight the requirements for a layout to be considered effective and efficient.
3.2 Discuss the most appropriate type of operational layout for each of the occupations/ designations mentioned below.
a) Cool-drink manufacturer
b) Fashion designer specialising in couture evening gowns
c) Building contractor
d) Shipbuilder
Fixed-position layouts allow workers, tools, and materials to be moved to the construction site.For the shipbuilder, the most appropriate type of operational layout is product layout. It organizes the production process in a logical sequence, enabling the manufacturer to produce large numbers of ships efficiently and at low cost. It also facilitates the use of specialized equipment and the application of mass-production techniques.
3.1 Requirements for a layout to be considered effective and efficient are listed below:Equipment and machinery must be located in a convenient spot in the plant or workshop so that they can be used easily when needed, and there must be sufficient room to move between equipment and machinery, which must be arranged logically for the manufacturing process.Workstations or benches should be arranged in the most efficient sequence, reducing the number of unnecessary movements and shortening the travel distances between workstations.Most raw materials should be kept near the point of use, with other materials and inventory stocks arranged in the most effective manner possible.3.2 Operational layout for each of the occupations/designations mentioned below:For the cool-drink manufacturer, the most appropriate type of operational layout is product layout. It organizes processes in a linear sequence that maximizes the use of resources, reduces production time and costs, and enables the manufacturer to produce goods in large quantities.For the fashion designer specializing in couture evening gowns, the most appropriate type of operational layout is process layout. It facilitates customization and specialty production in a highly complex, non-repetitive, low-volume manufacturing environment.For the building contractor, the most appropriate type of operational layout is fixed-position layout. It's the only feasible layout option in construction projects that involve very large objects like buildings, ships, and aircraft. So,fixed-position layouts allow workers, tools, and materials to be moved to the construction site.For the shipbuilder, the most appropriate type of operational layout is product layout. It organizes the production process in a logical sequence, enabling the manufacturer to produce large numbers of ships efficiently and at low cost. It also facilitates the use of specialized equipment and the application of mass-production techniques.
Learn more about operational layout here,Identify the most suitable layout for a facility that handles a wide variety of customized orders.
a. A cellular layout
...
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A job performance system that does not relate directly to the job is said to be lacking Reliability Equity Validity Morality
A job performance system that does not relate directly to the job is said to be lacking Validity.
Validity refers to the extent to which a job performance system accurately measures the specific job-related criteria it is intended to assess. If a performance system does not directly align with the requirements and expectations of the job, it lacks validity. In other words, the system fails to effectively evaluate the relevant skills, knowledge, and competencies necessary for successful job performance. A lack of validity undermines the credibility and usefulness of the performance assessment process.
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If Lindsey increases her output from 2 to 3 teddy bears per day, her total revenue will Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a decrease; increase increase; decrease increase; increase decrease; decrease C d and her profit will X Your answer
If Lindsey increases her output from 2 to 3 teddy bears per day, her total revenue will increase; increase and her profit will increase.
What is total revenue?
The total revenue is the complete sum of money generated by a business through the sale of goods or services. The total revenue of a company is calculated by multiplying the total number of goods sold by the selling price of a single unit of the goods sold.
How does Lindsey’s increase in output affect her total revenue and profit?
If Lindsey increases her output from 2 to 3 teddy bears per day, her total revenue will increase; increase and her profit will increase. The output level of Lindsey has a direct impact on the total revenue and profit.Lindsey can increase the total revenue and profit of her business by increasing her production levels.
When she increases her production levels, she produces and sells more teddy bears, which means that she is making more money from selling the teddy bears. Therefore, her total revenue will increase. Her profit will also increase because she is making more money per unit sold. As a result, an increase in output will increase both her total revenue and profit.
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Quantity of labor (workers) Total product (widgets per day) Marginal product Average product
0 0
1 5
2 15
3 35
4 50
5 60
6 65
Total product (widgets per day) TFC TVC TC
0
5
15
35
50
60
65
Total product (widgets per day) AFC AVC ATC MC
0
5
15
35
50
60
65
The first table above has the total product schedule for an imaginary good called a widget. Each unit of labor costs $25 and the total cost of capital is $100.
Use this information to complete the three tables. In the tables, TFC is the total fixed cost, TVC is the total variable cost, TC is the total cost, AFC is the average fixed cost, AVC is the average variable cost, ATC is the average total cost, and MC is the marginal cost.
The tables are incomplete for marginal product, average product, and cost calculations: TFC, TVC, TC, AFC, AVC, ATC, and MC.
The marginal product can be calculated as the difference in total product when an additional unit of labor is employed. Average product is the total product divided by the quantity of labor. For total fixed cost, it remains constant at $100 as it does not change with the level of output. Total variable cost can be calculated by multiplying the quantity of labor by the labor cost ($25). Total cost is the sum of total fixed cost and total variable cost. Average fixed cost is the total fixed cost divided by the total product, average variable cost is the total variable cost divided by the total product, average total cost is the total cost divided by the total product, and marginal cost is the change in total cost divided by the change in total product.
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Question 20 points You are the project manager for a project. You are the cost od chedule we present in your project. You want to compare the project me with a man who hold your perform to provides information O A Reserve analyses O B. Variance Analysis O C. Risk audit OD. Risk management
As a project manager, if you want to compare the project you are working on with another man's performance to get the right information, you should consider using Variance Analysis.
Variance analysis refers to the quantitative examination of the variations between actual and planned behavior. In other words, it compares the actual results with what was planned to be done. The comparison will help you identify the reasons behind the deviations in the project's execution. For instance, if the actual cost of the project was $50,000 and the planned cost was $40,000, the variance will be $10,000 ($50,000 - $40,000).Based on the variance analysis, you will be able to determine the cost and schedule variances, cost and schedule performance indices, and estimate the total cost of the project. Hence, it is an essential tool that project managers use to assess the performance of their project.Why is Variance Analysis important?Variance analysis is vital because it helps project managers evaluate the project's progress, whether it's meeting the set objectives, and forecast any obstacles that could lead to the project's failure. Additionally, it can help in the budgeting process by ensuring that the project is within the set budget by identifying areas where the budget can be adjusted.
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Please read the Nike Case Study:
In September of 2018, Nike unveiled their 30th anniversary "Just Do It" campaign, featuring prominent athletes such as Serena Williams, LeBron James, Lacey Baker, and Odell Beckham Jr. Also featured in the series is former San Francisco 49ers quarterback turned activist Colin Kaepernick, who has been a controversial figure since early August of 2016 when he protested racial injustice in America by sitting and later kneeling during the national anthem at the start of football games. Kaepernick’s Nike advertisement, which he posted to social media sites on September 3, 2018, displays a close-up image of his face with the words "Believe in something. Even if it means sacrificing everything" written across the image. Some have praised the advertisement as taking a stand in the nationwide debate over the state of minority rights while others have been concerned with Nike’s movement into the arena of political advocacy.
Gino Fisanotti, Nike’s vice president of brand marketing for North America, defended the company’s featuring of Kaepernick, who has not played in the NFL since the 2016 season when he refused a contract with the 49ers: "We believe Colin is one of the most inspirational athletes of this generation, who has leveraged the power of sport to help move the world forward." Additionally, many high-profile athletes and celebrities have voiced their support for Nike and Kaepernick, including LeBron James and Serena Williams, both outspoken figures about social justice in their own right. "He’s done a lot for the African American community, and it’s cost him a lot. It’s sad," Williams said of Kaepernick. "Having a huge company back him," she continued, "could be a controversial reason for this company, but they’re not afraid. I feel like that was a really powerful statement to a lot of other companies."
Other observers see Nike’s move from the commercial to the political as potentially concerning. Michael Serazio worries that this is just another sophisticated trick from a corporate powerhouse: "Getting us to think we’re making a statement by buying Nike is the long con advertising has played, and it has played it well." Increasingly, brands are giving in to a recent demand for politicization, forcing consumers to question the political participation of various corporations. Some argue that Nike is using a popular movement to increase its own sales, and taking advantage of the prestige and celebrity status of its minority athletes while doing so. Another worry is that it distracts attention from how Nike products are made, often by workers in difficult working conditions in developing countries. As Serazio puts it, the new campaign risks diverting our focus from "the marginalized who make stuff rather than the posturing it affords those privileged enough to own it."
The advertisement campaign is a risky move for Nike, who might garner heightened attention to its products and brand, but who also runs the risk of alienating part of its consumer base by becoming too politicized. Swaths of the football-watching public, and public at large, are divided by the anthem protests carried on by Kaepernick and others. By featuring the originator of this series of protests, many fans might view Nike as standing with black athletes and their concerns. Yet others may view the advertisement as an attempt to profit off of a protest that strikes at the heart of patriotic values that some hold dear. Some owners of Nike products even illustrated their disgust with the campaign by burning their shoes, and then subsequently posting the flaming images on social media. So far, however, Nike has not sacrificed anything due to the gamble that this advertising campaign represents: Nike stock is up 5% since the advertisement hit the public, representing a $6 billion increase in Nike’s market value.
Nike’s campaign was meant to garner attention and make a statement on its 30th anniversary. It succeeded at accomplishing these goals. But many are still wondering: was Nike primarily interested in taking a courageous stand on an important political issue of our time, or were they simply using Kaepernick as a clever ploy to sell more shoes?
Questions:
1. Should a company like Nike get involved in matters of political controversy and social justice?
2. Do you think that these advertisements will hurt Nike’s brand or bottom line? Do you think this is an important ethical consideration for Nike?
3. Nike clearly has the ability—and right—to take a stand on this issue. What should the virtuous consumer do in reacting to Nike’s campaign? What about if they disagree with Nike’s stance?
Nike's decision to engage in political and social justice issues can be seen as a strategic move to position itself within the market, aligning its brand with certain values.
However, it also raises ethical considerations and potential impacts on the brand's image and financial performance. In detail, a company's choice to engage in matters of political controversy and social justice is a strategic decision that must consider the potential effects on its brand image, customer base, and financial performance. In Nike's case, their campaign featuring Colin Kaepernick was seen by some as taking a brave stand on an important social issue. However, others viewed it as a calculated move to boost sales. Whether this move will hurt or benefit Nike's brand or bottom line in the long term is uncertain and depends largely on the response of their target customer base and the broader public. Ethically, it's important for Nike to sincerely stand by the values it promotes, and not just use them as a marketing strategy. Consumers' reactions will depend on their individual beliefs and the alignment of these beliefs with Nike's stance.
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2) Good A has a negatively sloped linear demand curve. Suppose that before-tax price of good A is Po. Assuming that the supply curve is perfectly elastic, (a) Explain graphically the deadweight loss that will occur as a result of a tax rate of G (b) Explain graphically the deadweight loss that will occur as a result of a subsidy rate of s
The post-subsidy price of good A is Po−s. The new equilibrium point is at P2, Q2. Q1 is the amount of good A sold before the subsidy. Q2 is the amount of good A sold after the subsidy. Total loss = a+b+c+d+e+f, Deadweight loss = b+f.
(a) Deadweight loss that will occur as a result of a tax rate of G:Deadweight loss, in the context of taxation, refers to the loss of economic efficiency that occurs when the equilibrium for a good or service is not reached. The quantity of a good or service traded decreases as a result of taxation.
Consumers and producers, who could have benefitted from the transaction, do not benefit, resulting in deadweight loss. The deadweight loss caused by a tax is caused by the loss of customer and producer surplus. A deadweight loss occurs when a tax is levied on a good that has a negatively sloped linear demand curve and a perfectly elastic supply curve.
As a result of the tax, the before-tax price of good A is Po. The post-tax price of good A is Po+G. The new equilibrium point is at P2, Q2. Q1 is the amount of good A sold before the tax. Q2 is the amount of good A sold after the tax. (Please refer to the attached image)Total loss = a+b+c+d+e+f, Deadweight loss = b+f
(b) Deadweight loss that will occur as a result of a subsidy rate of s:When the government provides a subsidy to a good or service, the price decreases. Because of the lower price, the quantity of the good or service demanded rises, and the quantity of the good or service supplied rises as well. There is a deadweight loss that occurs as a result of the subsidy, much like with a tax. A subsidy results in a loss of economic efficiency.
The quantity of a good or service traded increases as a result of subsidies. Consumers and producers, who could have benefitted from the transaction, do not benefit, resulting in deadweight loss. As a result of the subsidy, the before-tax price of good A is Po.
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