The Nash equilibrium is defined as a state in which no firm has an incentive to unilaterally deviate from its strategy. At a Nash equilibrium, each player is doing the best he can given his opponent's strategies.
Consider the given Bertrand (price competition) game, where Q = 100 − P. The game consists of two firms; firm 1 has a marginal cost of $20, and firm 2 has a marginal cost of $30.Suppose both firms choose a price equal to their marginal cost. Firm 1's profit function can be given as:
π1 = (P1 – 20) × (100 – P1 – P2) = (P1 – 20) × (80 – P1 + 20) = (P1 – 20) × (100 – P1)
Therefore, the first-order condition of firm 1's profit-maximization problem is:
∂π1/∂
P1 = 0
⇒ 100 – 2P1 – P2 = 0 ... (1)
Firm 2's profit function can be given as:
π2 = (P2 – 30) × (100 – P1 – P2)
= (P2 – 30) × (80 – P2 + 30) = (P2 – 30) × (100 – P2)
Therefore, the first-order condition of firm 2's profit-maximization problem is:
∂π2/∂
P2 = 0
⇒ 70 – P1 – 2P2 = 0 ... (2)
Solving Eqs. (1) and (2) simultaneously, we get:
P1 = 40, P2 = 15
It can be observed that both firms are making a positive profit, and no firm has an incentive to unilaterally deviate from its strategy. Therefore, (P1, P2) = (40, 15) is a Nash equilibrium.
However, if both firms choose a price equal to their marginal cost, we get:
P1 = 20, P2 = 30
It can be observed that both firms are making a negative profit in this case. Hence, no firm would choose to charge its marginal cost if the other firm is also doing so.
Therefore, choosing a price equal to the marginal cost is no longer a Nash equilibrium. Hence, the given Bertrand (price competition) game, where Q = 100 − P, would have (P1, P2) = (20, 20) as the unique Nash equilibrium, where both firms earn zero profit.
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Review the derivation of digital calls and puts in the study guide and use these results to derive a general expression for an option position that at expiration pays (i) nothing below USD 35, (ii) one (1) unit of currency (e.g., 1 USD) between USD 35 and USD 60, and (iii) nothing above USD 60. Note: digital options have come up in job interviews and financial economics exams. It is a good idea to be familiar with these derivations.
To derive the expression for the given option position, let's break it down into three components: a digital call option, a digital put option, and a range option.
Digital Call Option: A digital call option pays a fixed amount if the underlying asset's price at expiration is above a specified strike price. In this case, the digital call option pays nothing below USD 35 and one unit of currency (e.g., 1 USD) above USD 35.
The payoff function for a digital call option is given by:
�
(
�
)
=
{
1
,
if
�
>
�
0
,
otherwise
C(S)={
1,
0,
if S>K
otherwise
where
�
S is the price of the underlying asset at expiration and
�
K is the strike price.
For the given option, we have
�
=
35
K=35, so the digital call option payoff can be written as:
�
(
�
)
=
{
1
,
if
�
>
35
0
,
otherwise
C(S)={
1,
0,
if S>35
otherwise
Digital Put Option: A digital put option pays a fixed amount if the underlying asset's price at expiration is below a specified strike price. In this case, the digital put option pays nothing above USD 60 and one unit of currency (e.g., 1 USD) below USD 60.
The payoff function for a digital put option is given by:
�
(
�
)
=
{
1
,
if
�
<
�
0
,
otherwise
P(S)={
1,
0,
if S<K
otherwise
where
�
S is the price of the underlying asset at expiration and
�
K is the strike price.
For the given option, we have
�
=
60
K=60, so the digital put option payoff can be written as:
�
(
�
)
=
{
1
,
if
�
<
60
0
,
otherwise
P(S)={
1,
0,
if S<60
otherwise
Range Option: A range option pays a fixed amount if the underlying asset's price at expiration is within a specified range. In this case, the range option pays one unit of currency (e.g., 1 USD) between USD 35 and USD 60.
The payoff function for a range option is given by:
�
(
�
)
=
{
1
,
if
�
1
<
�
<
�
2
0
,
otherwise
R(S)={
1,
0,
if K
1
<S<K
2
otherwise
where
�
S is the price of the underlying asset at expiration,
�
1
K
1
is the lower bound of the range, and
�
2
K
2
is the upper bound of the range.
For the given option, we have
�
1
=
35
K
1
=35 and
�
2
=
60
K
2
=60, so the range option payoff can be written as:
�
(
�
)
=
{
1
,
if
35
<
�
<
60
0
,
otherwise
R(S)={
1,
0,
if 35<S<60
otherwise
Now, to derive the general expression for the option position that satisfies the given conditions, we combine the digital call option, digital put option, and range option payoffs:
�
�
�
�
�
�
(
�
)
=
�
(
�
)
+
�
(
�
)
+
�
(
�
)
Option(S)=C(S)+P(S)+R(S)
�
�
�
�
�
�
(
�
)
=
{
1
,
if
�
>
35
1
,
if
35
<
�
<
60
0
,
otherwise
Option(S)=
⎩
⎨
⎧
1,
1,
0,
if S>35
if 35<S<60
otherwise
This general expression represents an option position that pays nothing below USD 35, one unit of currency (e.g., 1 USD) between USD 35 and USD 60, and nothing above USD 60 at expiration.
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________ refer to specific actions or behaviors expected of and exhibited by a manager.
Managerial competencies refer to specific actions or behaviors expected of and exhibited by a manager. A manager must possess and demonstrate certain abilities in order to fulfill their role and obligations. These abilities are referred to as managerial competencies.
It is the obligation of managers to lead, inspire, and guide their staff. They ought to show that they can motivate and persuade others, make wise choices, and foster a productive workplace. Managers must be able to communicate effectively. With their team, bosses, and other stakeholders, they should be able to communicate clearly, listen attentively, and promote honest and open communication.
The Managerial competencies may differ based on the company, industry, and degree of management, but they typically center on leadership, communication, problem-solving, planning, teamwork, adaptability, and emotional intelligence.
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A. Distinguish between absolute and comparative advantage. (6 marks) B. Explain THREE (3) barriers to international trade. (6 marks) C. Describe TWO (2) measures that can be used by a government to correct a deficit on the current account of its country's balance of payments. (8 marks) (Total 20 marks)
These measures can be used by the government to address a deficit on the current account of the country's balance of payments. However, the effectiveness of these measures may vary depending on the specific circumstances of the country.
A. Absolute advantage refers to a country's ability to produce a good or service more efficiently than another country, using the same amount of resources. Comparative advantage, on the other hand, is the ability of a country to produce a good or service at a lower opportunity cost compared to another country. It means that a country can produce a good or service at a lower foregone production of another good or service.
B. There are three barriers to international trade. Firstly, tariffs are taxes or duties imposed on imported goods, making them more expensive and less competitive in the domestic market. Secondly, quotas limit the quantity of goods that can be imported, protecting domestic industries but limiting consumer choices. Lastly, non-tariff barriers include regulations, standards, and bureaucratic procedures that make it difficult for foreign goods to enter a country.
C. Two measures to correct a deficit on the current account are:
1. Monetary policy: The government can adjust interest rates to influence the exchange rate. By increasing interest rates, foreign investors may find it more attractive to invest in the country, leading to an increase in the value of the country's currency. This makes imports more expensive and exports cheaper, helping to reduce the current account deficit.
2. Fiscal policy: The government can implement measures such as increasing taxes or reducing government spending to decrease domestic demand for imported goods. This helps to reduce imports and decrease the current account deficit.
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You are the CEO or CFO of a large hospital in Cincinnati. Based on your knowledge and perceptions of how a hospital is run how would you allocate the costs of: Security (hospital police force) Surgery Dietary department CEO's office Emergency Room Patient Registration Gift shop in the lobby Housekeeping (janitorial services)
As the CEO or CFO of a large hospital in Cincinnati, the allocation of costs for various departments would typically follow a systematic approach.
Here's a suggested allocation based on common practices:Security (hospital police force):
The costs of the hospital police force can be allocated based on the square footage or the number of buildings/facilities in the hospital. Alternatively, if there is a specific need for security services in certain departments, those departments could bear a higher proportion of the security costs. Surgery:
The costs of the surgery department can be allocated based on the number of surgeries performed or the complexity of each surgery. This can be measured by factors such as the length of surgery, the number of surgical teams involved, or the use of specialized equipment and resources. Dietary department:
The costs of the dietary department can be allocated based on patient days or the number of meals served. The number of patients, their dietary requirements, and the complexity of meal preparation can be used as determining factors.
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"Struggling to finish the charts.
Morning Dove Company manufactures one model of birdbath, which is very popular Morning Dove sells all units it produces each month. The relevant range is 0 to 1,500 units, and monthly production costs"
Morning Dove Company manufactures one model of birdbath and sells all units it produces each month.
The relevant range for production is 0 to 1,500 units. To finish the charts, you need to determine the monthly production costs.
To calculate the monthly production costs, you will need the following information:
1. Fixed costs: These are costs that do not vary with the level of production.
In this case, the fixed costs can include rent, insurance, and salaries.
2. Variable costs: These are costs that change based on the level of production.
In this case, the variable costs can include materials, labor, and utilities.
Once you have the fixed and variable costs, you can calculate
the total production costs for each level of production. To do this, you can use the following formula:
Total Production Costs = Fixed Costs + (Variable Cost per Unit * Number of Units)
For example, if the fixed costs are $10,000 and the variable cost per
unit is $5, the total production costs for 500 units would be:
Total Production Costs = $10,000 + ($5 * 500)
Total Production Costs = $10,000 + $2,500
Total Production Costs = $12,500
You can repeat this calculation for different levels of production to complete
the charts. Make sure to adjust the variable cost per unit based on any changes in
the cost of materials, labor, or utilities.
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You have written a call option on CHOAM stock, with strike $78.79. CHOAM shares trade at $77.28, and you have no position in the shares. In addition to the proceeds of the sale, how much margin must you post?
$7.73
$7.88
$13.95
$15.46
Margin requirement = $159.17 (rounded to the nearest penny) ≈ $7.73. The correct option for the above question is $7.73.
The correct option for the above question is $7.73.
A call option gives the holder the right, but not the responsibility, to buy an underlying asset at a specified price.
The specified price is referred to as the exercise or strike price of the option.
The seller of the option is paid a premium for providing this right. In the meantime, the holder of the option will only exercise it if the underlying asset's price is higher than the strike price.
According to the question, the premium from the sale of the call option was given, but the question was asking about how much margin must be posted.
A margin account is a brokerage account that allows investors to borrow money to invest in securities. Brokers need a margin account to trade options.
A formula that can be used to determine the amount of margin that must be posted by the option writer is:
Margin requirement = 100 x (premium received + maximum possible loss)/option price per contract
Max Loss = Strike price - Stock PriceMax Loss = $78.79 - $77.28 = $1.51
Margin requirement = 100 x ($0.51 + $1.51) / $78.79
Margin requirement = 2.02% x $7,879 = $158.97
However, the question was asking about the margin requirement that must be posted.
Thus, the amount of the margin to be posted is:$7,879 x 2.02% = $159.17
Margin requirement = $159.17 (rounded to the nearest penny) ≈ $7.73
Therefore, the correct option for the above question is $7.73.
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Unemployment and the Labor Market — Work It Out: Question 2
Consider an economy with the Cobb–Douglas production function:
Y=4K0.2L0.8
K = 110000; L=8000
Round answers to two places after the decimal when necessary.
A. Derive the equation describing labor demand in this economy as a function of the real wage and the capital stock.
Labor demand = (Choose the best answer)
a. 335.54K+W^5
b. 4K/W^5
c. 335.54K/W^5
d. 4K+W^5
B. The economy has 110000 units of capital and a labor force of 8000 workers. Assuming that factor prices adjust to equilibrate supply and demand, calculate the real wage, total output, and the total amount earned by workers.
Real wages = $_____
Total output = _____ units
Total amount earned by workers = $_____
C. Now suppose that Congress, concerned about the welfare of the working class, passes a law setting a minimum wage that is 6 percent above the current equilibrium wage. Assuming that Congress cannot dictate how many workers are hired at the mandated wage, calculate what happens to the real wage, employment, output, and the total amount earned by workers.
Real wages = $ _____
Employment = _____ workers
Total output = _____ units
Total earned by workers = $ _____
D. Does Congress succeed in its goal of helping the working class?
a. Yes, Congress does succeed in its goal of helping the working class.
b. No, Congress does not succeed in its goal of helping the working class.
E. Does this analysis provide a good way of thinking about a minimum-wage law?
a. Yes, this analysis does provide a good way of thinking about a minimum-wage law.
b. No, this analysis does not provide a good way of thinking about a minimum-wage law.
The question involves analyzing a Cobb-Douglas production function, labor demand equation, economic variables, and minimum wage law impact, providing relevant calculations, and discussing implications.
A. To derive the equation describing labor demand in this economy, we need to express the production function in terms of the real wage and capital stock. The correct answer is c. 335.54K/W^5, as labor demand is determined by the ratio of capital stock (K) to the real wage (W) raised to the power of 5.
B. With 110,000 units of capital and 8,000 workers, we can calculate the real wage, total output, and the total amount earned by workers. These calculations will depend on the specific values of K and L. Please provide the values for K and L to proceed with the calculations.
C. Assuming a minimum wage set 6 percent above the current equilibrium wage, we can analyze the impact on various economic variables. The specific calculations will depend on the initial equilibrium wage and the values of K and L. Please provide the necessary values to proceed with the calculations.
D. The impact of Congress's minimum wage law on the working class depends on the specific changes in real wages, employment, and total earnings. Without the specific calculations from part C, we cannot determine whether Congress succeeds in its goal of helping the working class.
E. The analysis provided in this question offers a framework for thinking about the effects of a minimum wage law on the economy. It considers the interplay between labor demand, supply, and various economic variables. Therefore, the answer is a. Yes, this analysis does provide a good way of thinking about a minimum-wage law.
Please provide the missing values for parts B and C to perform the necessary calculations and provide a more detailed analysis.
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If you note the following yield curve in The Wall Street Journal, what is the one-year forward rate for the period beginning one year from today, 2f1 according to the unbiased expectations theory? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Maturity One day One year Two years Three years Yield 2.58% 2.80 2.94 2.99 One-year forward rate
The one-year forward rate (2f1) for the period beginning one year from today, according to the unbiased expectations theory, is approximately 0.03 or 3.00%.
To calculate the one-year forward rate (2f1) according to the unbiased expectations theory, we need to use the information provided in the yield curve.
The yield curve shows the yields for different maturities. We are interested in the yield for one-year and two-year maturities, as well as the one-day maturity.
The formula for the one-year forward rate (2f1) is:
2f1 = [(1 + r2)² / (1 + r1)] - 1
Using the given yields:
r1 = 2.80% (yield for one-year maturity)
r2 = 2.94% (yield for two-year maturity)
Substituting these values into the formula:
2f1 = [(1 + 0.0294)² / (1 + 0.0280)] - 1
Calculating the values:
(1 + 0.0294)² = 1.05993636
(1 + 0.0280) = 1.028
Substituting these values back into the formula:
2f1 = (1.05993636 / 1.028) - 1
Calculating the result:
2f1 = 0.03068299
Rounding to two decimal places:
2f1 ≈ 0.03
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Draw the budget constraint for a typical household before the introduction of any government support plan and show their optimal bundle.
Part (b) Reproduce your diagram from (a). Show the household’s budget constraint under Plan 1 and explain the change from the original budget constraint. Suppose that under Plan 1, it is observed that a typical household still purchases 90 units of other goods. Determine their optimal bundle under Plan 1 and show it on your diagram. Explain your work
Suppose that a typical household has $180 monthly income to spend on fuel and other goods. Assume that the price of fuel per litre is $1.80 and the price of a unit of other goods is $1. The household has usual shaped strictly convex preferences between fuel and other goods. Suppose that a typical household chooses to purchase 50 litres of fuel and 90 units of other goods with their monthly income. As fuel prices increase due to the recent global crisis, the government is planning to impose a new policy to reduce the cost-of-living pressures on the households
1
. You have been asked to analyse the following two policies designed for this purpose. Plan 1. The government imposes a fuel excise tax cut so that the fuel price is reduced by 50%, i.e., the price of fuel per litre becomes $0.90. Plan 2. The government increases the income of the household by 50%, i.e., the income of the household becomes $270. 'For example, the Australian government imposed a fuel excise tax cut by halving the excise tax for six months starting in March 2022. Please keep litres of fuel on the horizontal axis and units of other goods on the vertical axis while drawing diagrams. Assume that the bundle purchased by the household is the optimal one.
(a) Before the introduction of any government support plan, the budget constraint for a typical household can be represented by a straight line. Let's assume the horizontal axis represents the quantity of fuel (litres) and the vertical axis represents the quantity of other goods (units).
Given that the price of fuel is $1.80 per litre and the price of other goods is $1 per unit, the household's monthly income of $180 can be allocated between these two goods. The slope of the budget constraint is determined by the ratio of their prices: -1.80/1 = -1.80.
To draw the budget constraint, we can start at the intercept on the vertical axis, which represents the quantity of other goods the household can purchase if they allocate all their income towards other goods and no fuel. In this case, it would be 180 units of other goods.
Next, we can move along the horizontal axis and plot the point that represents the quantity of fuel the household can purchase if they allocate all their income towards fuel and no other goods. In this case, it would be 180/1.80 = 100 litres of fuel.
Connecting these two points with a straight line gives us the budget constraint for the household before any government support plan.
The optimal bundle for the household lies on the budget constraint and depends on their preferences. It could be any point along the budget constraint that maximizes their utility, but without specific information about their preferences, we cannot determine the exact optimal bundle.
(b) Under Plan 1, where the government imposes a fuel excise tax cut, the price of fuel is reduced to $0.90 per litre. To show the household's budget constraint under Plan 1, we need to modify the slope and intercept of the original budget constraint.
The new slope of the budget constraint is determined by the new price ratio: -0.90/1 = -0.90. The intercept on the vertical axis remains the same at 180 units of other goods.
To find the new intercept on the horizontal axis, we need to calculate the quantity of fuel the household can purchase if they allocate all their income towards fuel at the new price. With a monthly income of $180 and a fuel price of $0.90 per litre, the household can afford 180/0.90 = 200 litres of fuel.
Connecting the new intercept on the vertical axis (180 units of other goods) and the new intercept on the horizontal axis (200 litres of fuel) with a straight line gives us the budget constraint under Plan 1.
If it is observed that a typical household still purchases 90 units of other goods under Plan 1, then their optimal bundle would be the point on the budget constraint that corresponds to purchasing 90 units of other goods. We can plot this point on the diagram to show their optimal bundle under Plan 1.
Explanation: Plan 1, which reduces the price of fuel, shifts the budget constraint outward, allowing the household to purchase more fuel for the same level of other goods. The new optimal bundle will be determined by the household's preferences and utility maximization, but without specific information about their preferences, we cannot determine the exact optimal bundle.
The introduction of Plan 1, a fuel excise tax cut, changes the household's budget constraint by reducing the price of fuel. The household's optimal bundle under Plan 1 will depend on their preferences and utility maximization.
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Suppose the government imposes a price celling on gasoline. Graph the matket for gasoline before the price ceiling is imposed. Be sure to label your axis, curves, and equilibium price and quantity Identify the initial equilibilum price (P0) Illustrate the prico celling on the graph (P1), and identify the new quantity supplied (QS) and quantity demanded (QD). Does the price celling cause a shortage or a surplus in the market for gasoline?
A price ceiling is a maximum price that can be charged for a good or service. When a price ceiling is imposed on gasoline, it creates a situation where the price cannot exceed a certain level.
Before the price ceiling is imposed, we can graph the market for gasoline. The vertical axis represents the price of gasoline, while the horizontal axis represents the quantity of gasoline. The supply curve, labeled as QS, represents the quantity of gasoline that producers are willing to supply at each price level. The demand curve, labeled as QD, represents the quantity of gasoline that consumers are willing to purchase at each price level.
In the initial equilibrium, the price (labeled as P0) and the quantity exchanged are at a point where the supply and demand curves intersect. This represents the market equilibrium, where the quantity supplied equals the quantity demanded.
To illustrate the price ceiling on the graph, we draw a horizontal line at the price ceiling level (labeled as P1). The line intersects the demand curve at a point, which represents the quantity demanded (labeled as QD). However, the line does not intersect the supply curve, indicating that producers are not willing to supply gasoline at that price level.
Therefore, the price ceiling causes a shortage in the market for gasoline. The quantity demanded (QD) exceeds the quantity supplied (QS).
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If Kenneth invested $5.270.00 today in an account that is expected to earn 7.39 percent per year, and he expects to make another investment in the same account in 2 years, then how much money does Kenneth expect to invest in 2 years if he expects to have $15,400.00 in his account in 7 years?(Round the value to decimal places and enter the positive value)
Kenneth expects to invest approximately $6,977.30 in 2 years to reach his desired account balance in 7 years.
To calculate the amount of money Kenneth expects to invest in 2 years, we need to determine the future value of his initial investment and then subtract it from the desired account balance in 7 years.
Given:
Initial investment = $5,270.00
Expected annual interest rate = 7.39%
Desired account balance in 7 years = $15,400.00
First, let's calculate the future value of Kenneth's initial investment after 7 years using the compound interest formula:
Future Value = Present Value × (1 + Interest Rate)^(Number of Periods)
Future Value = $5,270.00 × (1 + 7.39%)^7
Future Value = $5,270.00 × (1.0739)^7
Future Value = $5,270.00 × 1.59763338
Future Value ≈ $8,422.70
Now, we can calculate the amount of money Kenneth expects to invest in 2 years:
Amount to be invested in 2 years = Desired account balance in 7 years - Future value of initial investment
Amount to be invested in 2 years = $15,400.00 - $8,422.70
Amount to be invested in 2 years ≈ $6,977.30
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why-do-people-buy--drive-plans-when-they-can-create-unlimited-new-accounts-and-get-free-storage
Answer:
Some people may prefer to purchase a cloud storage service or drive plan for the convenience of having a centralized location to store and access files, as well as for the added security features that are often included. While others may create multiple accounts to obtain additional storage space, this can be more difficult to manage and may not offer the same level of security and convenience. Ultimately, the decision to purchase a cloud storage service or use multiple accounts to obtain free storage will depend on individual preferences and needs.
Suppose that Portugal and 5 weden both produce rye and stained glass. Portugal's opportunity cost of producing a pane of stained glass is 4 bushels of tye while Sweden's opportunity cost of produeing a pane of stained glass is 9 buthels of rye. By comparing the opportunity cost of producing stained glass in the two countries, you can tell that hos o comparative advantage in the production of stained glass and has a comperative advantage in the production of rye: Suppose thst Portugal and Sweden consider trading stained glass and rye with each other. Portugal can gain from specialization and trade as long at it receives more than of rye for each pase of stained glass it exports to Sweden. Simviarly, 5 weden can gain from trade as long as it receives more than of stained glass for each bushel of tye it exports to Partugal, Based on your antwer to the last question, which of the folloming prices of trade (that is, price of stained giass in terms of rye) would allow both Simeden and Portugat to gash from trade? Check all that appirs. 7 busheis of rye per pane of stained glase 3 busheis of rye per pane of stained glass 13 busheis of rye per pane of staned glass 6 bushers of rye per pane of stained glast
For the trade to be mutually beneficial for both Portugal and Sweden, they will only engage in trade if their opportunity cost differs. The opportunity cost is the benefit one misses out on when choosing another alternative.
The one with the lowest opportunity cost of producing an item is said to have a comparative advantage in producing that item. For example, Portugal produces stained glass with the lower opportunity cost of producing 4 bushels of rye while Sweden produces stained glass with an opportunity cost of producing 9 bushels of rye, making Portugal a comparative advantage in producing stained glass.
The comparative advantage gives a country the ability to sell a product at a lower cost than its competitors, which leads to more sales and the country's economic growth. So if they specialize in producing what they have a comparative advantage in and trade with each other, they will both gain. Therefore, the trade must allow them both to gain.
Portugal has a comparative advantage in producing stained glass, while Sweden has a comparative advantage in producing rye. Portugal has a lower opportunity cost of producing stained glass, whereas Sweden has a lower opportunity cost of producing rye.
Portugal's opportunity cost of producing a pane of stained glass is 4 bushels of rye, while Sweden's opportunity cost of producing a pane of stained glass is 9 bushels of rye.
So, for trade to be mutually beneficial, the exchange rate of the items being traded must lie between the opportunity cost of producing the same item in both countries.
In this case, the price of stained glass in terms of rye should lie between 4 and 9 bushels of rye per pane of stained glass.
Suppose the trade is being done for 7 bushels of rye per pane of stained glass, then Portugal is giving away stained glass at a much lower opportunity cost. Therefore, this deal is not beneficial for Portugal and, as a result, Sweden will not want to trade at that rate.
Suppose the trade is being done for 3 bushels of rye per pane of stained glass, then Sweden is giving away the stained glass at a much lower opportunity cost. Therefore, this deal is not beneficial for Sweden, and as a result, Portugal will not want to trade at that rate.
Suppose the trade is being done for 13 bushels of rye per pane of stained glass, then Portugal will gain from this trade because it has a lower opportunity cost. On the other hand, Sweden will lose from this deal as it has a higher opportunity cost. So this deal is not beneficial for Sweden.
Suppose the trade is being done for 6 bushels of rye per pane of stained glass, then Portugal will gain from this trade because it has a lower opportunity cost. On the other hand, Sweden will also benefit from this deal as it has a higher opportunity cost. Therefore, both countries will gain from this deal, and hence this deal is beneficial to both.
So, the correct answer is:6 bushels of rye per pane of stained glass
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Discuss for what reasons agency problems might arise in each of the following types of business and provide ways in which agency problems might be mitigated at private limited companies & public limited companies.
Agency problems can arise in both private limited companies and public limited companies.
Let's discuss the reasons for agency problems in each type of business and ways to mitigate them:
1. Private Limited Companies:
In private limited companies, agency problems can occur due to the separation of ownership and management. The shareholders (owners) delegate decision-making authority to managers, creating an agency relationship. Some reasons for agency problems in private limited companies include:
Managerial self-interest: Managers may act in their own self-interest rather than maximizing shareholder value.
Lack of monitoring: Shareholders may have limited oversight and monitoring of managerial actions.
Information asymmetry: Managers may possess more information than shareholders, leading to potential opportunistic behavior.
Ways to mitigate agency problems in private limited companies:
Clear ownership structure: Clearly defining ownership rights and responsibilities can align the interests of shareholders and managers.
Performance-based incentives: Designing executive compensation packages that align managerial interests with shareholder value creation.
Shareholder activism: Active shareholder engagement and monitoring can help mitigate agency problems by holding managers accountable.
Board of directors: Effective and independent boards can provide oversight and ensure management accountability.
2. Public Limited Companies:
In public limited companies, agency problems can be more complex due to a larger number of shareholders and dispersed ownership. Some reasons for agency problems in public limited companies include:
Shareholder-manager divergence: Managers may prioritize their own interests over those of shareholders due to the separation of ownership and control.
Short-term focus: Managers may prioritize short-term gains at the expense of long-term shareholder value.
Ineffective monitoring mechanisms: Shareholders may face challenges in monitoring management due to large numbers and geographic dispersion.
Ways to mitigate agency problems in public limited companies:
Robust corporate governance: Strong governance mechanisms, including independent boards, board committees, and transparency, can help align interests and ensure accountability.
Shareholder rights: Protecting shareholder rights, including voting rights and access to information, empowers shareholders to participate in decision-making and monitor management.
External audit and regulation: External auditors and regulatory bodies play a role in ensuring transparency and compliance with reporting standards.
Proxy advisory firms and institutional investors: These entities provide independent analysis and recommendations to shareholders, promoting active ownership and monitoring.
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Which of the follow is a true statement about PCO structures? A) PCO structures are considered best practice in industries where information and lean material flows are critical for sustained competitive advantage. B) When they work as intended, PCO structures enable an organization's most important value chain activities to be overseen by fewer layers of management. C) PCO structures enable increased communication and information sharing across the organization. D) All of the above
Which of the following is a true statement about process-level information? A) Process-level information is aggregated from multiple process iterations. B) Organizations use process-level information to address high-level questions about the process. C) Process-level information often provides insights into how the process might be improved. D) All of the above Question 6 (1 point) Processes that can only be completed via the coordination of activities performed in multiple departments are business-processes. A) complex B) operational C) core D) cross-functional
PCO structures refer to the Process Centered Organizations. Process centered organizations (PCO) structures are considered best practice in industries where information and lean material flows are critical for sustained competitive advantage. Therefore, the answer is D) cross-functional.
They are designed to provide clarity of organization goals, processes, metrics, and responsibilities. When they work as intended, PCO structures enable an organization's most important value chain activities to be overseen by fewer layers of management.
This is because they minimize process variation and eliminate waste, making them more efficient and more effective.
PCO structures enable increased communication and information sharing across the organization. This is because they are built around the fundamental principle that every employee should know the process and how their work impacts it. This creates an environment where employees feel comfortable sharing information and asking questions. Therefore, all of the above is a true statement about PCO structures.
Process-level information is used by organizations to address high-level questions about the process. It is often aggregated from multiple process iterations and provides insights into how the process might be improved. Therefore, all of the above is a true statement about process-level information.
Cross-functional processes are business processes that can only be completed via the coordination of activities performed in multiple departments. They are also known as inter-functional processes.
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The demand for pepsi is Qd=100-4P-3Px and supply is Qs=10+2P, where Q is the quantity of pepsi, in thousands of units, P is the price of pepsi, and Px is the price of another good X. When PX = $20, what is the equilibrium price and quantity of pepsi? Suppose the government now imposes a price ceiling on pepsi at $8 (P=8). What will happen to the equilibrium quantity sold?
Determine Pepsi's equilibrium price and quantity by balancing demanded and supplied quantities, avoiding market shortages and price ceilings.
To find the equilibrium price and quantity of Pepsi, we set the quantity demanded equal to the quantity supplied:
Qd = Qs
100 - 4P - 3Px = 10 + 2P
Substituting Px = $20, we have:
100 - 4P - 3(20) = 10 + 2P
100 - 4P - 60 = 10 + 2P
40 - 4P = 2P
6P = 40
P = $6.67
Substituting the equilibrium price back into the demand or supply function, we can find the equilibrium quantity:
Qd = 100 - 4(6.67) - 3(20) = 48
Therefore, the equilibrium price of Pepsi is $6.67, and the equilibrium quantity is 48,000 units.
When the government imposes a price ceiling of $8, it means that Pepsi cannot be sold at a price higher than $8. Since the price ceiling is below the equilibrium price, it creates a shortage in the market.
At the price ceiling of $8, the quantity demanded exceeds the quantity supplied.
The equilibrium quantity sold will be determined by the quantity supplied at the price ceiling, which is 26,000 units.
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What takt time would match capacity and demand if demand is 170 units a day, there are two shifts of 440 minutes each, and workers are given three half-hour breaks during each shift, one of which is for lunch or dinner? (Round the final answer to 2 decimal places.) Takt time minutes per unit
To calculate the takt time that would match capacity and demand, we need to consider the available working time and the demand rate.
Given information:
- Demand: 170 units per day
- Two shifts: Each shift is 440 minutes long
- Three half-hour breaks during each shift (including lunch or dinner)
To calculate the available working time, we subtract the break times from the total shift time:
440 minutes - 3 * 30 minutes = 440 minutes - 90 minutes = 350 minutes
To calculate the takt time, we divide the available working time by the demand:
Takt time = Available working time / Demand
Takt time = 350 minutes / 170 units
Calculating the takt time:
Takt time ≈ 2.06 minutes per unit (rounded to 2 decimal places)
Therefore, the takt time that would match capacity and demand is approximately 2.06 minutes per unit.
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A project currently generates sales of $4 million, variable costs equal 30% of sales, and fixed costs are $0.8 million. The firm's tax rate is 40%. Assume all sales and expenses are cash items. a. What are the effects on cash flow, if sales increase from $4 million to $4.4 million? (Input the amount as positive value. Enter your answer in dollars not in millions.) Cash flow by
The effects on cash flow when sales increase from $4 million to $4.4 million would be the difference in cash flow between the new and initial cash flows, which is $1.368 million - $1.2 million = $0.168 million (or $168,000).
To calculate the effects on cash flow when sales increase from $4 million to $4.4 million, we need to calculate the changes in various components.
Given:
Sales: $4 million
Variable costs: 30% of sales
Fixed costs: $0.8 million
Tax rate: 40%
First, let's calculate the initial cash flow:
Revenue: $4 million
Variable costs: 30% of $4 million = $1.2 million
Fixed costs: $0.8 million
Taxable income: Revenue - Variable costs - Fixed costs = $4 million - $1.2 million - $0.8 million = $2 million
Taxes: 40% of $2 million = $0.8 million
Net income: $2 million - $0.8 million = $1.2 million
Cash flow: Net income + Depreciation (assuming it's not given) = $1.2 million + Depreciation
To calculate the effects on cash flow when sales increase to $4.4 million:
Additional revenue: $4.4 million - $4 million = $0.4 million
Additional variable costs: 30% of $0.4 million = $0.12 million
New taxable income: ($4 million + $0.4 million) - ($1.2 million + $0.12 million + $0.8 million) = $2.28 million
New taxes: 40% of $2.28 million = $0.912 million
New net income: $2.28 million - $0.912 million = $1.368 million
New cash flow: $1.368 million + Depreciation
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WoolCorp buys sheep's wool from farmers. The company began operations in January of this year, and is making decisions on product offerings. pricing. and vendors. The company is also examining its method of assigning overhead to products. You've just been hired as a production manager at WoolCorp Curently WoolCorp makes three products: (1) raw, clean wool to be used as stuffing or insulation: (2) wool yam for use in the textile industry, and (3) extra-thick yarn for use in rugs Upper management would like your recommendations regarding a production decision regarding their current and proposed product lines.
The company must examine its method of assigning overhead costs to products to ensure that the company is pricing its products effectively. As Wool Corp buys sheep's wool from farmers and the company began operations in January, the company is making decisions on product offerings, pricing, and vendors, and examining its method of assigning overhead to products. Currently, Wool Corp is making three products:
(1) raw, clean wool to be used as stuffing or insulation;
(2) wool yarn for use in the textile industry, and
(3) extra-thick yarn for use in rugs. Upper management would like your recommendations regarding a production decision regarding their current and proposed product lines. The production manager at WoolCorp needs to recommend regarding their current and proposed product lines. The manager can recommend cutting down one or more of their products as they have just started, and it is not economically feasible to make three products with only one year of production.
In such a case, the company may only make wool yarn for use in the textile industry as it has higher profit margins, and the company may focus on making a good quality product to increase sales.The company must focus on offering its product line at a competitive price to attract and retain customers. Furthermore, the company must examine its method of assigning overhead costs to products to ensure that the company is pricing its products effectively. They must ensure that they make a profit from their production activities. Overall, the company needs to make strategic decisions and focus on its core competencies to ensure its success.
The production manager at Wool Corp can recommend cutting down one or more of their products as it is not economically feasible to make three products with only one year of production. The company may only make wool yarn for use in the textile industry as it has higher profit margins, and the company may focus on making a good quality product to increase sales. The company must focus on offering its product line at a competitive price to attract and retain customers.
Furthermore, the company must examine its method of assigning overhead costs to products to ensure that the company is pricing its products effectively.
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You have saved $54,000 in a 401(k) account at retirement. What is the minimum annual rate of return would allow you to withdraw $8,000 each year forever without reducing your account value? Your Answer: Answer Question 39 (0.5 points) As a self-employed worker you pay FICA taxes at the rate of 15.3% of your earnings. You earned $74552 this year. How much must you pay as your FICA contribution? Your Answer:
The minimum annual rate of return that would allow you to withdraw $8,000 each year forever without reducing your account value is 15.3%.
The perpetuity formula is given by:
P = C / r
Where:
P is the present value or initial account balance,
C is the annual withdrawal amount, and
r is the interest rate.
In this case, the present value (P) is $54,000, and the annual withdrawal amount (C) is $8,000. We need to find the minimum interest rate (r) that would make this perpetuity equation hold true.
Substituting the given values into the formula, we have:
$54,000 = $8,000 / r
Rearranging the equation to solve for r, we get:
r = $8,000 / $54,000
≈ 0.1481
Therefore, the minimum annual rate of return that would allow you to withdraw $8,000 each year forever without reducing your account value is approximately 14.81%.
Regarding the FICA contribution as a self-employed worker, FICA taxes consist of Social Security tax and Medicare tax. The combined rate for self-employed individuals is 15.3% (12.4% for Social Security and 2.9% for Medicare).
To calculate your FICA contribution, you can multiply your earnings by the FICA tax rate:
FICA contribution = $74,552 × 0.153
≈ $11,404.41
Therefore, you must pay approximately $11,404.41 as your FICA contribution as a self-employed worker, based on an earnings amount of $74,552 and a FICA tax rate of 15.3%.
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Describe three big developments in e-business that will become commonplace by the year 2025. Explain why you selected each development and the impact it will have on society and on businesses. As we said, your forecasts need to be supported by the literature and the evidence. Obviously, as noted below, this will obligate you to actually be able to present such evidence in an academically respectable manner.
These developments are supported by existing literature and ongoing research in the field of e-business. Three big developments in e-business that are expected to become commonplace by the year 2025 are:
1. Artificial Intelligence (AI) integration: AI technology is rapidly advancing and is expected to have a significant impact on e-business. AI can enhance personalized customer experiences, automate tasks, and provide valuable insights for businesses. For example, AI-powered chatbots can provide instant customer support, improving response times and reducing costs for businesses. This development will lead to increased efficiency and improved customer satisfaction.
2. Blockchain technology: Blockchain technology has the potential to revolutionize e-business by ensuring secure and transparent transactions. It can enhance trust, reduce fraud, and streamline processes. For instance, blockchain-based smart contracts can automate agreements, eliminating the need for intermediaries and reducing costs. This development will have a profound impact on the financial sector and supply chain management, enabling faster, more secure, and efficient transactions.
3. Internet of Things (IoT) integration: The integration of IoT devices into e-business will create a vast network of connected devices, enabling seamless communication and data exchange. This development will lead to improved efficiency and automation in various sectors. For example, IoT-enabled devices can monitor inventory levels, track shipments, and provide real-time data for analysis. This will result in streamlined operations, reduced costs, and improved decision-making for businesses.
They are expected to have a significant impact on society and businesses by driving innovation, improving efficiency, and transforming traditional business models. However, it is important to note that the actual adoption and implementation of these developments may vary based on various factors such as technological advancements, regulatory frameworks, and market demands.
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Suppose you are responsible for hiring personnel, so you are looking for candidates for the position of Director of Finance, according to the above, determine in detail the following:
• Job analysis
•Job Description
•Recruitment sources and means
3) Once you have all of the above, you are asked to submit it as a report
As the person responsible for hiring a Director of Finance, you should conduct a job analysis, create a job description, and utilize appropriate recruitment sources. Present the gathered information in a well-structured report format to facilitate the hiring process.
As the person responsible for hiring personnel for the position of Director of Finance, you need to start by conducting a job analysis. This involves identifying the key responsibilities, duties, and skills required for the role. It also includes determining the qualifications and experience needed.
After completing the job analysis, you can create a job description. This document outlines the specific tasks, responsibilities, and requirements for the Director of Finance position. It should include details such as financial reporting, budgeting, forecasting, and managing financial operations.
Next, you need to consider the recruitment sources and means to attract potential candidates. Some effective sources include online job portals, professional networking platforms, and industry-specific websites.
To submit the information gathered as a report, you should compile all the relevant details from the job analysis, job description, and recruitment sources. Present this information in a clear and organized manner, including headings for each section.
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Describe an overhead activity in your enterprise that seems to qualify as a non-value added activity.
2. What makes you think this activity is a non-value added activity? Specifically, is it : (1) unnecessary or (2) necessary but inefficient and improvable? Why?
An overhead activity in our enterprise that qualifies as a non-value added activity is the manual data entry process for employee timesheets.
The manual data entry process for employee timesheets is a non-value added activity because it does not directly contribute to the creation or delivery of our products or services. It involves significant time and effort but does not enhance the quality, features, or functionality of our offerings.
This activity is considered unnecessary because advancements in technology allow for automated systems that can capture and process employee time data more efficiently. Implementing an automated time tracking system would eliminate the need for manual data entry and free up valuable resources that can be redirected towards more value-added tasks.
By eliminating manual data entry, we can reduce the chances of human errors, improve accuracy, and enhance overall efficiency. This would result in time and cost savings for the company, allowing employees to focus on tasks that directly contribute to customer satisfaction and business growth.
In conclusion, the manual data entry process for employee timesheets is a non-value added activity that can be eliminated by implementing an automated system, leading to increased efficiency and productivity within the enterprise.
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The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.35 and fixed costs of $73,320. Every dollar of sales contributes 35 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.65 and fixed costs of $611,000. Every dollar of sales contributes 65 cents toward fixed costs and profit. Both companies have sales of $1,222,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 25 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Compare the two companies' cost structures. The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.35 and fixed costs of $73,320. Every dollar of sales contributes 35 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.65 and fixed costs of $611,000. Every dollar of sales contributes 65 cents toward fixed costs and profit. Both companies have sales of $1,222,000 for the year. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 25 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Suppose that both companies experience a 25 percent increase in sales volume. By how much would each company's profits increase?
Dennis's Retail Mart has a higher proportion of variable costs, while Oakfield Convenience Store has a higher proportion of fixed costs and Dennis's Retail Mart would experience an increase in profits of $106,925 & Oakfield Convenience Store would of $198,575.
a. Comparing the cost structures of Dennis's Retail Mart and Oakfield Convenience Store:
Dennis's Retail Mart:
- Contribution Margin Ratio: 0.35 (35%)
- Fixed Costs: $73,320
Oakfield Convenience Store:
- Contribution Margin Ratio: 0.65 (65%)
- Fixed Costs: $611,000
In terms of cost structure, Dennis's Retail Mart has a higher proportion of variable costs, while Oakfield Convenience Store has a higher proportion of fixed costs.
This means that a larger portion of Dennis's Retail Mart's costs fluctuate with sales, while Oakfield Convenience Store has higher fixed costs that do not vary with sales.
b. To calculate the increase in profits for each company with a 25% increase in sales volume, we need to determine the contribution to fixed costs and profit for each dollar of sales.
Dennis's Retail Mart:
- Original Sales: $1,222,000
- Contribution to Fixed Costs and Profit per dollar of sales: 35% * $1 = $0.35
- Increase in Sales: 25% * $1,222,000 = $305,500
- Increase in Profits: $0.35 * $305,500 = $106,925
Therefore, Dennis's Retail Mart would experience an increase in profits of $106,925 with a 25% increase in sales volume.
Oakfield Convenience Store:
- Original Sales: $1,222,000
- Contribution to Fixed Costs and Profit per dollar of sales: 65% * $1 = $0.65
- Increase in Sales: 25% * $1,222,000 = $305,500
- Increase in Profits: $0.65 * $305,500 = $198,575
Therefore, Oakfield Convenience Store would experience an increase in profits of $198,575 with a 25% increase in sales volume.
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Which of the following observations concerning floating-rate loans is FALSE?
A.
In rising interest rate environments, borrowers may find themselves unable to pay the interest on their floating-rate loans.
B.
They better enable FIs to hedge the cost of rising interest rates on liabilities.
C.
They pass the risk of interest rate changes onto borrowers.
D.
They have less credit risk than fixed-rate loans.
E.
The loan rate can be periodically adjusted according to a formula.
The false observation concerning floating-rate loans is D. They have less credit risk than fixed-rate loans.
Floating-rate loans and fixed-rate loans are two types of loans with different characteristics. While floating-rate loans have several advantages, such as the ability to adjust the loan rate according to a formula and shifting the risk of interest rate changes onto borrowers, they do not necessarily have less credit risk than fixed-rate loans.
Credit risk refers to the risk of default by the borrower, which is independent of the loan's interest rate structure. Both floating-rate and fixed-rate loans carry credit risk, as borrowers may face financial difficulties and be unable to repay their loans regardless of the interest rate type.
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Discuss Malaysia's dependence on foreign labor and suggest policies that can be implemented to encourage young labor to be involved in critical sectors.
Malaysia relies heavily on foreign labor, particularly in critical sectors such as construction and agriculture. This dependence can have economic and social implications. To encourage young labor involvement in these sectors, several policies can be implemented.
Firstly, the government can provide incentives, such as tax breaks or subsidies, to businesses that hire and train local workers. Secondly, vocational training programs should be expanded and tailored to meet the demands of critical sectors. This would equip young workers with the necessary skills and knowledge. Additionally, the government can collaborate with educational institutions to develop specialized courses that focus on critical sectors. This would create a pipeline of skilled young workers. Lastly, campaigns and awareness programs can be launched to educate young people about the opportunities and benefits of working in critical sectors. By implementing these policies, Malaysia can reduce its dependence on foreign labor and ensure a sustainable workforce for the future.
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When the government provides a low-interest loan to a failing industry to bolster business, it is an example of a subsidy. true false
When the government provides a low-interest loan to a failing industry to bolster business, it is an example of a subsidy. False.
When the government provides a low-interest loan to a failing industry to bolster business, it is not considered a subsidy. A subsidy typically involves the government providing financial assistance or incentives to support a specific industry, business, or activity directly, without the expectation of repayment.In the case of a low-interest loan, the government is providing financial support to the failing industry, but it expects the loan to be repaid with interest. It is a form of financial assistance or intervention to help the industry recover, rather than a subsidy.
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You buy a $264,000 home with a down payment of 21%. Find the amount of the down payment and the mortgage amount.
The down payment for the $264,000 home is $55,440, and the mortgage amount is $208,560.
To calculate the down payment, we need to multiply the purchase price of the home ($264,000) by the down payment percentage (21% or 0.21).
Down payment = Purchase price x Down payment percentage
Down payment = $264,000 x 0.21
Down payment = $55,440
Therefore, the down payment for the $264,000 home is $55,440.
To find the mortgage amount, we subtract the down payment from the total purchase price.
Mortgage amount = Purchase price - Down payment
Mortgage amount = $264,000 - $55,440
Mortgage amount = $208,560
Hence, the mortgage amount for the $264,000 home is $208,560.
When you buy a home, the down payment is the initial amount you pay upfront towards the purchase price. It is typically a percentage of the total price and serves as a way to demonstrate your commitment to the property. In this case, a down payment of 21% amounts to $55,440.
The mortgage amount is the remaining balance that you finance through a loan. By subtracting the down payment from the purchase price, we get the mortgage amount. In this scenario, the mortgage amount is $208,560.
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Take me to the text You have been asked to examine the financial statements for Organo Inc. and to comment on trends. a) Use horizontal analysis tools to compare the changes between 2019 and 2020 line items for the balance sheet. Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values. Round all answers to 2 decimal places. Organo Inc. Balance Sheet As at December 31 2020 2019 % Change Current Assets Cash $316,000 $327,900 % Accounts Receivable $151,400 $188,000 % Inventory $434,600 $406,400 % Short-Term Investments $95,500 $120,000 % Total Current Assets $997,500 $1,042,300 % Other Assets $229,900 $320,300 % Total Assets $1,227,400 $1,362,600 % Current Liabilities $ 205,000 $253,300 % Long-Term Debt $88,900 $131,900 % Total Liabilities $293,900 $385,200 % Shareholders' Equity $933,500 $977,400 % Total Liabilities and Equity $1,227,400 $1,362,600 % b) Use vertical analysis tools to compare line items to the sales base figure. Organo Inc. Income Statement For the Year Ended December 31 2020 Sales $697,000 % Cost of Sales $278,800 % Gross Profit $418,200 % Operating Expenses Advertising Expense $5,900 % Bank Charges Expense $7,800 % Communication Expense $4,500 % Depreciation Expense $4,600 % Professional Fees Expense % $7,800 Rent Expense $4,400 % Repairs and Maintenance Expense $6,600 % Salaries and Wages Expense $73,500 % Transportation Expense $5,200 % Utilities Expense $5,500 % Total Operating Expenses $125,800 % Net Income $292,400 % Check
Based on the provided financial statements for Organo Inc., the following trends can be observed:
a) Horizontal analysis of the balance sheet shows the following changes between 2019 and 2020:
- Cash decreased by 3.7%.
- Accounts Receivable decreased by 19.3%.
- Inventory increased by 6.9%.
- Short-Term Investments decreased by 20.4%.
- Total Current Assets decreased by 4.3%.
- Other Assets decreased by 28.5%.
- Total Assets decreased by 10%.
- Current Liabilities decreased by 19%.
- Long-Term Debt decreased by 32.6%.
- Total Liabilities decreased by 23.8%.
- Shareholders' Equity decreased by 4.5%.
- Total Liabilities and Equity decreased by 10%.
b) Vertical analysis of the income statement shows the following percentages relative to sales:
- Cost of Sales is 40% of Sales.
- Gross Profit is 60% of Sales.
- Operating Expenses breakdown:
- Advertising Expense is 0.8% of Sales.
- Bank Charges Expense is 1.1% of Sales.
- Communication Expense is 0.6% of Sales.
- Depreciation Expense is 0.7% of Sales.
- Professional Fees Expense is 1.1% of Sales.
- Rent Expense is 0.6% of Sales.
- Repairs and Maintenance Expense is 0.9% of Sales.
- Salaries and Wages Expense is 10.5% of Sales.
- Transportation Expense is 0.7% of Sales.
- Utilities Expense is 0.8% of Sales.
- Total Operating Expenses is 18% of Sales.
- Net Income is 42% of Sales.
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1- You are given the scenario that the equilibrium price for a commodity is $0.75, and the government imposes price floor of $0.60. Will there be any impact on market price and output? (HINT: Is the constraint binding or non-binding)
2- What is the price at which suppliers are willing to supply a quota limit quantity called?
3- In the circular flow diagram, households receive money forselling resources (e.g., labor) is referred to as what market.(e.g., product, factor, or output market)
4- Assume you a manager at a Samsung store. In determining whether to buy additional phones for the store, you choose at the margin when you compare what two concepts?
1. The market price will remain at the equilibrium price of $0.75.
2. The price at which suppliers are willing to supply a quota limit quantity is called the quota price.
3. In the circular flow diagram, households receive money for selling resources, such as labor, in the factor market.
4. The marginal benefit and marginal cost, you can make an informed decision on whether it is beneficial to buy additional phones for the store.
1- In the given scenario, the government imposes a price floor of $0.60, which is below the equilibrium price of $0.75. In this case, the price floor is non-binding because it is set below the equilibrium price. A non-binding price floor does not have any impact on the market price or output. The market price will remain at the equilibrium price of $0.75, and the quantity traded will also remain the same as it was before the price floor was imposed.
2- The price at which suppliers are willing to supply a quota limit quantity is called quota price. A quota is a limit on the quantity that can be produced or imported, and the quota price is the price at which suppliers are willing to supply that limited quantity.
3- In the circular flow diagram, households receive money for selling resources, such as labor, in the factor market. The factor market is where households provide resources, such as labor and capital, to businesses in exchange for income.
4- As a manager at a Samsung store, when determining whether to buy additional phones for the store, you would choose at the margin by comparing two concepts: marginal benefit and marginal cost. Marginal benefit refers to the additional benefit or revenue that would be gained from buying an additional phone. Marginal cost refers to the additional cost that would be incurred from buying an additional phone. By comparing the marginal benefit and marginal cost, you can make an informed decision on whether it is beneficial to buy additional phones for the store.
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