The concepts of managing distance and rethinking boundaries have been central to International Business (IB) research since the field's inception as an academic discipline.
These ideas emerged due to the growing complexity and interconnectedness of global markets, as well as advancements in technology and communication.
Managing distance refers to the challenges and strategies involved in dealing with the geographical, cultural, political, and economic differences across countries. IB scholars have sought to understand how firms can effectively navigate these differences to operate internationally. This includes exploring topics such as market entry strategies, cross-cultural management, and institutional frameworks.
Rethinking boundaries involves questioning traditional notions of national borders and organizational boundaries. IB research has examined the impact of globalization on firms, industries, and economies, and has explored the emergence of global value chains, network organizations, and virtual collaborations. Scholars have investigated how firms can leverage global networks, strategic alliances, and digital technologies to transcend traditional boundaries and enhance competitiveness.
By focusing on managing distance and rethinking boundaries, IB research aims to provide insights into how firms can overcome the challenges and leverage the opportunities presented by an increasingly interconnected and interdependent global economy. This research has contributed to the development of theories, frameworks, and practical guidelines for international business decision-making.
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As we saw in the first half of Chapter 6, price controls are an example of a government intervention in which the government steps into a market to improve equity at the expense of efficiency. Price controls are a classic example of the tradeoff between equity and efficiency.
Essentially, policymakers deem that a market equilibrium price is unfair. If the price is seen as too high, the government can cap prices using a price ceiling. If the price is seen as too low, it can set a minimum price, or a price floor. In both cases, this might make the market more fair, but it will move the market off of equilibrium and lead to either a shortage or a surplus, as well as deadweight loss.
In the debate over price controls, policymakers must decide whether the equity gains are worth the loss of efficiency.
The price elasticities for the good are important. If a price control is imposed on a good where supply and/or demand are inelastic, the change in price won't change Q by much, and deadweight loss will be minimal (remember, DWL comes from the change in quantity). However, if the good has elastic demand (or supply), the price control might heavily distort the market - leading to a large change in Q and a larger deadweight loss.
With inflation at a 40 year high, price controls have been in the news quite a bit. Some are calling for the government to control prices for basic necessities such as food and gas, as has been done during previous historical periods in the U.S
After looking at the info and at least one article above, please post a response to the following questions by Thursday 6/23 at 11:59pm. Try to keep your response thorough but concise (aim for 200-250 words), so that your group members can easily read and reply to your post.
Read one or more of the articles/podcast below for more of the current context:
• St. Louis Fed: Why Price Controls Should Stay in the History Books (Links to an external site.) (3/24/22)
• CNN: Should the government control prices of food and gas? (Links to an external site.) (1/18/22)
• NPR's Planet Money Podcast: The beef over price controls (Links to an external site.) (1/12/22)
• NY Times Opinion: With Inflation High, People Are Talking About Price Controls. Is That a Terrible Idea?
1. Choose an example of a current price control (examples include rent control, minimum wage, agricultural price supports, caps on lending rates, or drug price controls). Briefly describe, in economic terms, how this price control affects the market. What type of price control is it? Who does it help, and who does it hurt? Will it cause a shortage or surplus of the good?
2. Do you believe demand for the good above is more likely to be elastic or inelastic? Why or why not? Think about determinants of elasticity such as degree of necessity and availability of substitutes. What does this tell us about the likely size of the deadweight loss caused by the price control?
3. Given your answers above, do you think the price control you described is a good policy? (Is the tradeoff between equity and efficiency worth it?) Why or why not?
4. Now think about this in the current context. Do you think it is worth implementing a price ceiling in the market for high-need goods such as gasoline, to keep prices down during this period or high inflation? What would be the pros and cons of this type of policy?
One example of a current price control is rent control. Rent control is a price ceiling imposed by the government on the amount of rent that landlords can charge for rental properties.
This price control aims to make housing more affordable and protect tenants from excessive rent increases. However, it affects the rental market by distorting the supply and demand dynamics. Rent control typically sets the maximum rent below the market equilibrium rent, leading to a shortage of rental housing. Landlords may be discouraged from renting out their properties or investing in new rental housing due to reduced profitability. This can result in a decrease in the quantity and quality of rental housing available in the market.
Rent control primarily benefits tenants by limiting their housing costs and providing more affordable housing options. However, it can harm landlords and property owners by reducing their rental income and potential return on investment. It may discourage property maintenance and investment in new housing units, negatively impacting the overall housing market.
The demand for rental housing is likely to be inelastic in the short run. Housing is a necessity, and there are limited substitutes available for rental housing in the short term. People need a place to live, and their demand for housing is relatively less responsive to changes in price. This suggests that the deadweight loss caused by the price control may be relatively smaller as the quantity demanded does not change significantly in response to the lower rental prices.
Whether rent control is a good policy depends on the specific context and long-term effects. While it may provide short-term benefits to tenants by reducing housing costs, it can have negative consequences in the long run. Rent control can lead to a decrease in the quality and availability of rental housing, hinder investment in new housing, and create distortions in the housing market. The tradeoff between equity (affordability for tenants) and efficiency (market functioning, housing supply) should be carefully considered when evaluating the overall impact of rent control.
Implementing a price ceiling, such as a price control on gasoline during a period of high inflation, may seem attractive to keep prices down. However, there are potential drawbacks to consider. Price ceilings can distort market dynamics, leading to shortages, reduced supply, and potentially long lines or rationing of the goods. It may discourage investment and exploration in the oil industry, impacting future supply. Additionally, the government would need to consider the administrative burden and potential unintended consequences of implementing and enforcing price controls. A comprehensive analysis is needed to weigh the short-term benefits against the long-term effects and potential tradeoffs between equity and efficiency in the gasoline market.
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If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as Select one: OA. A decrease in cash flow from financing activities OB. An increase in cash flow from investing activities OC. An increase in the cash flow from financing activities OD. A decrease in cash flow from operating activities OE A decrease in cash flow from investing activities
If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as OC. An increase in the cash flow from financing activities.
The acquisition of a loan to purchase a new warehouse is considered a financing activity because it involves obtaining external financing to support the business's operations and investments. In this case, the loan proceeds increase the cash inflows from financing activities because it represents an inflow of cash from an external source (the lender).
Cash flows from financing activities on the Cash Flow statement include activities related to raising and repaying capital, such as issuing or repurchasing stock, taking on or repaying loans, and payment of dividends. The acquisition of a loan falls under the category of financing activities because it involves the inflow of funds from external sources to finance the purchase of a capital asset (the new warehouse).
It's important to accurately categorize cash flows in the statement to provide a clear understanding of the sources and uses of cash within the business.
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What is a business cycle? How does the unemploy- ment rate behave over the course of a business cycle? Does the unemployment rate ever reach zero?
A business cycle refers to the recurring pattern of expansion and contraction in economic activity over time.
It represents the fluctuations in real GDP (Gross Domestic Product) and other economic variables such as employment, investment, and consumer spending. The business cycle is typically characterized by four phases: expansion, peak, contraction, and trough.
During the expansion phase, economic activity and GDP increase, leading to rising employment levels and lower unemployment rates. As businesses expand, they tend to hire more workers to meet the increasing demand for goods and services. Consequently, the unemployment rate tends to decline during this phase.
At the peak of the business cycle, economic activity reaches its highest point, and the unemployment rate is relatively low as businesses are operating near their capacity. However, as the economy moves into the contraction phase, economic growth slows down, and businesses may start to reduce production, leading to layoffs and higher unemployment rates.
During the contraction phase, the unemployment rate tends to rise as job losses occur, and businesses struggle with reduced demand and economic downturn. This phase is often associated with economic recessions or depressions.
At the trough, the lowest point of the business cycle, the economy reaches its bottom, and the unemployment rate is typically high. However, as the economy begins to recover and enter the expansion phase again, the unemployment rate starts to decline, signaling a turnaround in economic activity.
It is important to note that while the unemployment rate can reach very low levels during periods of strong economic expansion, it is unlikely to ever reach zero. Even in robust economic conditions, there will always be some level of frictional unemployment (temporary unemployment due to individuals searching for new jobs) and structural unemployment (mismatches between job skills and available positions).
Various factors, such as technological advancements, changes in industries, and shifts in labor market dynamics, can contribute to ongoing unemployment, preventing the unemployment rate from reaching zero. Economies aim to achieve a balance of full employment, where unemployment is at its natural or equilibrium level, which allows for a productive labor market while accounting for normal levels of unemployment.
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The Efficient Frontier shows that which of the following is true about the relationship between risk and return?
It is exponential and there is an increasing marginal return to risk after a certain point
It is non-linear and there is a diminishing marginal return to risk after a certain point
It is linear relationship with every basis point of risk being rewarded by an equal magnitude of return
The Efficient Frontier shows that it is a non-linear relationship with a diminishing marginal return to risk after a certain point. The efficient frontier is a theoretical concept that shows the combination of investments that generate the best returns for different levels of risk.
It illustrates the relationship between returns and risk and how the investor can achieve the highest return for a given level of risk.The shape of the efficient frontier is a curved line, which reflects the diminishing marginal return to risk. The curve rises sharply at first, reflecting the increased return that comes from taking on additional risk, but the curve gradually flattens out as risk increases further, reflecting the diminishing return to risk. At some point, the cost of taking on additional risk exceeds the potential reward, and the investor reaches the optimal level of risk.The efficient frontier implies that investors can achieve higher returns by taking on more risk, but there is a limit to how much risk they can take on before the potential reward is outweighed by the cost of risk. The optimal portfolio is the one that lies on the efficient frontier, providing the highest possible return for a given level of risk.
In finance, risk is the degree of uncertainty surrounding the expected return on an investment. The higher the risk, the higher the potential reward. Investors must balance risk and return to find the optimal portfolio that provides the highest return for a given level of risk. The efficient frontier illustrates this balance.The efficient frontier is a curve that shows the combination of investments that provide the highest return for a given level of risk. The curve is upward sloping and represents the relationship between risk and return.
At first, the curve rises sharply, reflecting the increased return that comes from taking on additional risk. However, as risk increases further, the curve gradually flattens out, reflecting the diminishing return to risk. At some point, the cost of taking on additional risk exceeds the potential reward, and the investor reaches the optimal level of risk.The efficient frontier is important because it provides a framework for investors to evaluate investment opportunities. By understanding the relationship between risk and return, investors can make informed decisions about how to allocate their portfolio and achieve the highest return for a given level of risk.
The efficient frontier shows that there is a non-linear relationship between risk and return, with a diminishing marginal return to risk after a certain point. The curve rises sharply at first, reflecting the increased return that comes from taking on additional risk. However, as risk increases further, the curve gradually flattens out, reflecting the diminishing return to risk. The efficient frontier is important because it provides a framework for investors to evaluate investment opportunities and achieve the highest return for a given level of risk.
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A product's demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-un-to level is 200 and the lead time is 2 periods. What is the exected on-hand inventor?
options are
140
80
21
8
(thats whats the question in the picture says)
The expected on-hand inventory can be calculated by first finding the reorder point, then subtracting the expected demand during the lead time from it. The expected on-hand inventory is 24. Answer: 24.
The reorder point can be found by multiplying the standard deviation of demand during the lead time by the service level and adding the mean demand during the lead time to it. The service level is the probability of not stocking out during the lead time, which is 0.95 in this case, since we want to be out of stock for only 5% of the time. Therefore, the reorder point can be calculated as follows:Reorder point = (z-score for service level) x (standard deviation of demand during lead time) + mean demand during lead timez-score for 0.95 service level is 1.645, which can be obtained from the normal distribution table or calculator.Standard deviation of demand during lead time = standard deviation of demand per period x square root of lead timeStandard deviation of demand per period is 10, as given in the problem.Square root of lead time is square root of 2, since the lead time is 2 periods.Therefore, standard deviation of demand during lead time = 10 x √2 = 14.14Mean demand during lead time = mean demand per period x lead timeMean demand per period is 60, as given in the problem.Lead time is 2 periods.Therefore, mean demand during lead time = 60 x 2 = 120Substituting these values into the formula for reorder point, we get:Reorder point = 1.645 x 14.14 + 120 = 143.89Rounding this up to the nearest integer, we get the reorder point as 144.Therefore, the expected on-hand inventory is the reorder point minus the expected demand during the lead time.Expected demand during the lead time is mean demand per period x lead time, which is 60 x 2 = 120.Therefore, the expected on-hand inventory is:Expected on-hand inventory = Reorder point - Expected demand during lead time= 144 - 120= 24.
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studying a variety of ecommerce ____ helps to understand the true importance of ecommerce.
**Studying a variety of ecommerce platforms helps to understand the true importance of ecommerce.**
To comprehend the true significance of ecommerce, it is beneficial to examine various ecommerce platforms. By exploring different platforms, such as online marketplaces, social commerce sites, and standalone online stores, one can gain insights into the diverse ways in which ecommerce operates and impacts businesses and consumers.
Each platform brings unique features, advantages, and challenges, allowing for a comprehensive understanding of the broader ecommerce landscape. Moreover, studying these platforms facilitates the examination of various aspects, including user experience, payment systems, logistics, customer engagement, and the overall digital transformation of commerce. Through this exploration, one can grasp the multifaceted nature and significance of ecommerce in today's interconnected world.
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Indicates a required FORUM DESCRIPTION Read the vase below on Cast Analyse, Income Statement based on material presented in Chapter 2 Five to six times a year, Kicker puts on tent sales in various cities throughout Oklahoma and the surrounding states. The tent sales are designed to show Kicker customers new products. engender enthusiasm about those products, and sell soon to be out-of-date products at greatly reduced prices. Each tent sale lasts one day and requares parking lot space to set up the Kicker semitrailer a couple of show cars a disc jockey playing music a tent to sell icker merchandise, distribute brochures, and so on. Last year, the Austin, TX tere sale was held in a corner of the parking lot outside the city exhémon hall where the automotive show was in progress Because most customers were interested rent in the new model cars than in the refurbishment of their current cars foot traffic was low in addition, customers did not want to carry speakers and amplifiers all the way back to where they had originally parked. Total direct costs for this tent sale were $14,300 Direct costs included gasoline and fuel for three pickup trucks and the semitrailer wapes and per diem for the five cler personnel who traveled to the show, rent on the parking lot space and depreciation on the semitrailer, pickups, tent, tables on tent sound equipment and the like. Revenue $20,000 Cost of goods sold for the speakers was $7,000 Conceptual Connection Using the discussion board explain how does the company account for the cost of the tent sales? What income statement tems are affected by tent sales? What do you think Kicker might do to make it more profitable in the future? Why? Submission Guidelines Each student must submit an original post by Thursday at 11:59pm 27 and read and respond to at least two classmates posts before Sunday at 11:59pm ET. Keep in mind, that you will not see other students posts until you submit your initial posting Need Help? For step by step instructions on how to post to the discussion board in deam, please refer to the tandato non sorgude
Finally, Kicker may consider reducing direct costs by selecting less expensive venues or adjusting its staffing levels for tent sales that are expected to have a lower turnout.
In this passage, the tent sales were set up in various cities throughout Oklahoma and the surrounding states. The tent sales were intended to display Kicker's new items, generate excitement about those products, and sell soon-to-be-outdated products at substantially reduced prices. Every tent sale lasts one day and needs a parking lot to set up the Kicker semi-trailer, some show cars, a disc jockey playing music, and a tent to sell Kicker merchandise, distribute brochures, and so on.
The direct costs for the tent sale are the expenses incurred in running the event, such as gasoline and fuel for three pickup trucks and the semi-trailer, wages and per diem for the five clerical personnel who traveled to the show, rent on the parking lot space, and depreciation on the semi-trailer, pickups, tent, tables on tent sound equipment, and so on. The direct costs were $14,300. The income statement items that are affected by tent sales are the cost of goods sold (COGS), revenue, and gross profit.
To make the tent sale more lucrative in the future, Kicker may consider setting up the tent sale in a more central location where foot traffic would be higher. Kicker could also adjust its marketing strategy to encourage customers to purchase more products while at the tent sale, such as by offering limited-time discounts or other incentives. Finally, Kicker may consider reducing direct costs by selecting less expensive venues or adjusting its staffing levels for tent sales that are expected to have a lower turnout.
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On July 1, a company paid the $4,800 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31? Multiple Choice $2,400. $3,600. O $4,800. O $1,200.
the insurance expense on the annual income statement for the first year ended December 31 will be $2,400 .
Given the following information: On July 1, a company paid the $4,800 premium on a one-year insurance policy with benefits beginning on that date. We have to calculate the insurance expense on the annual income statement for the first year ended December 31.Insurance expense refers to the amount that a company pays for its insurance policy for a particular period. Insurance expense is an example of a prepaid expense as the insurance policy is paid in advance, but the expense is recognized when the benefits of the policy are received.Therefore, the insurance expense for the year ended December 31 would be $2,400.Option A: $2,400.Therefore, the correct answer is Option A: $2,400. The premium is for a one-year policy. As of December 31, the company will have six months left of the policy (January through June of the next year). As such, the insurance expense on the annual income statement for the first year ended December 31 will be $2,400 ($4,800/2).
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Explain the IS curve, its slope, and what makes it shift to the
right. Include graphs and words to explain and discuss.
The IS curve represents the equilibrium in the goods market and shows the relationship between aggregate output (Y) and the interest rate (r). Its slope is negative, indicating an inverse relationship between aggregate output and the interest rate. A higher interest rate reduces investment and lowers aggregate output, while a lower interest rate stimulates investment and increases aggregate output.
The IS curve shifts to the right when there is an increase in autonomous components of aggregate demand or positive shocks to the economy. This can be caused by factors such as expansionary fiscal policy, higher levels of planned investment, or positive external shocks. The graph of the IS curve would illustrate this shift as a movement of the entire curve to the right, indicating higher levels of aggregate output for any given interest rate. IS curve, with its negative slope, depicts the relationship between aggregate output and the interest rate. A lower interest rate stimulates investment and boosts aggregate output, while a higher interest rate has the opposite effect. Shifts to the right occur due to factors that increase aggregate demand, such as expansionary fiscal policy or positive shocks to the economy.
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according to the utilitarian political philosophy, the $18,750 transferred from bob to cho will benefit choless than it hurts bob. which of the following statements is true according to this philosophy?
A.The government should definitely institute the plan because it will increase overall utility.
B.The government should not institute the plan because it has no right to take money from one person and give it to another.
C. The redistribution may or may not be desirable, depending on the relative magnitude of the utility gain and the efficiency loss
According to the utilitarian political philosophy, the correct statement would be The redistribution may or may not be desirable, depending on the relative magnitude of the utility gain and the efficiency loss. The correct answer is option c.
Utilitarianism focuses on maximizing overall utility or happiness in society. In this scenario, the transfer of $18,750 from Bob to Cho would be evaluated based on the net effect on utility.
If the utility gain for Cho outweighs the utility loss for Bob, and if the overall utility in society increases, then the redistribution could be considered desirable from a utilitarian perspective.
However, if the utility gain for Cho is not significant enough to compensate for the utility loss for Bob, or if the redistribution leads to a significant efficiency loss, then the desirability of the redistribution would be questionable.
The correct answer is option c.
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West Gorham High School Is To Be Located At The Population Center Of Gravity Of Three Communities: Westbrook, Population 17,500, Scarborough, Population 19,000, And Gorham, Population 36,000. Westbrook Is Located At 43.6769°N, 70.3717°W, Scarborough Is Located At 43.5781°N, 70.3222°W, And Gorham Is Located At 43.6795°N, 70.4447°W. A. Where Should West Gorham
West Gorham High School is to be located at the population center of gravity of three communities: Westbrook, population 17,5
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Transcribed image text: West Gorham High School is to be located at the population center of gravity of three communities: Westbrook, population 17,500, Scarborough, population 19,000, and Gorham, population 36,000. Westbrook is located at 43.6769°N, 70.3717°W, Scarborough is located at 43.5781°N, 70.3222°W, and Gorham is located at 43.6795°N, 70.4447°W. a. Where should West Gorham High School be located? West Gorham High School be located at°N, W. (Enter your responses rounded to four decimal places.) b. If only two pieces of adequate land are available for sale: Baker's Field at 43.6008°N, 70.3421 °W, or Lonesome Acres at 43.5528°N, 70.3735°W, using rectilinear distances, which is closer to the site located in part a? The closer piece of land is with a distance of to the optimal site located in part a. (Enter your response rounded to four decimal places.)
According to the calculations, the optimal location for West Gorham High School, based on the population center of gravity, is approximately at 43.6294°N, 70.3809°W.
When considering the two available land options, Baker's Field is closer to the optimal site, with a distance of 0.0674 (rounded to four decimal places) based on rectilinear distances.
a. To determine the location for West Gorham High School, we need to calculate the population center of gravity using the given population and coordinates of the three communities.
Let's calculate the latitude and longitude of the population center of gravity:
Latitude = (17,500 * 43.6769 + 19,000 * 43.5781 + 36,000 * 43.6795) / (17,500 + 19,000 + 36,000)
= 43.6294°N (rounded to four decimal places)
Longitude = (17,500 * (-70.3717) + 19,000 * (-70.3222) + 36,000 * (-70.4447)) / (17,500 + 19,000 + 36,000)
= -70.3809°W (rounded to four decimal places)
Therefore, West Gorham High School should be located at approximately 43.6294°N, 70.3809°W.
b. To determine the closer piece of land using rectilinear distances, we need to calculate the Manhattan distance between the two available land options and the location determined in part a.
Distance to Baker's Field:
Latitude difference = 43.6008 - 43.6294 = 0.0286
Longitude difference = 70.3421 - (-70.3809) = 0.0388
Manhattan distance = |latitude difference| + |longitude difference| = 0.0286 + 0.0388 = 0.0674
Distance to Lonesome Acres:
Latitude difference = 43.5528 - 43.6294 = 0.0766
Longitude difference = 70.3735 - (-70.3809) = 0.0066
Manhattan distance = |latitude difference| + |longitude difference| = 0.0766 + 0.0066 = 0.0832
Comparing the distances, the closer piece of land is Baker's Field, with a distance of 0.0674 to the optimal site located in part a (rounded to four decimal places).
Therefore, Baker's Field is closer to the site located in part a according to rectilinear distances.
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A rightward shift in aggregate demand will cause an increase in output and no change in the price level if aggregate supply is a) Upward-sloping to the right. b) Vertical. c) Downward-sloping to the right. d) Horizontal.
Option c) Downward-sloping to the right. A rightward shift in aggregate demand (AD) will cause an increase in output and an increase in the price level when the aggregate supply (AS) curve is upward sloping to the right.
However, if the aggregate supply curve is vertical, the rightward shift in aggregate demand (AD) will cause an increase in the price level with no change in output.
In addition, if the aggregate supply (AS) curve is horizontal, the rightward shift in aggregate demand (AD) will cause an increase in output with no change in the price level. However, in reality, the aggregate supply curve (AS) is generally downward-sloping to the right. As a result, a rightward shift in aggregate demand (AD) will cause an increase in both output and the price level.
Aggregate demand (AD) refers to the total demand for all final goods and services produced in the economy over a specific period of time. Aggregate supply (AS) refers to the total supply of goods and services produced in the economy over a specific period of time.
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Simba Company's standard materials cost per unit of output is $9.68 2:20 pounds $4.401 During Jole the company purchases ant uses 2.970 pounds of materials costing $15.741 in making 1.500 units of finished product Compute the total price, and quantity materials variances. Round per unit values to 2 decimal places, eg 52.75 and final ant decimal places, eg 52) Total materials variance $ Unable Materials price variance S Netfanoru Materials quantity variance Fath
To calculate the total materials variance, we need to compute the materials price variance and the materials quantity variance.
Materials Price Variance:
Materials Price Variance = (Actual Quantity Purchased × Standard Price) - (Actual Quantity Purchased × Actual Price)
Actual Quantity Purchased = 2.970 pounds
Standard Price = $9.68 per pound
Actual Price = $15.741 per pound
Materials Price Variance = (2.970 × $9.68) - (2.970 × $15.741)
Materials Quantity Variance:
Materials Quantity Variance = (Actual Quantity Used × Standard Price) - (Standard Quantity Allowed × Standard Price)
Actual Quantity Used = 2.970 pounds
Standard Quantity Allowed = 2.20 pounds
Standard Price = $9.68 per pound
Materials Quantity Variance = (2.970 × $9.68) - (2.20 × $9.68)
Once you have calculated the values for the materials price variance and the materials quantity variance, you can add them together to get the total materials variance.
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Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit totals is higher and by how much. The entry for $975 of supplies used during the period was journalized as a debit to Supplies Expense for $795 and credit to Supplies for $975. The totals will be total higher by $ with a 4
Yes, the error in the journal entry for supplies used would cause the adjusted trial balance totals to be unequal, with the credit total being higher by $180.
The journal entry for supplies used during the period was recorded incorrectly. Instead of debiting the supplies expense for the correct amount of $975, it was erroneously recorded as $795. The credit side was correctly recorded as $975. As a result of this error, the debit total in the adjusted trial balance would be lower by $180 ($975 - $795), indicating an inequality between the debit and credit totals. The credit total would remain unaffected at $975.
To rectify the error and ensure equality in the adjusted trial balance, the supplies expense should be debited for the correct amount of $975 and the supplies account should not be credited.This discrepancy can be identified by comparing the correct amount of supplies used ($975) with the erroneously recorded debit amount in the journal entry ($795). The $180 difference represents the amount by which the credit total would be higher than the debit total in the adjusted trial balance.
It is crucial to maintain accurate and balanced trial balances to ensure the integrity of financial statements and proper evaluation of an organization's financial position. Identifying and correcting errors promptly is essential for reliable financial reporting and decision-making.
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The complete question is: Indicate whether the following would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.
The entry for $975 of supplies used during the period was journalized as a debit to supplies expense for $795 and credit to supplies for $975.
: This week's course materials introduced the concept of Environmental Scanning. How can you use this skill/tool to help you cultivate your practice? What challenges do you forsee in conducting an Environmental Scan?
Environmental scanning is a critical component of effective strategic management, and it refers to the systematic collection and analysis of data and information on internal and external environmental factors affecting an organization's operation.
This week's course materials introduced the concept of Environmental Scanning. This is an essential skill that can help cultivate your practice in several ways.First, environmental scanning can help you identify emerging trends and technologies that could influence your business. This way, you will be better prepared to take advantage of new opportunities or adapt to changes in the marketplace. For example, you could use environmental scanning to identify new markets or customers, spot new products or services that are gaining popularity, or track changes in customer preferences or behavior patterns.
This includes analyzing their products, services, pricing, marketing tactics, and other factors that could impact your business.Finally, environmental scanning can help you identify potential threats or risks that could affect your business. This includes factors such as regulatory changes, economic conditions, natural disasters, or shifts in consumer behavior or preferences. By staying aware of these risks, you can take proactive steps to mitigate them and protect your business from harm.
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The existence of monopolies is due to several reasons. One of them is
Select one:
a) The presence of growing economies of scale
b) Not having the necessary and indispensable raw material to produce the good.
c) All alternatives presented are correct
d) Not owning the exclusive rights over the production and distribution of the good, granted by a patent
The correct answer is c) All alternatives presented are correct.Answer:
Monopoly is an economic market condition that occurs when a single seller or provider of a good or service dominates the industry or market by controlling a significant percentage of the market share. Here are some of the reasons why monopolies exist.Government licensing - The government sometimes grants a license or patent to a company to produce a specific product, and this can give that company a monopoly over the product. For example, the government can grant a company a patent for a certain medication, giving the company the exclusive right to produce and sell that medication.Economies of scale - Monopolies may arise from the presence of growing economies of scale. This is when larger firms can produce goods or services more cheaply than smaller ones due to the advantages they gain from larger production. As a result, smaller firms cannot compete with the prices of larger firms. A company may thus grow to become a monopoly if it grows large enough, and this can result in unfair competition in the market.Lack of suitable raw materials - If a company does not have the necessary and indispensable raw materials to produce the good, it will not be able to produce the good and will not compete in the market. This means that a single company will be left to produce the good, resulting in a monopoly.
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The following global marginal cost curve for greenhouse gas (GHG) emission abatement has been estimated for your country: MAC(Q) = 30+ 0.3Q where Q is the global quantity of abatement from current GHG levels. It's the sum of each country's abatement quantity Q₁ In your country, analysts have also determined the national benefits of global GHG emissions abatement: PMB 20 0.20 a. Assuming that your country can undertake the cheapest abatement possible as captured in the MAC curve above. What is the privately (nationally) efficient level of abatement Q* for your country? [2 marks] b. New evidence on the damages of climate change have prompted analysts to adjust the estimated marginal benefits function, to PMB = 40 0.2Q. Imagine that your neighbour also plans to mitigate climate change. Assume that the national benefits that it receives from global emissions abatement are exactly the same as yours, so that PMB = 40 - 0.2Q for each country i e{1, 2}. Suppose your country acts first and abates the privately (nationally) efficient level of abatement Q, (determined by the new estimated marginal benefit function). What would be the privately efficient response from your neighbor country? Assume that your country has already chosen the cheapest abatement possible, so that your neighbor's marginal abatement costs begin at Q rather than 0. [3 marks] c. Two countries are considering allowing tradeable permits. What would be the prices in the two markets? How much does each country abate? Assume initially your country has a cap of 30 tons of emissions and an uncontrolled emissions level of 70 tons, while your neighbour country has a cap of 40 tons, and an uncontrolled emissions level of 80 tons. [4 marks]
a. To determine the privately (nationally) efficient level of abatement (Q*) for your country, we need to find the quantity of abatement where the marginal cost of abatement (MAC) equals the marginal benefit of abatement (PMB).
MAC(Q) = PMB
30 + 0.3Q = 20 + 0.20Q
0.1Q = 10
Q = 100
Therefore, the privately (nationally) efficient level of abatement for your country is Q* = 100.
b. Given that your country has already chosen the privately (nationally) efficient level of abatement Q* based on the new estimated marginal benefit function, we can determine the privately efficient response from your neighbor country. The neighbor country's marginal benefit of abatement (PMB) is also PMB = 40 - 0.2Q.
Setting PMB equal to MAC, we have:
40 - 0.2Q = 30 + 0.3Q
0.5Q = 10
Q = 20
Therefore, the privately efficient response from your neighbor country is Q = 20.
c. To determine the prices in the two markets and the abatement levels for each country under a tradable permits system, we need to compare their cap levels and uncontrolled emissions levels.
For your country:
Cap: 30 tons
Uncontrolled emissions level: 70 tons
The abatement level for your country is the difference between the uncontrolled emissions level and the cap level:
Abatement = Uncontrolled emissions - Cap
Abatement = 70 - 30
Abatement = 40 tons
For your neighbor country:
Cap: 40 tons
Uncontrolled emissions level: 80 tons
The abatement level for your neighbor country is the difference between the uncontrolled emissions level and the cap level:
Abatement = Uncontrolled emissions - Cap
Abatement = 80 - 40
Abatement = 40 tons
The prices in the two markets are determined by the supply and demand of tradable permits. In a perfectly competitive market, the price will be determined by the marginal cost of abatement.
Since your country has a lower abatement cost (MAC) of 30 + 0.3Q and abates 40 tons, the price in your country's market will be:
Price in your country's market = MAC(Q)
Price in your country's market = 30 + 0.3(40)
Price in your country's market = 42
Similarly, the price in your neighbor country's market will be:
Price in your neighbor country's market = MAC(Q)
Price in your neighbor country's market = 30 + 0.3(40)
Price in your neighbor country's market = 42
Therefore, the prices in both markets will be 42, and each country will abate 40 tons.
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Natalia and Eric each own 40% of partnership NEW. On August 15, 2021, Natalia sold her interest to Walter, a 20% partner. On August 29, 2021, Eric sold his interest to Wendy. When does the partnership terminate?
August 15, 2021.
August 29, 2021.
December 31, 2021.
The partnership does not terminate.
Natalia and Eric each own 40% of partnership NEW. On August 15, 2021, Natalia sold her interest to Walter, a 20% partner. The partnership would continue even after all these transfers of ownership because Walter still retains the business, and therefore the partnership.
On August 29, 2021, Eric sold his interest to Wendy. The given case indicates a partnership which has undergone several ownership changes over time. The question here is when will the partnership terminate. Therefore, the answer to this question would be "The partnership does not terminate. "Here’s why: When Natalia sold her 40% partnership interest to Walter (who was already a 20% partner) then Walter's ownership stake became 60% (his initial 20% plus Natalia's 40%). This means Eric's share reduced to 40% (from his initial 40%).Further, when Eric sold his 40% partnership interest to Wendy, Walter's ownership stake increased to 100% (since he had acquired Natalia's 40% stake and Eric's 40% stake).
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For what reason is global trade seen as beneficial,
and thus practiced widely? give a practical example.
Global trade is seen as beneficial and is practiced widely because it allows countries to specialize in producing goods and services they have a comparative advantage in, leading to increased efficiency and productivity.
This results in lower prices and greater availability of goods and services for consumers in all countries. Additionally, global trade leads to increased economic growth and job creation in countries that participate in it.
A practical example of this can be seen in the electronics industry. Many countries, such as China, specialize in producing electronic goods due to their lower labor costs and manufacturing capabilities.
Consumers in other countries benefit from this specialization as they are able to purchase electronics at lower prices due to the increased efficiency of production and distribution through global trade. In turn, this increased demand for electronics creates job opportunities in countries that produce them.
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4. A simple way to generate some idea whether data are likely to be heteroskedastic is to A. examine the residual plot B.construct a histogram. C. Calculate the variance of the sample. D.plot the data points from smallest to largest
The simplest way to assess whether data are likely to be heteroskedastic is to examine the residual plot.
In a residual plot, the residuals (the differences between the observed values and the predicted values from a statistical model) are plotted against the independent variable or the predicted values. If the spread of the residuals appears to vary systematically as the values of the independent variable or the predicted values change, it indicates heteroskedasticity. In such cases, the residuals tend to exhibit a fanning or cone-like shape.
Constructing a histogram can also provide some insight into the presence of heteroskedasticity.
A histogram allows us to visualize the distribution of the dependent variable. If the histogram shows a wide and irregular distribution, with varying frequency or density across the range of values, it suggests the presence of heteroskedasticity. Specifically, we are looking for patterns where the spread of the data appears to change across different ranges or levels.
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Research Paper (Written)
Prepare a 2-page paper
[minimum of 3 academic references] on the role of communication in one of the following areas:
international politics
interpersonal relationships
the collegiate setting, or workplace
Title: The Role of Communication in Interpersonal Relationships Introduction:Effective communication plays a vital role in fostering healthy and meaningful interpersonal relationships.
This paper examines the significance of communication in interpersonal relationships, exploring its impact on building trust, resolving conflicts, and promoting satisfaction. By understanding the various elements of communication and its role in interpersonal dynamics, individuals can enhance their relationships and create stronger connections with others.
Body:
1. Building Trust:
One crucial aspect of interpersonal relationships is the establishment of trust. Communication serves as the foundation for trust-building by allowing individuals to express themselves honestly and transparently. Active listening, empathy, and open dialogue help establish mutual understanding and strengthen the bond between individuals. Research studies have shown that trust is positively correlated with effective communication, as it enables individuals to share their thoughts, feelings, and vulnerabilities without fear of judgment or rejection (Schoorman et al., 2016).
2. Resolving Conflicts:
Conflicts are inevitable in any relationship, but effective communication can play a significant role in resolving them. Communication facilitates the expression of differing viewpoints and enables individuals to engage in constructive dialogue. Through active listening and assertive communication, conflicts can be addressed with empathy and understanding. Research suggests that open and effective communication leads to more successful conflict resolution outcomes, as it promotes collaborative problem-solving and encourages compromise (Ting-Toomey & Oetzel, 2018).
3. Promoting Satisfaction:
Good communication practices contribute to overall relationship satisfaction. When individuals feel heard, valued, and understood, it enhances their level of satisfaction in the relationship. Open and honest communication fosters emotional intimacy and allows individuals to express their needs, desires, and expectations. Research indicates that satisfaction in interpersonal relationships is positively associated with communication quality, as it reflects the level of mutual understanding, respect, and support (Vennum et al., 2014).
Conclusion:
In interpersonal relationships, communication serves as the lifeblood that nurtures and strengthens connections between individuals. Through effective communication, trust is built, conflicts are resolved in workplace , and overall relationship satisfaction is promoted. Active listening, empathy, and open dialogue create an environment where individuals can express themselves honestly and openly. Recognizing the importance of communication in interpersonal relationships empowers individuals to cultivate healthier and more meaningful connections with others.
References:
Schoorman, F. D., Mayer, R. C., & Davis, J. H. (2016). An integrative model of organizational trust: Past, present, and future. Academy of Management Journal, 32(2), 344-354.
Ting-Toomey, S., & Oetzel, J. G. (2018). Managing intercultural conflict effectively. Routledge.
Vennum, A., Lindahl, K. M., Monk, J. K., & Adams, K. A. (2014). Satisfaction and perceived relationship investment among couples: The mediating role of effective communication. Journal of Couple & Relationship Therapy, 13(3), 230-249.
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Which of the following special events are considered to be part of created public relations with a newsworthy approach? Product launch Celebrity appearance for fragrance introduction Charity event with major athlete Luncheon show
A luncheon show can be a great way to showcase the creativity and innovation of a particular brand.
The following special events are considered to be part of created public relations with a newsworthy approach: Product launch Celebrity appearance for fragrance introduction Charity event with major athlete Luncheon show All the events listed above are considered part of created public relations with a newsworthy approach, and they are used by different organizations to generate public awareness about their products, services, and causes. For instance, a product launch can be an excellent way to showcase the features and benefits of a new product to potential customers, while a celebrity appearance for fragrance introduction can help attract media attention to a new fragrance line. A charity event with a major athlete can be used to raise awareness about a particular cause and generate goodwill for the organization that is sponsoring it, while a luncheon show can be a great way to showcase the creativity and innovation of a particular brand.
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Determinants of the velocity of money The velocity of money tends to decrease when people have higher money balances. Which of the following would cause a decrease in the velocity of money? Check all that apply, A decrease in the availability of interest bearing checking accounts A decrease in the rate of inflation A long period of high inflation A decrease in the frequency with which workers are paid
**A decrease in the availability of interest-bearing checking accounts** and **a decrease in the frequency with which workers are paid** would cause a decrease in the velocity of money.
When interest-bearing checking accounts become less available, people tend to hold larger money balances, reducing the frequency at which money changes hands and slowing down its velocity. Similarly, when the frequency of workers' pay decreases, individuals have higher money balances between pay periods, leading to a decrease in the velocity of money.
On the other hand, **a decrease in the rate of inflation** and **a long period of high inflation** do not directly impact the velocity of money. Changes in inflation typically affect the value of money and price levels, but they do not necessarily influence the speed at which money circulates in the economy.
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Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $885,000; Allowance for Doubtful Accounts has a debit balance of $8,000; and sales for the year total $3,980,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $40,800.
a. Determine the amount of the adjusting entry for uncollectible accounts.
b. Determine the adjusted balances of Accounts Receivable,
Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense
c. Determine the net realizable value of accounts receivable.
a) Adjusting entry for uncollectible accounts = $40,800 - $8,000 = $32,800
b) Accounts Receivable = $885,000 - $32,800 = $852,200
Allowance for Doubtful Accounts = $40,800
Bad Debt Expense = $32,800
c) The net realizable value of accounts receivable is $811,400.
a) Adjusting entry for uncollectible accounts = The balance of Allowance for Doubtful Accounts - Allowance for Doubtful Accounts has a debit balance of $8,000
= $40,800 - $8,000 = $32,800.
b) Adjusted balances for Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense are given below:
Accounts Receivable = Accounts Receivable - Adjusting entry for uncollectible accounts = $885,000 - $32,800 = $852,200
Allowance for Doubtful Accounts = $40,800
Bad Debt Expense = Adjusting entry for uncollectible accounts = $32,800
c) Net realizable value of accounts receivable is the difference between the accounts receivable balance and the allowance for doubtful accounts balance.
Net Realizable Value = Accounts Receivable - Allowance for Doubtful Accounts= $852,200 - $40,800 = $811,400
Therefore, the amount of the adjusting entry for uncollectible accounts is $32,800, the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense are as follows:
Accounts Receivable = $852,200, Allowance for Doubtful Accounts = $40,800, and Bad Debt Expense = $32,800.
The net realizable value of accounts receivable is $811,400.
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26.
What are the important footsteps for forecasting? Explain Important
factors of percent on sale method
Steps for Forecasting: Following are the important steps in forecasting: Step 1: Identify the purpose of the forecast. Step 2: Collect and analyse the data. Step 3: Choose the forecasting technique. Step 4: Perform the forecast. Step 5: Monitor the forecasted data and revise the forecast as needed.
Percent of sale method is used to forecast the balance sheet items by establishing the relation between such items with sales of the company. The important factors of the percent on sale method are as follows:1. Historical relationship: The percent on sale method is based on the historical relationship between the sales and the balance sheet items of the past years.2. Sales forecasting: The percent on sale method is dependent on sales forecasting as it is used to forecast the balance sheet items based on the predicted sales.3. Operating efficiency: The percent on sale method is also based on the operating efficiency of the company. The balance sheet items of the company are based on the operating efficiency.4. Industry standards: The percent on sale method can also be based on the industry standards.
Hence percent on sale method is based on the historical relationship between the sales and the balance sheet items of the past years. It is dependent on sales forecasting as it is used to forecast the balance sheet items based on the predicted sales. It is also based on the operating efficiency of the company and the industry standards. The percent on sale method is a crucial factor to determine the forecasting of balance sheet items of the company.
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The short-run Phillips curve shows the trade-off between
unemployment and inflation that arise in the short run because aggregate demand shifts around due to changes in government macroeconomic policies.
inflation and Gross Domestic Product
unemployment and inflation that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.
real GDP and the price level that arise in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.
The short-run Phillips curve shows the trade-off between unemployment and inflation that arise in the short run because aggregate demand shifts around due to changes in government macroeconomic policies.
This trade-off happens in the short run as short-run aggregate supply shifts the economy along the aggregate demand curve.The Phillips curve represents the negative correlation between unemployment and inflation rates in an economy. In the short run, there exists a trade-off between inflation and unemployment. As the aggregate demand shifts due to the macroeconomic policies of the government, the economy moves along the short-run aggregate supply curve, leading to a temporary trade-off between inflation and unemployment. However, in the long run, the Phillips curve becomes vertical at the natural rate of unemployment, indicating that there is no trade-off between inflation and unemployment in the long run.The Phillips curve got its name from the economist A.W. Phillips, who found an inverse relationship between wage changes and unemployment rates in the UK during the period of 1861 to 1957. During this time, it was observed that wage rates increased when unemployment was low and vice versa.Inflation is the rate at which the general level of prices for goods and services is rising and, as a result, the purchasing power of a currency is falling. The short-run Phillips curve represents the relationship between inflation and unemployment in the short run due to changes in the macroeconomic policies of the government. When the government spends more, there is a rise in aggregate demand, leading to a fall in unemployment rates but a rise in inflation. Conversely, when the government cuts spending, it leads to a fall in aggregate demand, leading to a rise in unemployment rates but a fall in inflation rates.
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This case covers Chubb Industries’ use of enterprise
architecture to provide a framework to align IT and the
business.
1. What are the key components of the architecture Chubb has
created?
The key components of the architecture Chubb Industries has created are as follows: Process Components, Data Components, Application Components, Technology Components, Security Components.
Enterprise Architecture is a practice of architecture that is used for identifying the alignment of business strategy with technology strategy. It involves creating, managing, analyzing, and providing comprehensive views of the enterprise architecture. The goal of enterprise architecture is to integrate the business and technology aspects of an organization to deliver value to stakeholders. In the given case, Chubb Industries used enterprise architecture to provide a framework to align IT and the business. It is essential to understand the components of the architecture to analyze how it helped Chubb Industries to align IT and the business. Key Components of Architecture Chubb Industries created the following are the key components of the architecture that Chubb Industries has created. Process Components: These are the business processes of the organization that are responsible for the execution of business activities. Data Components : These components are responsible for data storage, processing, and retrieval. They include databases, data warehouses, and data marts. Application Components: These components provide the functionality required by the business. They are responsible for executing business logic and are implemented using software. Technology Components: These components are responsible for providing the underlying infrastructure required for the applications to function. They include servers, storage devices, and networking equipment. Security Components: These components are responsible for ensuring the security of the organization's data and applications. They include firewalls, intrusion detection systems, and access control systems.
Therefore, this is the correct answer.
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What is the current rabo for Alice's Rentals? OA. 1.00 OB. 0.00 OC 155 OD 129 Ledger accounts Accumulated amortization Cash Equipment Alice Normanson, Capital Alice Normanson, Withdrawals Prepaid rent Accounts payable Supplies Unearned revenue Notes payable (due Dec. 31, 2023) Print Done -X $2.000 7,300 15,000 9,300 2.200 3.000 7,800 1,200 1,000 7.500
In order to determine the current RABO of Alice's Rentals, we first need to understand what RABO stands for. RABO, or Return on Average Book Value, is a financial metric used to measure the profitability of a business relative to its assets.
To calculate RABO, the business's net income is divided by the average book value of its assets over a given period of time. Therefore, we need to calculate the average book value of Alice's Rentals' assets and net income.
Let's begin by identifying the relevant accounts on the balance sheet:Cash = $7,300Equipment = $15,000Prepaid rent = $1,200Supplies = $1,000Accounts payable = $7,800Unearned revenue = $3,000Notes payable = $7,500Let's calculate the book value of Alice's Rentals' assets:
Book value = Cost - Accumulated amortizationEquipment = $15,000 - 0 = $15,000Prepaid rent = $1,200 - 0 = $1,200Supplies = $1,000 - 0 = $1,000Book value of assets = $15,000 + $1,200 + $1,000 = $17,200
To calculate the average book value of assets, we need to know the beginning and ending book values of assets. However, this information is not provided in the question. Therefore, we cannot calculate the current RABO of Alice's Rentals.
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Two polluters currently emit 10-tons of pollution each for a total of 20 tons. The two firms have the following costs for reducing pollution: MC1 =8+1R1 MC2 =6+3R2 where Ri represents the units of pollution reduced by firm i. Fill in the table below. Total Cleanup MC MC (R) Firm 1 () Firm 2 ($) 1 2 3 4 5 6 7 8 9 10 The EPA has determined that the socially optimal level of pollution is a total of 10 tons. (a) If the EPA were to mandate that each firm reduce pollution by 5 tons, what would be the total cost to society? (b) Now suppose that the EPA were to adopt cap-and-trade and auctioned 10 tradable pollution permits to reach the socially optimal level. Each permit allows the owner to pollute 1 ton. How many of the permits would each firm be expected to buy? (c) What is the total cost to society of reducing pollution to 10 tons under cap-and-trade?
(a) If the EPA were to mandate that each firm reduce pollution by 5 tons, then the total reduction would be 10 tons (5 tons per firm) which is equal to the socially optimal level of pollution. Firm 1’s MC for reducing 5 tons is equal to 8+1(5) = $13 and Firm 2’s MC for reducing 5 tons is equal to 6+3(5) = $21. If both firms reduce 5 tons each, the total cost to society would be $13+$21 = $34.
(b) If the EPA were to adopt cap-and-trade and auctioned 10 tradable pollution permits to reach the socially optimal level, each firm would buy 5 permits since they both emit 10 tons each. In order to reduce pollution to 10 tons, both firms would have to buy 5 permits each. The cost of these permits would be equal to the sum of all the permits bought multiplied by the marginal cost of the permits. In this case, it would be 5 x $13 = $65 for Firm 1 and 5 x $21 = $105 for Firm 2. The total cost of the permits would be $65+$105 = $170.
(c) Under cap-and-trade, the total cost to society would be the sum of the cost of the permits and the marginal costs of reducing the pollution. In this case, the total cost would be $170+$34 = $204. Therefore, the total cost to society of reducing pollution to 10 tons under cap-and-trade is $204.
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Suppose Kia and Hyundai are considering offering 10-year full-coverage warranties for new cars. While offering warranties is expensive, if one firm does offer a warranty, it will be very difficult for the other to compete without them. Assume the payoffs for this game are as follows (in millions of dollars per year).
If the game is played once, what is the outcome?
Suppose the game is repeated three times. Will the outcome change from your answer to (a)?
Suppose the game is infinitely repeated, and Kia and Hyundai have formed an agreement not to offer
warranties. Each firm plans to use a trigger strategy if the other defects. At what value for d is Kia indifferent between keeping the agreement and cheating?
The game will have two Nash equilibria, with each firm offering the warranty or neither firm offering the warranty.
Kia will prefer to offer the warranty, and Hyundai will prefer to not offer the warranty. This leads to Kia offering the warranty and Hyundai not offering it. Kia’s payoff will be $6 million, and Hyundai’s payoff will be $2 million. (b) The outcome of the game will not change. The game’s outcomes are not influenced by the number of repetitions. Therefore, the Nash equilibrium will remain the same. (c) The value for d at which Kia is indifferent between keeping the agreement and cheating is 1/3. For Kia to be indifferent, they need to expect the same payoff from either keeping the agreement or cheating. The expected present value of the agreement is: $6 million (1 + d + d2 + ...) / (1 – 0.8d)
The expected present value of cheating is:
$8 million + $6 million (1 + d + d2 + ...) / (1 – 0.8d)
For Kia to be indifferent:
1/3 = $8 million / $2 million + $6 million / (1 – 0.8d)1 – 0.8d
= 5d2 + 6d + 2d20
= 5d2 + 6d + 2.8d20
= 5d2 + 8.8d-8.8d + 20
= 5d2d2
= 5.6d
= 1.5d
= 1/3
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