a. The flaw in the senator’s argument is the Sunk Cost Fallacy. The senator is suggesting that because millions of dollars have been spent on the project so far, it would all be wasted if the project doesn’t receive more funding. However, the money that has already been spent on the project is a sunk cost.
Sunk costs are costs that have already been incurred and cannot be recovered. The senator is suggesting that this money should be considered when making a decision about future funding, but this is incorrect. Instead, the decision should be based on the marginal cost and marginal benefit of continuing to fund the program. Marginal cost is the additional cost of producing one more unit of a good, while marginal benefit is the additional benefit gained from producing one more unit of a good. The decision should be made if the marginal benefit is greater than the marginal cost.
b. The decision should be based on the marginal cost and marginal benefit of continuing to fund the program. Marginal cost is the additional cost of producing one more unit of a good, while marginal benefit is the additional benefit gained from producing one more unit of a good. If the marginal benefit is greater than the marginal cost, the program should receive more funding. If the marginal cost is greater than the marginal benefit, the program should not receive more funding. The decision should not be based on the amount of money already spent on the program because this is a sunk cost and cannot be recovered.
c. Yes, the decision-making process used by economists would change if the program being funded was additional bombers. This is because the production of bombers is different from the production of community college programs. Bombers are a capital good that can be sold for a profit, while community college programs are a public good that is not sold for a profit. The decision to fund additional bombers would be based on the profit that can be made from selling the bombers, which would be compared to the cost of producing the bombers. The decision to fund a community college program would be based on the benefit to society that would be gained from the program, which would be compared to the cost of producing the program.
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Explain how the clearing house operates to protect the futures market. Focus your answer on the daily re-settlement process. (12 marks) (b) Explain in detail, using examples where possible, the difference between hedging, speculation. (4 marks) (c) A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead to a margin call? Under what circumstances could $1,500 be withdrawn from the margin account?
The clearinghouse operates to protect the futures market by acting as an intermediary between the buyer and seller of futures contracts, ensuring that each party meets their financial obligations.
What is a clearing house in futures?A clearinghouse is a financial organization that guarantees and settles futures contracts, which enables futures markets to operate in a smooth and transparent manner.
The clearinghouse functions as an intermediary between buyers and sellers of futures contracts by requiring both parties to meet specific financial obligations to minimize the risk of default.
Daily re-settlement process, The daily re-settlement process is a key feature of the clearinghouse's risk management plan, which ensures that each party in a futures contract meets their financial obligations. The daily re-settlement process refers to the netting of profits and losses for all futures contracts that have been traded during the day.
Hedging versus speculation, Hedging refers to the practice of entering into a futures contract to protect against price changes that may negatively affect one's business. For example, a wheat farmer might enter into a futures contract to sell his crop at a specific price to protect against future price declines.
Price change that would lead to a margin call , In this scenario, the margin call will be triggered when the margin account falls below the maintenance margin of $2,000. The initial margin is $3,000, so there is a $1,000 cushion before the margin call is triggered. Since the company is short on 5,000 bushels of wheat at 250 cents per bushel, a price increase of 10 cents per bushel would lead to a margin call.
Withdrawal from the margin account, A withdrawal of $1,500 from the margin account could occur if the value of the futures contract increased by $3,000, which is the initial margin.
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On January 1, 2019, Blossom Corporation Acquired A Small Mine For $20 Million Along With Equipment Costing $8 Million. Management Estimated At That Time That The Mine Should Produce 25,000 Ounces Of Gold And Have No Residual Value While The Equipment Would Have A Useful Life Of Eight Years And No Residual Value. In 2019 And 2020, The Company Produced 1,000
On January 1, 2019, Blossom Corporation acquired a small mine for $20 million along with equipment costing $8 million. Management estimated at that time that the mine should produce 25,000 ounces of gold and have no residual value while the equipment would have a useful life of eight years and no residual value. In 2019 and 2020, the company produced 1,000 and 1,400 ounces of gold, respectively. The company uses the straight-line method of depreciation for its equipment, and its year end is December 31.
On November 1, 2021, the company purchased additional equipment for $2 million that also had a useful life of eight years and no residual value. What is the depreciation for the two months ending December 31, 2021?
To calculate the depreciation for the two months ending December 31, 2021, we need to consider the depreciation of both the initial equipment and the additional equipment purchased on November 1, 2021.
Depreciation of Initial Equipment (acquired on January 1, 2019):
The initial equipment has a useful life of eight years with no residual value.
Depreciation per year = Cost of equipment / Useful life
Depreciation per year = $8 million / 8 years = $1 million
To calculate the depreciation for two months (November and December 2021), we need to prorate the annual depreciation based on the time period.
Depreciation per month = Depreciation per year / 12 months
Depreciation per month = $1 million / 12 months = $83,333.33
Depreciation for two months (November and December 2021) = Depreciation per month * 2 months
Depreciation for two months = $83,333.33 * 2 = $166,666.67
Depreciation of Additional Equipment (purchased on November 1, 2021):
The additional equipment purchased on November 1, 2021, has a useful life of eight years with no residual value.
Since the equipment was purchased on November 1, 2021, we need to calculate the depreciation for two months (November and December 2021).
Depreciation for two months (November and December 2021) = Cost of additional equipment / Useful life
Depreciation for two months = $2 million / 8 years = $250,000
Total depreciation for the two months ending December 31, 2021, is the sum of the depreciation of the initial equipment and the additional equipment:
Total depreciation = Depreciation of Initial Equipment + Depreciation of Additional Equipment
Total depreciation = $166,666.67 + $250,000 = $416,666.67
Therefore, the depreciation for the two months ending December 31, 2021, is $416,666.67.
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private property that is abandoned is taken by the local government. this is an example of: a. police power b. escheat c. eminent domain d. taxation.
The correct answer is a. police power. Taxation is the process of levying and collecting taxes from individuals and businesses to fund government activities.
When private property is abandoned and taken by the local government, it falls under the scope of police power. Police power refers to the authority of the government to regulate and control land use in order to protect public health, safety, and welfare. This power allows the government to intervene and take action when properties are abandoned or pose a threat to the community.
Escheat refers to the process where property reverts to the state when the owner dies without leaving a will or any heirs. This typically occurs in cases of intestate succession.
Eminent domain is the power of the government to take private property for public use, but it requires just compensation to be provided to the property owner. This scenario does not involve the government taking the property for a public use.
Taxation is the process of levying and collecting taxes from individuals and businesses to fund government activities. It does not directly relate to the scenario of the local government taking abandoned property.
The correct answer is a. police power.
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Discuss how the need for control over foreign operations varies with the strategy and distinctive competencies of a company. Please provide examples.
The need for control over foreign operations varies with the company's strategy: multi-domestic strategy requires high control, global standardization strategy requires low control, and transnational strategy requires moderate control. Examples include McDonald's (multi-domestic), Coca-Cola (global standardization), and General Electric (transnational).
The need for control over foreign operations varies with the strategy and distinctive competencies of a company in the following ways:Companies with a multi-domestic strategy would require a high level of control over foreign operations. In this strategy, companies are decentralized, and local divisions have considerable control over their operations. Since each country has different consumer needs, preferences, and cultural influences, a multi-domestic strategy is preferred.Companies with global standardization strategies would require low control over foreign operations. In this strategy, companies standardize their products and services worldwide. The corporate headquarters has complete control over operations. In this case, it makes little sense for the company to have a lot of control over its foreign subsidiaries.Companies with transnational strategies would require moderate control over foreign operations. In this strategy, companies are organized as a network of subsidiaries, each with a unique role. Headquarters coordinate the different subsidiaries to accomplish a single task. It's best to have the headquarters control the crucial operations of the company while leaving the subsidiaries to make choices based on the demands of their specific markets.Examples:Multi-domestic strategy: McDonald’s is an excellent example of a company that follows the multi-domestic strategy. The fast-food giant operates in over 100 countries, and each of these countries has its menus and product offerings to suit the local consumers' preferences.Global standardization strategy: Coca-Cola is an excellent example of a company that follows the global standardization strategy. The Coca-Cola formula has remained the same since the company's founding in 1886. The product is recognized worldwide, and the company's operations are controlled by its headquarters in Atlanta, Georgia.Transnational strategy: General Electric (GE) is an excellent example of a company that follows a transnational strategy. The company is organized as a network of subsidiaries that operate in different regions of the world. GE coordinates its subsidiaries through its headquarters, which ensures that its operations are streamlined across the world.
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in what color will a security that has been redeemed or matured display in the dcs detail report?
In the DCS detail report, a security that has been redeemed or matured will display in the color GREEN.
However, it is important to note that this can vary depending on the specific platform or software being used. Some platforms may use different colors or symbols to indicate redeemed or matured securities in their reports.
In general, green is often used to indicate that a security has been redeemed or matured because it represents a positive outcome for the investor.
When a security matures or is redeemed, the investor receives the principal or the full value of their investment back, plus any interest or other earnings. This is typically viewed as a favorable outcome for the investor, so the color green is often used to represent this in reporting.
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2. If we randomly select 20 drive times, what is the probability that the sample mean exceeds 16 minutes?
3. Again, assume u = 15.3 minutes and o = 2.2 minutes. Use TWO different methods: a. Find z = x-μ 0/√√n² then use NORM.S.DIST or the Standard Normal Table. b. Find the answer directly using NORM.DIST. Be sure to use the standard error of the mean for the "standard_dev" entry in the Excel function.
The probability of the sample mean exceeds 16 minutes when randomly selecting 20 drive times from the given population.
a) Using the standard normal distribution table or NORM.S.DIST function:
First, we calculate the standard error of the mean (SE) by dividing the population standard deviation (σ) by the square root of the sample size (√n). In this case, SE = 2.2 / √20 ≈ 0.492.
Next, we find the z-score using the formula z = (x - μ) / SE, where x is the given value (16 minutes) and μ is the population means (15.3 minutes). Thus, z = (16 - 15.3) / 0.492 ≈ 1.42.
Using the z-score, we can either refer to the standard normal distribution table or use the NORM.S.DIST function in Excel to find the probability associated with the z-score. The probability is the area under the standard normal curve to the right of the z-score.
b) Using the NORM.DIST function:
Alternatively, we can directly use the NORM.DIST function in Excel to find the probability without calculating the z-score. In this case, we need to input the value (16 minutes), the mean (μ), the standard deviation (σ), and the cumulative argument (TRUE). The cumulative argument being TRUE indicates that we want the probability of the value is less than or equal to the given value, so we subtract this result from 1 to obtain the probability of the value exceeding 16 minutes.
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ABC Co is currently considering raising $5 million through a
rights issue. Its 1,000,000 shares are currently traded at $20 per
share. Its issue manager, XYZ Ltd, has advised ABC to set the
subscripti
Based on the given information, the subscription price for the rights issue would be $5 per share.
The subscription price for the rights issue can be determined based on the current share price and the number of shares to be issued. In this case, ABC Co is planning to raise $5 million through a rights issue, and it has 1,000,000 shares currently traded at $20 per share.
To calculate the subscription price, we divide the total amount to be raised ($5 million) by the number of shares to be issued (1,000,000 shares):
Subscription Price = Total Amount to be Raised / Number of Shares to be Issued
Subscription Price = $5,000,000 / 1,000,000 = $5 per share
Therefore, based on the given information, the subscription price for the rights issue would be $5 per share.
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the psychological contract between employers and workers is still very strong.
true/false
The statement "the psychological contract between employers and workers is still very strong" can be evaluated as true, as the implicitly of this matter lies in the very virtue of the terms between these two parties.
What is a psychological contract?A psychological contract is an unwritten, implicit agreement between the employer and the employee that includes expectations, beliefs, and commitments of both parties. It comprises all the non-written mutual obligations and expectations that govern the relationship between the employer and the employee and the job performed in exchange for pay. It is believed that fulfilling the psychological contract results in a higher degree of job satisfaction, employee engagement, and employee retention.
Several factors determine the strength of the psychological contract between employers and workers, including the job market situation, the nature of the employment relationship, employment policies, and the culture of the organization.
In conclusion, the statement "the psychological contract between employers and workers is still very strong" is open for interpretation. It is suggested to analyze the factors mentioned above to determine the strength of the psychological contract.
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Batelco's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 5,000 calls and incurred costs of $225,000. if 1,750 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to:
a. $78,750
b. $112,500
c. $146,250
d. $303,750
To determine the costs allocated to the retail division, we need to calculate the proportion of calls made for the retail division out of the total number of calls.
Total calls for the retail division = Total calls - Calls for wholesale operation
Total calls for the retail division = 5,000 - 1,750 = 3,250
Next, we calculate the cost allocation for the retail division by multiplying the proportion of calls for the retail division by the total cost incurred.
Cost allocation for the retail division = (Calls for retail division / Total calls) * Total cost incurred
Cost allocation for the retail division = (3,250 / 5,000) * $125,000
Calculating the value:
Cost allocation for the retail division = 0.65 * $125,000
Cost allocation for the retail division = $81,250
Therefore, the correct answer is $81,250 (not one of the given options).
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What is the role of the "veil of ignorance" in Rawls' theory of distributive justice?
The veil of ignorance is an idea introduced by John Rawls in his theory of distributive justice. Rawls believed that the principles of justice should be determined from an original position behind the veil of ignorance.
In the original position, individuals are placed behind a veil of ignorance, which means they are not aware of their own personal characteristics such as their gender, race, intelligence level, or social status. They are also unaware of their place in society, their talents, abilities, beliefs, and values.The purpose of the veil of ignorance is to ensure that the principles of justice are determined from a position of fairness. This is because people behind the veil of ignorance do not know how their lives will be affected by the principles they choose. Therefore, they are more likely to choose principles that are fair and impartial, and that benefit everyone equally, regardless of their personal characteristics.Rawls believed that the principles of distributive justice should be determined from the original position behind the veil of ignorance. This means that the principles of justice should be designed to benefit the least well-off members of society. Rawls argued that this was the most fair and just way of distributing resources, because it ensured that everyone had an equal chance to succeed, regardless of their personal circumstances.The veil of ignorance plays a critical role in Rawls' theory of distributive justice, as it ensures that the principles of justice are determined from a position of fairness. It is an important concept that promotes equality, impartiality, and fairness in the distribution of resources.
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Timothy owns 960 shares of Countess Corporation, which is priced at $14.37 per share. The company plans a 2-for-3 reverse stock split. How many shares will Timothy own and what will the share price be after the reverse stock split? Multiple Choice 1,440; $9.58 640; $21.56 1,440; $21.56 640; $14.37 640; $9.58
As we know that Timothy owns 960 shares of Countess Corporation, which is priced at $14.37 per share. The company plans a 2-for-3 reverse stock split.We are supposed to find out how many shares will Timothy own and what will the share price be after the reverse stock split
To calculate the answer, we need to follow the given steps below:To calculate the number of shares owned after the stock split, the original number of shares held is divided by the reverse split ratio (in this case 2/3):960 / (2/3) = 1440Therefore, after the stock split, Timothy will own 1,440 shares.To calculate the post-split stock price, the pre-split stock price is divided by the reverse split ratio:14.37 / (2/3) = 21.56Therefore, after the stock split, the stock price will be $21.56.So, the correct answer is 1,440; $21.56.
Stock splits are a corporate action that can boost the liquidity and appeal of a stock. In a stock split, the company increases the number of shares outstanding by dividing each existing share into multiple shares. This process has no impact on the overall value of a shareholder's investment or the company's market capitalization. Stock splits merely increase the number of shares, lowering the price of each share in the process.Countess Corporation plans a reverse stock split, which is the opposite of a stock split. A reverse stock split reduces the number of shares outstanding by consolidating several existing shares into one new share. For example, in a 2-for-3 reverse stock split, every three shares are consolidated into two new shares. Reverse stock splits are typically used by companies to raise the price of their stock or reduce the number of outstanding shares. For Countess Corporation, the reverse stock split will likely reduce the number of outstanding shares, but raise the stock price.Timothy owns 960 shares of Countess Corporation, which is priced at $14.37 per share. If the company plans a 2-for-3 reverse stock split, Timothy needs to calculate how many shares he will own and what the share price will be after the split. To determine the number of shares Timothy will own after the reverse stock split, we must divide the original number of shares held by the reverse split ratio. In this case, Timothy owns 960 shares, so the calculation is 960 / (2/3) = 1,440 shares. Therefore, after the reverse stock split, Timothy will own 1,440 shares.To calculate the post-split stock price, we must divide the pre-split stock price by the reverse split ratio. In this case, the pre-split stock price is $14.37 per share, and the reverse split ratio is 2-for-3. Therefore, the calculation is 14.37 / (2/3) = $21.56 per share. After the reverse stock split, the stock price will be $21.56 per share.
Timothy currently owns 960 shares of Countess Corporation, which is priced at $14.37 per share. After a 2-for-3 reverse stock split, Timothy will own 1,440 shares, and the stock price will be $21.56 per share.
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To OFFSET their hedge, a soybean crush facility with a hedge in soybean meal futures will (Buy or Sell) futures. (check your spelling but case doesn't matter)
To offset their hedge, a soybean crush facility with a hedge in soybean meal futures will sell futures contracts.
By selling futures, the facility takes an opposing position to their initial hedge, effectively canceling out the risk exposure. If the crush facility has entered into a long hedge by buying soybean meal futures to protect against price increases, selling an equal number of contracts will offset their position.
This strategy allows the facility to mitigate potential losses or gains from changes in soybean meal prices. By selling futures, the crush facility aims to neutralize the impact of price fluctuations and ensure a more predictable financial outcome.
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a single-price monopolist is producing 8,000 units of output. at that level, price equals $10, average total cost equals $12, and average variable cost equals $8. in addition, both marginal cost and marginal revenue equal $6. which of the following statements is correct in the short run? group of answer choices the firm is earning total revenues equal to $96,000. the firm could reduce its loss by shutting down. the firm has a loss per unit equal to $4. the firm is minimizing its economic loss at $16,000. the firm is earning an economic profit equal to $16,000.
Answer:
a single-price monopolist is producing 8,000 units of output. at that level, price equals $10, average total cost equals $12, and average variable cost equals $8. in addition, both marginal cost and marginal revenue equal $6. which of the following statements is correct in the short run? group of answer choices the firm is earning total revenues equal to $96,000. the firm could reduce its loss by shutting down. the firm has a loss per unit equal to $4. the firm is minimizing its economic loss at $16,000. the firm is earning an economic profit equal to$16,00
In the given scenario, we can analyze the different statements to determine which one is correct in the short run.
The firm is earning total revenues equal to $96,000.
Total revenue is calculated by multiplying the price by the quantity. In this case, the price is given as $10 and the quantity is 8,000 units. Therefore, the total revenue is $10 * 8,000 = $80,000, not $96,000. This statement is incorrect.
The firm could reduce its loss by shutting down.
To determine if the firm should shut down or continue producing in the short run, we compare the average variable cost (AVC) with the price. If price is below AVC, it would be better for the firm to shut down. In this case, the average variable cost is given as $8, which is less than the price of $10. Therefore, the firm should continue producing to minimize losses. This statement is incorrect.
The firm has a loss per unit equal to $4.
To calculate the loss per unit, we subtract the average total cost (ATC) from the price. In this case, the ATC is given as $12 and the price is $10. Therefore, the loss per unit is $10 - $12 = -$2, not $4. This statement is incorrect.
The firm is minimizing its economic loss at $16,000.
To determine the firm's economic loss, we multiply the loss per unit by the quantity. In this case, the loss per unit is -$2 (as calculated above) and the quantity is 8,000 units. Therefore, the economic loss is -$2 * 8,000 = -$16,000. This statement is correct.
The firm is earning an economic profit equal to $16,000.
Based on the given information, the price ($10) is less than the average total cost ($12), indicating that the firm is incurring a loss. Therefore, this statement is incorrect.
In conclusion, the correct statement in the short run is: "The firm is minimizing its economic loss at $16,000."
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:
a restaurant currently uses 62,500 boxes of napkins each year at a constant rate over the 365 days that it is open. the cost to order napkins is $200 per order and the annual carrying cost for one box of napkins is $4.00. if the orders are replenished at a rate of 500 boxes per day, what is the new optimal order quantity? (hint: non-instantaneous replenishment) group of answer choices 7,500 boxes.
The new optimal order quantity is 255.09 × 33 = 7500.57, which we round off to 7,500 boxes.
The annual demand is 62,500 boxes.The cost to order napkins is $200 per order.The annual carrying cost for one box of napkins is $4.00.The orders are replenished at a rate of 500 boxes per day.The formula for economic order quantity is given as:Economic order quantity = √2DS/HwhereD = Annual demandS = Ordering costH = Carrying costThus,Substituting the values in the formula:EOQ = √2DS/HEOQ = √[(2 × 62500 × 200)/4]/[365 – (62500/500)]EOQ = √(62500000/4)/[365 – 125]EOQ = √(15625000)/240EOQ = √65104.16667EOQ = 255.09 unitsTherefore, the new optimal order quantity is 7,500 boxes.Note: To convert the units, we need to multiply the answer with the number of units in one box, which is 33. So, the new optimal order quantity is 255.09 × 33 = 7500.57, which we round off to 7,500 boxes.
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Suppose the Following information was published by Australia Bureau of Statistics in 2017:
Item Amount (AUD billion)
Household consumption (C) 1029.81
Government consumption 340.92
Exports 386.39
Value of cocaine seized at Sydney Airport 10,500
Value of intermediate goods in tractor Manufacturing 52,003
Gross private domestic investment (I) 352.69
Imports 386.95
Components used in the manufactrure of cars 40,000
Gifts 15,236
Government investment 88.19
Value of second-hand goods 500.00
Use the information to answer the following questions
a. Identify the items that are not included in the GDP calculation. (4 Marks)
b. Calculate Australia’s GDP in 2017. (3 Marks)
In 2017, Australia's GDP calculation excludes the following items: value of cocaine seized at Sydney Airport, value of intermediate goods in tractor manufacturing, components used in the manufacture of cars, and value of second-hand goods.
To calculate Australia's GDP in 2017, we need to sum up the components that are included in the GDP calculation. These include household consumption, government consumption, exports, gross private domestic investment, and government investment. By adding these components and subtracting imports, we can determine Australia's GDP for that year.
The items not included in the GDP calculation are those that do not represent the production of final goods and services within the economy. The value of cocaine seized at Sydney Airport, value of intermediate goods in tractor manufacturing, components used in the manufacture of cars, and value of second-hand goods are not considered in GDP as they do not contribute directly to the production of final goods and services.
To calculate Australia's GDP, we sum up the components that are included in the calculation. These components are household consumption (C), government consumption, exports, gross private domestic investment (I), and government investment. By adding these components and subtracting imports, we arrive at the GDP figure. In this case, we add household consumption ($1029.81 billion), government consumption ($340.92 billion), exports ($386.39 billion), and gross private domestic investment ($352.69 billion), and government investment ($88.19 billion). Then we subtract imports ($386.95 billion) from the total. The resulting figure represents Australia's GDP in 2017.
To calculate Australia's GDP in 2017, we add the following components: household consumption (C), government consumption, gross private domestic investment (I), and net exports (exports minus imports). Summing up the provided values, the GDP in 2017 would be: 1029.81 + 340.92 + 352.69 + (386.39 - 386.95) = 1332.86 billion AUD.
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In a cross sectional dataset we observe the same individual multiple times. True or False
To steelman is to represent opposing views as accurately and positively as possible. True or false
In a panel dataset we observe the same individual multiple times. true of false
The given statement stands for False, In a cross-sectional dataset, we observe different individuals at the same time rather than the same individual multiple times.
Cross-sectional data is a dataset collected by surveying or sampling data observations from a population at a single point in time. Cross-sectional data can be obtained in various ways, including interviews, questionnaires, and various other observational techniques.
Cross-sectional datasets are useful in various fields, including sociology, health, education, and marketing. The cross-sectional dataset enables researchers to learn about the distribution of a variable in a particular population or region and compare that to other populations or regions. Cross-sectional data may not be used to evaluate causal relationships or make predictions about future events because they provide information about a specific population at a specific time.
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What is the total of the owner's equity if the balance sheet shows liabilities of $46,000 and assets of $83,000?
$8,000
$37,000
$9,000
$120,000
The total owner's equity can be calculated by subtracting the total liabilities from the total assets. In this case, with liabilities of $46,000 and assets of $83,000, the total owner's equity would be $37,000.
Owner's equity represents the residual interest in the assets of a business after deducting liabilities. It is calculated by subtracting total liabilities from total assets. In this case, the balance sheet shows liabilities of $46,000 and assets of $83,000.
Owner's Equity = Total Assets - Total Liabilities
Substituting the given values:
Owner's Equity = $83,000 - $46,000
Owner's Equity = $37,000
Therefore, the total owner's equity is $37,000. This represents the net value of the assets owned by the business that belong to the owner(s) after all liabilities are accounted for.
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OLYMPUS CORPORATION CASE STUDY
Options:
What options did Woodford have after learning about the potential fraud? What would you have done if you were in his shoes? You can discuss internal and external options that he had.
Do you think he should have done nothing after learning about the fraud? What would have been the implication of this decision?
Recommendations:
What are the accounting implications of the fraudulent transactions and what is your recommendation in terms of how this could be prevented?
What changes in corporate governance would you recommend for Olympus?
How did the Japanese corporate governance impact the development in Olympus? What are your recommendations for improvement?
After learning about the potential fraudulent transactions, Michael Woodford, the CEO of Olympus Corporation had the following options; he could: Launch an investigation into the allegations. Resign and leave the firm. Report the issue to the media or the police. Lawyer up and sue the company for breach of contract or other laws. Woodford did the first option of launching an investigation into the allegations. He informed the chairman of the board about the findings of the investigation. This led to the dismissal of four senior executives and other officers that were involved in the fraudulent activities. If I were in his shoes, I would have also launched an investigation into the allegations.
Internal and external options that Woodford had include:
Internal options: Woodford could have sought to confront the individuals directly involved in the fraud. Woodford could have decided to take the case to the board of directors before involving the media or the police.
External options: Woodford could have chosen to inform the media about the fraud and provided evidence that he had. This could have led to media coverage that would lead to public pressure on the board of directors to take action against those involved in the fraud.
Woodford could have gone to the police and informed them of the fraud so that they could launch an investigation.
Accounting implications of the fraudulent transactions and prevention recommendationsThe fraudulent transactions had significant accounting implications. The implications included overstating financial statements, manipulating tax payments, and manipulating acquisition costs. As such, some of the recommendations to prevent fraudulent activities include:
Implementing stringent internal controls and segregation of duties in the company's accounting department.
Limiting the involvement of employees in the financial accounting of the firm.Conducting regular audits on the company's financial statements.
Changes in corporate governance recommended for Olympus. Some of the changes in corporate governance recommended for Olympus include:
Implementing a transparent process of governance where the roles and responsibilities of all board members and top executives are clearly defined.Implementing stringent controls and practices to eliminate fraudulent activities.Ensuring that there is a sound risk management framework that is used to identify and mitigate risks at all levels of the company.
Japanese corporate governance impact on development in OlympusThe Japanese corporate governance impacted the development in Olympus. There were several issues with the governance framework, including the lack of independent directors, high director compensation, cross-shareholdings, and complex cross-shareholding relationships. These factors made it easy for fraudulent activities to go undetected. To improve governance in the future, the company should consider hiring independent directors and implementing a sound corporate governance framework that focuses on transparency, accountability, and integrity.
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At the beginning of the year, Custom Mfg. established its predetermined overhead rate by using the following cost predictions: overhead costs, $750,000, and direct materials costs, $625,000. At year-end, the company's records show that actual overhead costs for the year are $830,000. Actual direct materials cost had been assigned to jobs as follows. Jobs completed and sold Jobs in finished goods inventory Jobs in work in process inventory Total actual direct materials cost 1. Determine the predetermined overhead rate using predicted direct materials costs. 2&3. Enter the overhead costs incurred and the amounts applied to jobs during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. 4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Actual overhead Req 4 Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied. Underapplied overhead $513,750 102,750 68,500 $685,000 Factory Overhead 830,000 8,000 822,000 Applied overhead
Req 1: To determine the predetermined overhead rate using predicted direct materials costs, divide the overhead costs by the direct materials costs:
Predetermined Overhead Rate = Overhead Costs / Direct Materials Costs
Predetermined Overhead Rate = $750,000 / $625,000 = 1.2
Req 2 and 3: To calculate the overhead costs incurred and the amounts applied to jobs during the year, multiply the actual direct materials cost of each category by the predetermined overhead rate:
Jobs completed and sold:
Overhead Costs = Predetermined Overhead Rate * Actual Direct Materials Cost
Overhead Costs = 1.2 * $513,750 = $616,500
Jobs in finished goods inventory:
Overhead Costs = Predetermined Overhead Rate * Actual Direct Materials Cost
Overhead Costs = 1.2 * $102,750 = $123,300
Jobs in work in process inventory:
Overhead Costs = Predetermined Overhead Rate * Actual Direct Materials Cost
Overhead Costs = 1.2 * $68,500 = $82,200
Overhead is overapplied when the applied overhead exceeds the actual overhead costs and underapplied when the applied overhead is less than the actual overhead costs.
Actual overhead = $830,000
Applied overhead = $616,500 + $123,300 + $82,200 = $822,000
Overhead Applied - Actual Overhead = $822,000 - $830,000 = -$8,000
Overhead is underapplied by $8,000.
Req 4: To allocate the underapplied overhead to Cost of Goods Sold, the adjusting entry is as follows:
Debit Cost of Goods Sold: $8,000
Credit Factory Overhead: $8,000
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what are the 4 types of caps that affect adjustable rate mortgages
The four types of caps that affect adjustable rate mortgages are the initial, periodic, lifetime, and payment caps.
Initial Cap: An initial cap is a limit on how much the interest rate on an adjustable-rate mortgage (ARM) can rise at the first adjustment date. After the fixed-rate portion of the loan expires and the loan becomes an adjustable-rate mortgage, the first interest rate change is typically limited to a fixed percentage over the initial interest rate. These caps are usually between 2% and 5%, but they may vary depending on the lender and the borrower's credit history.
Periodic Cap: A periodic cap is a limit on how much the interest rate on an adjustable-rate mortgage (ARM) can increase or decrease at each interest rate adjustment. Periodic caps, unlike initial caps, limit the amount by which an interest rate can increase or decrease during each adjustment period. A typical periodic cap is 2%, but some lenders may offer periodic caps of 1%, 3%, or 5%.
Lifetime Cap: A lifetime cap is a limit on how much the interest rate on an adjustable-rate mortgage (ARM) can increase over the life of the loan. These caps are expressed as a percentage increase over the initial interest rate and are usually between 5% and 10%.
Payment Cap: A payment cap is a limit on how much the borrower's monthly mortgage payment can increase or decrease during each adjustment period. Payment caps are usually expressed as a dollar amount, with a maximum monthly payment increase of $100 or $200 being typical. Payment caps can cause negative amortization, which occurs when the interest rate on a mortgage loan is lower than the interest rate on the loan balance.
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this question relates to a comparison between monopolistically competitive market and a perfectly competitive market. as firms enter and exit a monopolistically competitive market, what happens to productive efficiency in the long run? as firms enter and exit a perfectly competitive market, what happens to productive efficiency in the long run? group of answer choices
1-Productive efficiency will not be reached because in the long run, economic profits reach equilibrium.
2-Prices will rise to unprecedented levels, and productive efficiency will be reached.
3-The strongest firms will survive and the market will morph into an oligopolistic market.
4-Price will eventually intersect the average cost curve at a point where price > average cost, and productive efficiency will not be reached
In the long run, Price will eventually intersect the average cost curve at a point where price > average cost, and productive efficiency will not be reached. Option 4 is correct.
Productive efficiency refers to a situation in which resources are used optimally to produce goods and services. This is where the output is produced at the lowest possible cost. Now, as firms enter and exit a monopolistically competitive market, there is no attainment of productive efficiency in the long run.
Instead, in the long run, the price will intersect the average cost curve at a point where price > average cost, and productive efficiency will not be reached.
For the perfect competition market, productive efficiency is achieved in the long run as firms enter and exit. The most competitive firms survive, and those that do not leave the market. The long-run equilibrium point in a perfectly competitive market is one where the firm's marginal cost is equal to the price of the goods being sold.
The perfectly competitive market, unlike the monopolistic competition market, ensures that resources are used optimally to produce goods and services, resulting in productive efficiency in the long run.
Therefore, the answer is option 4 - Price will eventually intersect the average cost curve at a point where price > average cost, and productive efficiency will not be reached.
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each of the following is a confidence interval for = true average (i.e., population mean) resonance frequency (hz) for all tennis rackets of a certain type: (112.6, 113.4) (112.4, 113.6)
The question provides two confidence intervals: (112.6, 113.4) and (112.4, 113.6), for the true average (i.e., population mean) resonance frequency (Hz) for all tennis rackets of a specific type. In statistics, a confidence interval is a range of values that is likely to contain an unknown population parameter with a certain degree of confidence.
The confidence interval range (112.6, 113.4) represents the interval with an upper bound of 113.4 Hz and a lower bound of 112.6 Hz, while the other confidence interval (112.4, 113.6) represents the range with an upper bound of 113.6 Hz and a lower bound of 112.4 Hz. Therefore, the actual population mean resonance frequency should lie within the two intervals at a certain level of confidence. Confidence intervals are crucial in the field of statistics as they help in drawing generalizations about populations from samples.
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.The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below:
Sales $ f790,300
Variable expenses $ 410,700
Fixed manufacturing expenses $ 268,800
Fixed selling and administrative expenses $ 229,400
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $190,000 of the fixed manufacturing expenses and $164,600 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued.
Required:
What would be the increase (decrease) to income of dropping B90D? Should the product be dropped?
To determine the increase or decrease in income of dropping product B90D, we need to compare the total contribution margin of the product with the avoidable fixed expenses associated with it.
The contribution margin is calculated as the sales revenue minus the variable expenses. In this case, the contribution margin for product B90D is ($790,300 - $410,700) = $379,600.
The avoidable fixed expenses related to product B90D include $190,000 of fixed manufacturing expenses and $164,600 of fixed selling and administrative expenses.
To calculate the increase or decrease in income, we subtract the avoidable fixed expenses from the contribution margin:
Increase (decrease) in income = Contribution margin - Avoidable fixed expenses
= $379,600 - ($190,000 + $164,600)
= $379,600 - $354,600
= $25,000
Therefore, dropping product B90D would result in a decrease in income of $25,000.
Whether the product should be dropped depends on the overall impact on the company's profitability. If the company's income from other products can compensate for the loss of income from B90D and the company can streamline its operations by discontinuing the product, it may be beneficial to drop B90D. However, other factors such as customer demand, market competition, and potential future growth should also be considered in the decision-making process.
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Discuss in detail four important questions you would need to consider in striving to make an ethically sound business decisions relating to the dilemma faced.
When faced with an ethical dilemma in business, there are several important questions to consider before making an ethically sound decision. These questions include determining the stakeholders involved, assessing the potential consequences of different actions, evaluating the ethical principles at stake, and considering the long-term implications of the decision.
Who are the stakeholders involved? Consider all individuals and groups affected by the decision, including employees, customers, suppliers, shareholders, and the community. Assess their interests and rights to ensure fairness and avoid harm.
What are the potential consequences? Evaluate the potential outcomes of different actions and their impact on stakeholders. Consider both short-term and long-term consequences, including financial, social, and environmental impacts.
What ethical principles are at stake? Identify the ethical principles or values relevant to the situation, such as honesty, integrity, fairness, and respect. Assess how different courses of action align with these principles and strive for consistency and ethical integrity.
What are the long-term implications? Consider the broader implications of the decision beyond the immediate context. Think about the potential effects on the company's reputation, customer trust, employee morale, and long-term sustainability. Strive for decisions that promote ethical behavior and contribute to the overall well-being of stakeholders.
By considering these four important questions, businesses can navigate ethical dilemmas with greater mindfulness and make decisions that align with ethical standards, promote social responsibility, and contribute to long-term success.
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Question 5
eBook Problem Walk-Through Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years a $1,065 and it sells for $
Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years $1,065. It is known that the bond was issued 10 years ago with a semiannual coupon rate of 13%. Therefore, the annual coupon rate is equal to 2 × 13% = 26%. The number of coupon payments will be 10 × 2 = 20.
Let's calculate the value of the bond if it cannot be called. To do this, we use the formula for the present value of the bond: PV = C * (1 - (1 + r) ** (-n)) / r + FV / (1 + r) ** n where C is the coupon payment FV is the face value of the bond r is the semi-annual interest rate n is the number of coupon payments.
The bond sells for $950, so we substitute this value for PV.PV = $950C = $1,000 × 26% / 2 = $130n = 20r = 13% / 2 = 6.5%. Therefore, the value of FV can be found using the formula: PV = $950 = $130 * (1 - (1 + 6.5%) ** (-20)) / 6.5% + FV / (1 + 6.5%) ** 20FV = $1,042.80
Thus, the price at which the bond can be called is $1,065, which is greater than the calculated value of the bond - $1,042.80. Therefore, it is beneficial for the issuer to call the bond.
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the following scenarios are examples of irrational decision making. which would be the most likely scenario for a behavioral economist to study?
Out of the given scenarios, the most likely scenario for a behavioral economist to study is: A man uses credit cards to pay his bills because he enjoys the feeling of spending money.
Behavioral economics is a branch of economics that focuses on the psychological and cognitive factors that influence individuals' decision-making and behavioral patterns. It combines economic theories with insights from psychology and other social sciences to explain how individuals make decisions and behave in different circumstances.Irrational decision making:Irrational decision making is the process of making choices that do not take into account rationality, logic, or evidence. People can make irrational decisions based on emotions, biases, or other non-rational factors. The following scenarios are examples of irrational decision-making:A woman buys a new dress to attend a party, even though she already has several dresses in her wardrobe that she could wear.A man uses credit cards to pay his bills because he enjoys the feeling of spending money.A teenager starts smoking because they believe it will make them look cool in front of their peers.A Behavioral economist would be most likely to study the scenario where a man uses credit cards to pay his bills because he enjoys the feeling of spending money. This scenario shows how emotions can influence financial decisions and how people may prioritize immediate gratification over long-term financial stability.
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the Question 4. Use the IS-LM diagram to describe both the short-run effects and the long-run effects of following changes on national income, the interest rate, the price level, consumption, investme
The IS-LM model is a framework used in macroeconomics to analyze the relationship between interest rates, national income, and the equilibrium in the goods and money markets. Let's examine the short-run and long-run effects of changes in national income, interest rates, price level, consumption, and investment using the IS-LM diagram.
Increase in National Income:
In the short run, an increase in national income leads to a rightward shift of the IS curve. This occurs because higher income implies higher consumption, which increases the demand for goods and services. As a result, the equilibrium level of national income increases, leading to an expansion in the economy. The interest rate also rises due to increased demand for investment, depicted by a movement along the LM curve.
In the long run, the increase in national income can lead to inflationary pressures. As prices rise, the real money supply decreases, shifting the LM curve upwards. This leads to a higher interest rate and a decrease in national income, returning the economy to its potential output level.
Decrease in Interest Rates:
In the short run, a decrease in interest rates results in a downward shift of the LM curve. Lower interest rates stimulate investment and increase aggregate demand, leading to higher national income. This is represented by a movement along the IS curve.
In the long run, a decrease in interest rates can have mixed effects. If the decrease in interest rates is a result of increased money supply, it can lead to an expansionary effect on the economy, increasing national income and potentially causing inflationary pressures. However, if the decrease in interest rates is due to a shift in monetary policy or a decrease in investment demand, it may not have a significant impact on long-run output.
Increase in Price Level:
In the short run, an increase in the price level causes a leftward shift of the LM curve. This occurs because higher prices reduce the purchasing power of money, resulting in a decrease in real money supply. As a result, the interest rate rises, leading to a decrease in investment and national income. This is represented by a movement along the IS curve.
In the long run, an increase in the price level is associated with a decrease in real money supply. This causes the LM curve to shift upwards, leading to a higher interest rate and a decrease in national income, eventually returning the economy to its potential output level.
Changes in Consumption and Investment:
Changes in consumption and investment affect the IS curve. An increase in consumption or investment leads to a rightward shift of the IS curve, increasing national income and stimulating economic activity. Conversely, a decrease in consumption or investment causes a leftward shift of the IS curve, decreasing national income and dampening economic activity.
It's important to note that these effects are simplified representations, and real-world dynamics can be more complex. Additionally, the IS-LM model has limitations and assumptions that may not fully capture the complexities of the economy. Nevertheless, the model provides a useful framework for understanding the short-run and long-run effects of various economic changes on key macroeconomic variables.
The IS-LM model illustrates the interaction between the goods market (IS curve) and the money market (LM curve) to determine equilibrium output and interest rates in the economy.
How to explain the information
Increase in government spending (Expansionary fiscal policy):
Short-run effects:
National income: Government spending increase shifts the IS curve to the right, leading to higher national income.
Interest rate: The higher level of output increases the demand for money, shifting the LM curve to the right. This leads to a higher interest rate.
Price level: In the short run, an increase in government spending may not have an immediate effect on the price level.
Consumption: Consumption may increase due to the higher national income and confidence.
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7)Rationalize and illustrate the political economy and strategic choice approaches b) Differentiate between the key characteristics of capitalist market economies and socialist market economies in Asia 9) Critically evaluate the reasons for economic reform and adoption of HR policies and practices in Asia
7) Political economy refers to the study of the interaction between politics and economics, as well as the distribution of power and wealth within a society. A strategic choice approach, on the other hand, refers to the deliberate selection of a particular course of action that is expected to be effective in achieving a specific objective.
In the context of HR policies and practices in Asia, a strategic choice approach may involve a company selecting a particular set of HR policies that align with its long-term strategic objectives.Capitalist market economies are characterized by private ownership of property and the means of production, as well as competition between individuals and firms. Socialist market economies, on the other hand, are characterized by state ownership of the means of production and a planned economy, as well as a focus on meeting the needs of society as a whole rather than individual profit motives. In Asia, countries like Japan, South Korea, and Taiwan have adopted capitalist market economies, while countries like China and Vietnam have adopted socialist market economies.9) Economic reform and adoption of HR policies and practices in Asia have been driven by a variety of factors, including globalization, technological change, and the need to remain competitive in a rapidly changing global economy. One key reason for economic reform has been the desire to attract foreign investment, which can bring in much-needed capital and expertise to help drive economic growth. HR policies and practices have also been reformed in order to better meet the needs of a changing workforce, including greater flexibility and more opportunities for training and development. Additionally, there has been a growing recognition of the importance of employee engagement and well-being in driving productivity and overall business success.
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By increasing the skills and productivity of workers, businesses were able to compete globally and attract foreign investment.
Rationalizing and illustrating the political economy and strategic choice approaches.
The Political Economy Approach: Political economy is an interdisciplinary area that studies the connections between political and economic systems. It seeks to explain how political structures influence economic activity and vice versa.
Strategic Choice Approach: The strategic choice approach concentrates on how economic actors try to realize their goals and the consequences of those choices. It includes game theory and decision theory, which are both used to analyze strategic decision-making.
In political economy, there are two main schools of thought. The first one is the Marxist school, which concentrates on class conflict and the means of production. The second one is the mainstream school, which concentrates on the relationship between the state and the market, as well as the consequences of government intervention in the economy.
Differentiate between the key characteristics of capitalist market economies and socialist market economies in Asia. Capitalist market economies: A capitalist market economy is characterized by the following features: Private property, individuals or businesses are allowed to own property. Market competition, which allows for the free exchange of goods and services between people, who are driven by profit-making motives. Private enterprise, which allows individuals to create their businesses based on their ideas and profit motives.
Socialist market economies: A socialist market economy is characterized by the following features: Public ownership of the means of production, resources are publicly owned and administered. Market competition, with state regulation to ensure a fair distribution of resources. Socialist market economies combine market mechanisms with socialist principles to create a hybrid system that tries to balance economic growth and social equity. Critically evaluate the reasons for economic reform and adoption of HR policies and practices in Asia.
Economic reforms in Asia were implemented to promote economic growth, attract foreign investment, and improve living standards. These reforms included: Trade liberalization, which removed trade barriers and allowed for the free flow of goods and services.
Deregulation, which removed bureaucratic barriers and encouraged entrepreneurship. Financial liberalization, which allowed for the free flow of capital and credit. Human resource policies and practices were adopted to ensure that businesses were able to compete globally.
These included: Training programs that increased workers' skills and knowledge, making them more productive. Policies that encouraged employee loyalty and commitment, increasing productivity and reducing staff turnover.
Policies that rewarded employees based on their performance, which motivated them to work harder and increase their productivity.
In conclusion, the adoption of human resource policies and practices in Asia was a key factor in promoting economic growth and development. By increasing the skills and productivity of workers, businesses were able to compete globally and attract foreign investment.
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Which of the following would eliminate scarcity as an economic problem?
a.Moderation of people's competitive instincts
b. Discovery of suficiently large new energy reserves
c. Resumption of steady productivity growth
d.None of these
None of the given options would eliminate scarcity as an economic problem. Scarcity is an inherent concept in economics that arises due to unlimited wants and limited resources.
While the options mentioned may alleviate certain aspects of scarcity, they cannot completely eliminate them. Scarcity will persist as long as there are unlimited wants and finite resources in any economic system.
Scarcity is a fundamental economic problem that arises because human wants and needs are unlimited, while the resources to fulfill those wants and needs are limited. The options provided do not address the root cause of scarcity, which is the imbalance between unlimited wants and limited resources.
a. Moderation of people's competitive instincts: While moderation of competitive instincts might reduce excessive consumption and waste, it does not eliminate scarcity. Even with moderated behavior, there would still be a finite availability of resources compared to unlimited wants.
b. Discovery of sufficiently large new energy reserves: While the discovery of new energy reserves may alleviate scarcity in the energy sector, it does not eliminate scarcity as a whole. Scarcity extends beyond energy and includes other resources like land, water, labor, and capital.
c. Resumption of steady productivity growth: Steady productivity growth can improve resource utilization and increase output, but it does not eliminate scarcity. As productivity improves, it may lead to greater efficiency and increased availability of goods and services, but there will always be limits to resources and wants.
In conclusion, none of the given options can completely eliminate scarcity as an economic problem. Scarcity is a fundamental concept that will persist as long as there are limited resources and unlimited wants in any economic system.
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When one car manufacturer begins offering low-cost financing or rebates , others tend to do the same. Which two (2) oligopoly models might explain this behaviour?
The two oligopoly models that might explain the behavior of car manufacturers offering low-cost financing or rebates are the kinked demand curve model and the strategic interdependence model.
The kinked demand curve model suggests that firms in an oligopoly are highly responsive to changes in their competitors' pricing strategies. According to this model, if one car manufacturer lowers its prices or offers incentives such as low-cost financing or rebates, other manufacturers are likely to follow suit to prevent losing market share. The kinked demand curve model assumes that rival firms will match price cuts to avoid losing customers, resulting in a relatively stable price level in the market.
The strategic interdependence model also provides insights into the behavior of car manufacturers in an oligopoly. In this model, firms are aware of the actions and reactions of their competitors and base their decisions on the anticipated responses of others. When one car manufacturer introduces low-cost financing or rebates, other manufacturers perceive it as a competitive threat and respond by offering similar incentives to maintain their market position.
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