If the cost method is used to account for a long-term investment in common stock:____.
a. it is presumed that the investor has significant influence on the investee.
b. the earning of net income by the investee is considered a proper basis for recognition of income by the investor.
c. net income of the investee is not considered earned by the investor until dividends are declared by the investee.
d. the Investment account may be, at times, greater than the acquisition cost.
Answers
Answer:
net income of the investee is not considered earned by the investor until dividends are declared by the investee
Explanation:
Cost method can be regarded as
a method that is utilized when the influence of the investor over the investment that which he owns is just little or no influence , this could be typically described as owning less than 20% of the company. The investment will be recorded in the asset section of the balance sheet at historical cost. When an investment is made by an investing entity and the investment is having following two criteria, then the investment can be accounted for by the investor using the cost method.
Those criteria are;
1) There is no substantial influence by the investor over the investee.
2)There is no easily determinable fair value for the investment.
This cost method is best method when making a passive as well as long-term investment which doesn't result to influence over the company.
It should be noted that If the cost method is used to account for a long-term investment in common stock, then net income of the investee is not considered earned by the investor until dividends are declared by the investee
Related Questions
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller?
a. The demand for Booth letters decreases.
b. The supply of Lincoln letters increases.
c. The demand for Lincoln letters increases and the supply of Booth letters increases.
d. The demand for Lincoln letters decreases and the demand for Booth letters increases.
Answers
Lincoln letters are more in demand, whereas Booth letters are more plentiful. The price disparity widens as a result of a combination of lower prices for Lincoln's letters and higher prices for Booth's letter.
It's crucial that we pay attention to the precise terminology used in both the Lincoln letters, queries and the replies when dealing with supply and demand. When discussing shifts in supply and demand curves, the entire curve moves to the right or left depending on the topic of changes in supply and demand. Students who are unfamiliar with economics frequently conflate variations in supply or demand with variations in the quantity supplied or demanded. Any changes in the quantity provided or required imply a movement from one point to another along the supply or demand curves, whereas the former shows a shift in the entire curve.
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Alfred E. Old and Beulah A. Crane, each age 42, married on September 7,2017. Alfred and Beulah will file a joint return for 2019. Alfred's Social Security number is 111-11-1109. Beulah's Social Security number is 123-45-6780, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304. Alfred was divorce from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2019. In addition, in January 2019, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788. Alfred's salary for 2019 is $150,000. He is an executive working for Cherry.Inc. (Federal I.D. No. 98-7654321). As part of his compensation package, Cherry provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society.Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives salary of $42,000 in 2019. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes. Alfred and Beulah had interest income of $500. They received $1,900 refund on their 2018 state income taxes. They claimed the standard deduction on their 2018 Federal income tax return. Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2019. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Alfred and Beulah have never owned or used any virtual currency, and they do not want to contribute to the Presidential Election Campaign. Compute the Old's net tax payable (or refund due) for 2019. Suggested software: ProConnect Tax Online
Answers
To compute the Olds' net tax payable (or refund due) for 2019, we need to gather all the relevant information and calculate their taxable income, apply the appropriate tax rates, deductions, and credits. Since the tax calculation involves various factors and tax laws, it would be best to use tax software such as ProConnect Tax Online or consult with a tax professional. The software will streamline the process and ensure accurate calculations based on the specific tax laws and regulations applicable to the Olds' situation.
investing is best for
?
Answers
Karl Jahaz Corp., an automobile company, has many business units across the globe. Although the company has reached saturation in the domestic market, it continues to generate substantial revenue by selling its old-model, light commercial vehicles in a few countries. In this case, which of the following is achieved by the globalization of the company?
a. Extension of product's life cycle
b. Deduction of production costs
c. Higher profits by lowering prices
d. Greater economies of scale
Answers
Answer:
a. Extension of product's life cycle
Explanation:
Extension of the product life cycle means the strategies that are followed to increase the product life or its service prior go into the decline stage.
These strategies involved price change, place, promotion, adding new attributes to the existing product, etc
So according to the given situation, the option a is correct
A major drawback with lot-for-lot sizing is?
a) high setup costs
b) low investment costs
c) low setup costs
d) high capital investments
Answers
Answer:
c is the answer I think because I just think
Al-Baida wants to buy a new machine with special purposes for an amount $ (1) million for the production of a product, and the economic life of the machine is (10) years, bearing in mind that there is no residual value for the machine at the end of its useful life. The company adopts the straight-line method in calculating the depreciation, and it is expected that the annual revenues from operating the machine will be 1,200,000 ID, and the annual expenses excluding taxes, (700,000 ID. If you know that the company adopts a discount rate of 12% The income tax rate is 30% for all years. Required: Calculate the following: .1. payback period. 2. Rate of accounting return on investment.
Answers
1. Payback period will be 2 years.
2. The rate of accounting return on investment for the machine is 35%.
To calculate the payback period, we need to determine the number of years it takes for the company to recover the initial investment of $1 million.
Step 1: Calculate the annual net cash flow.
Annual net cash flow = Annual revenues - Annual expenses excluding taxes
Annual net cash flow = $1,200,000 - $700,000 = $500,000
Step 2: Determine the payback period.
Payback period = Initial investment / Annual net cash flow
Payback period = $1,000,000 / $500,000
Payback period = 2 years
Therefore, the payback period for the investment in the machine is 2 years.
To calculate the rate of accounting return on investment, we need to determine the average annual net income generated by the investment.
Step 1: Calculate the average annual net income.
Average annual net income = (Annual revenues - Annual expenses excluding taxes) * (1 - Tax rate)
Average annual net income = $500,000 * (1 - 0.30)
Average annual net income = $350,000
Step 2: Calculate the rate of accounting return on investment.
Rate of accounting return on investment = Average annual net income / Initial investment * 100
Rate of accounting return on investment = $350,000 / $1,000,000 * 100
Rate of accounting return on investment = 35%
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Goals set for and by first-line managers are called _____ goals.
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Identify each action by the Fed as expanding the money supply, shrinking it, or neither. expands the money supply shrinks the money supply neither expands nor shrinks Drag each item above to its matching item below. Note that every item may not have a match, while some items may have more than one match. The Fed lends money to struggling banks. Press Space to open The Fed regulates banks to ensure stability. Press Space to open The Fed buys mortgage-backed securities. Press Space to open The Fed sells Treasury bonds to investors.
Answers
Based on macroeconomic analysis, it is believed that by matching the items in the question with their effect, we have the Fed lends money to struggling banks. -- expanding the money supply;
This is because when the Fed lends money to struggling banks, there is more money available for people to borrow or assess in the economy.The Fed regulates banks to ensure stability. -- expanding the money supply, or shrinking it;
When the Fed regulates banks to ensure stability, they may either be pumping money into the economy to solve deflation or take money from the economy to solve inflation.The Fed buys mortgage-backed securities. -- expanding the money supply;
When the Fed buys mortgage-backed securities, owners of these mortgages get more money, thereby pumping money into the economy.The Fed sells Treasury bonds to investors -- shrinking it;
When the Fed sells Treasury bonds to investors, they take money from investors, thereby taking away money from the economy.Hence, in this case, it is concluded that there are various means by which the federal government can expand or shrink the money supply in the economy.
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The coupon rate on a debt issue is 9%. If the yield to maturity on the debt is 8%, what is the after-tax cost of debt in the weighted average cost of capital if the firms tax rate is 35%?
Answers
The after - tax cost of debt, based on the firm's tax rate and the yield to maturity is 5.2 %
How to find the after - tax cost of debt?The after - tax cost of debt refers to the interest rate paid on the debts that a company has, after the tax has been adjusted for. This is an important rate because debt is a tax deductible expense.
The after - tax cost of debt is found by the formula:
= Cost of debt x ( 1 - tax rate)
The cost of debt is the yield to maturity.
The after - tax cost of debt is:
= 8 % x ( 1 - 35%)
= 5.2%
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purchased goods of rs 40000 journal entries
Answers
The journal entry for Rs. 40, 000 purchases would include a debit to purchases and credit to cash or accounts payable.
How to enter the journal ?The Purchases account is debited because the business has acquired goods, which is an asset. The Accounts Payable account is credited because the business owes money to the supplier for the goods.
Date Account title Debit Credit
XX -XXXX Purchases Rs. 40, 000
Accounts payable Rs. 40, 000
This journal entry will increase the balance of the Purchases account and the Accounts Payable account. The Purchases account will be used to track the cost of goods sold, and the Accounts Payable account will be used to track the amount of money owed to suppliers.
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Companies Violating Human Rights
Answers
It is unfortunate that some companies have been known to violate human rights in their operations. Human rights are the basic rights and freedoms to which all humans are entitled, regardless of their race, gender, religion, or any other status. Companies that violate human rights may engage in practices such as forced labor, unsafe working conditions, discrimination, and more.
It is important for companies to respect human rights and ensure that their operations do not harm individuals or communities. Companies can do this by following international human rights standards, conducting human rights impact assessments, and implementing policies and procedures to prevent and address human rights violations.
In addition, consumers can play a role in holding companies accountable for their actions. This can be done through ethical consumerism, which involves choosing products and services from companies that have a positive impact on people and the planet. Consumers can also raise awareness about companies that violate human rights and advocate for change.
Overall, it is crucial for companies to respect human rights and for consumers to hold them accountable for their actions. By doing so, we can work towards creating a world where all people are treated with dignity and respect.
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How does screening help with keeping the organization secure?
Answers
Answer:
screening helps because it is designed to keep track of things and do background checks to make people or objects secure.
pls mark brainliest
have a great day
Answer:
Security screening checks the history and background of successful applicants and current employees. For most positions, screening consists of a criminal record check, which is a search for convictions, penalties or outstanding charges.
a pregnant employee who violated several attendance rules due to her physical conditions. She is about to get fire by hr manager of the company.discuss what business ethics issues present on this situation. what can be done?
Answers
Answer:
answer is no
Explanation:
You cannot be fired for being pregnant under most circumstances.employers from terminating employees due to pregnancy and pregnancy-related conditions
"All three levels are required to run an organization or a business smoothy"Justify the statement.
Answers
Answer:
"All three levels are required to run an organization or a business " according to my point of view it is true without anyone levels (sector) business or organization not imagine to run
The management team of a company with 10,000 employees is considering installing charging stations for electric cars in the company parking lots. In a random sample of 500 employees, 15 reported owning an electric car. Construct a 99 percent confidence interval for the proportion of all employees at the company who own an electric car. Show Work a) the type of interval b) the assumptions/conditions you checked c) the critical value you used d) the interval you calculated e) your interpretation of the interval in context
Answers
a) The type of interval is a proportion confidence interval. b) Assumptions/conditions checked: Independence, Randomization, 10% rule (at least 10 success and 10 failures in the sample).
What type of interval will be used to estimate the proportion of employees who own electric cars?
The kind of c programming language in order to be used to estimate the proportion of personnel who personal electric powered vehicles will probably be a self assurance c program language period. A self belief c language is a number values that is probable to incorporate the actual proportion of employees who personal electric cars, with a sure level of self assurance. This degree of self assurance is typically expressed as a percentage, including 95%. The c programming language is calculated the usage of sample information from a survey or other study and takes into account the sample length and the range within the records. The larger the sample length, the extra particular the estimate of the proportion may be and the narrower the self assurance interval will be.
c)The critical value used: 2.576 based on a standard normal distribution. d) The interval calculated: (0.068, 0.234). e) Interpretation: With 99% confidence, we estimate that the proportion of all employees who own an electric car is between 6.8% and 23.4%.
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How much would you have to invest today at 4.5% compounded annually to have $32,425 available for the purchase of a car at the end of five years from now? A) S20,267.26 B) $22,747.60 C) $24,147.25 D) $26,019.48 E) $28,080.12
Answers
Answer:
D
Explanation:
The formula for calculating present value:
PV = FV(1 + r)^-n
FV = Future value
P = Present value
R = interest rate
N = number of years
$32,425(1.045)^-5 = $26,019.48
I NEED HELP PLEASE PLEASE I BEG
The article claims "Import taxes from 60% to 100% in the world's fourth-largest car market rank among the highest globally, drawing criticism from companies such as Tesla Inc (TSLA.O)Links to an external site., which shelved entry plansLinks to an external site. because of the high tariffs." Why is it that the Indian government has allowed so far 60% - 100% tariffs on imported cars? Your answer needs to be found in the article OR in the chapter that you learnt (3). NOT in Internet desktop research! (50-75 words, 5 pts).
Why are Maruti Suzuki, Tata Motors and Mahindra resisting this change? Again, use the article and what you have learnt in class. NO desktop research. (50 words max, 4 pts).
All else equal, would the WTO - a priori - be pleased about this potential development? Meaning a possible reduction of Import Taxes or Tariffs. If yes why? If no why? (50 words max, use your arguments based on the textbook material AND/OR Internet research here!, 3 pts)
Say you're a resident of India, and you were planning to buy a Range Rover made in the UK. All else equal, and given this article, and given you have the money available to buy the car - would you, a priori, buy the car or postpone your purchase? If yes why? If no why? (50 words max, 3 pts)
PLEASE I NEED HLEP
Answers
The Indian government has allowed such high tariffs on imported cars in order to protect domestic car manufacturers such as Maruti Suzuki, Tata Motors and Mahindra, who would otherwise face competition from foreign companies and face a possible decrease in their market share.
What is domestic?Domestic refers to activities or relationships that occur within a country or nation, such as domestic policy, domestic trade, domestic travel, and domestic affairs. Domestic activities are usually distinguished from international activities, as those that occur between two or more countries. Domestic activities are generally related to the internal affairs of a country and its citizens, including political, social, and economic issues.
Maruti Suzuki, Tata Motors and Mahindra are resisting the potential change because they are concerned that they would be unable to compete against foreign companies, who would be able to offer cheaper cars due to the lower tariff rates.
The WTO would not be pleased with this potential development because it is against their objective of free trade and would create an uneven playing field between domestic and foreign companies.
If I were a resident of India and planning to buy a Range Rover made in the UK, I would postpone my purchase because the high tariff rates would make the car much more expensive than it would normally be. This would mean that I would have to pay significantly more for the same car than if I had bought it from a domestic manufacturer.
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what does corporate ‘limited liability mean?
Answers
Answer:
is a form of legal protection for shareholders and owners that prevents people from being held personally responsible for their company's debts or financial losses. Keeps finances separate from the owners' personal finances.
Which of the following is not a feature of parliamentary democracy?
Answers
Joseph contributed $25,750 in cash and equipment with a tax basis of $14,800 and a fair market value of $19,500 to Berry Hill Partnership in exchange for a partnership interest.a. What is Joseph’s tax basis in his partnership interest?b. What is Berry Hill’s basis in the equipment?
Answers
Answer:
a. Joseph’s tax basis in his partnership interest=$40,550
b. Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800
Explanation:
a. In order to calculate Joseph’s tax basis in his partnership interest we would have to make the following calculation:
Joseph’s tax basis in his partnership interest=amount contributed in cash+tax basis equipment
According to given data:
amount contributed in cash=$25,750
equipment tax basis =$14,800
Therefore, Joseph’s tax basis in his partnership interest=$25,750+$14,800
Joseph’s tax basis in his partnership interest=$40,550
Joseph's tax basis in his partnership interest is $40,550
b. According to the given data Joseph contributed equipment with a tax basis of $14,800, therefore, Berry Hill’s basis in the equipment is $14,800
A customer’s specification for weight of an antiseptic cream sold in plastic tubes is 4.00 ounces ± 0.02 ounces. The target process capability ratio is 1.00. At Brooklyn Pharmaceuticals, the current distribution of the filling process is centered on 4.005 ounces with a standard deviation of 0.004 ounces. Compute Cp and Cpk and report whether the filling process is capable of delivering to customer specifications?
Customer Specification 3.98
Process Average 4.005
Process Standard Deviation 0.004
Answers
Answer:
Cp = 1.667
Cpk = 1.25
The filling process will deliver the customer's specifications since Cp > 1 and Cpk > 1
Explanation:
Given data:
Customer Specification 3.98 4.02
Process Average 4.005
Process Standard Deviation 0.004
Calculate the Cp and Cpk values
Cp = Δ customer specification / ( 6 * std )
= (4.02 - 3.98 ) / ( 6 * 0.04 )
= 0.04 / 0.24 = 0.1667 + 1 = 1.667
Cpk ( upper ) = ( 4.02 - process average ) / ( 3* std )
= ( 4.02 - 4.005 ) / ( 3 * 0.004 ) = 1.25
Cpk ( lower ) = ( process average - 3.98 ) / ( 3 * std )
= ( 4.005 - 3.98 ) / ( 3 * 0.04 ) = 2.083
Cpk = minimum value of Cpk = 1.25
If the equilibrium price for tickets to a a Lady Antebellum concert is $100 each and they sell them for $85,
Answers
Answer: you save $15
Explanation: 100-85 is 15 and the tickets are selling for $85 instead of original price
Explanation:
The cost of an items is 200. what will be the cost of 50 such. write a simple program
If the sinks are filled and unused what is the first step of proper dish rotation procedures
Answers
Is the first stage in good dish rotations practices cleaning, scrapping, or soaking objects if the sinks are full and unused.
What is dish?
The phrase dish refers to a specific tool. this tool, as well as the culinary variety. There was the fully prepared food waiting for service. The dishes are all the objects that have been used to cook, serve, and consume a meal.
There were filthy dishes in the sink. He'd cooked a meal and done the washing. The first stage was to justify the underused sink, and the way was to depict the cleaning, scraping, or soak goods.
As a result, the first stage in good dish rotations practices cleaning, scrapping, or soaking objects if the sinks are full and unused.
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What is it Unrealized gains
I need help please
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Eight years ago you bought your house for $115,000. You just sold it for $267,000. What was the average annual appreciation of your home
Answers
Answer:
$19,000
Explanation:
appreciation is the difference between the price at which the house was bought and the price at which the house was sold
$267,000 - $115,000 = $152,000.
Average annual appreciation = $152,000 / 8 =$19,000
Answer:
(C) y = 115,000(1.05)x
Explanation:
i just took the test
Bindy Crawford created a corporation providing legal services, Skysong, Inc., on July 1, 2022. On July 31 the balance sheet showed: Cash $4,600; Accounts Receivable $7,400; Supplies $730; Equipment $9,900; Accounts Payable $9,100; Common Stock $11,700; and Retained Earnings $1,830. During August the following transactions occurred.
Aug. 1 Collected $1,200 of accounts receivable due from customers.
4 Paid $2,770 cash for accounts payable due.
9 Performed services worth $6,050, of which $3,510 is collected in cash and the balance is due in September.
15 Purchased additional office equipment for $4,180, paying $510 in cash and the balance on account.
19 Paid salaries $1,390, rent for August $760, and advertising expenses $330. 23 Paid a cash dividend of $670.
26 Borrowed $5,700 from American Federal Bank; the money was borrowed on a 4-month note payable.
31 Incurred utility expenses for the month on account $370.
Prepare a tabular analysis of the August transactions beginning with July 31 balances.
Prepare an income statement for August, a retained earnings statement for August and a classified balance sheet at August 31.
Answers
Answer:
Bindy Crawford
1. Tabular Analysis of the August Transactions:
Cash Accounts Supplies Equipment Accounts Common Retained
Receivable Payable Earnings
7/31 $4,600 $7,400 $730 $9,900 $9,100 $11,700 $1,830
8/1 +1,200 -1,200
8/4 -2,770 -2,770
8/9 +3,510 +2,540 +6,050
8/15 -510 +4,180 +3,670
8/19 -2,480 -2,480
8/23 -670 -670
8/26 +5,700 +5,700
8/31 -370 -370
8/31 $8,210 $8,740 $730 $14,080 $15,700 $11,700 $4,360
2. Income Statement for the month of August
Service revenue $6,050
Salaries expense $1,390
Rent expense 760
Advertising expenses 330
Utility expenses 370 2,850
Net income $3,200
3. Retained Earnings Statement for the month of August
Retained earnings, July 31 $1,830
Net income 3,200
Dividends (670)
Retained earnings, Aug. 31 $4,360
4. Classified Balance Sheet as of August 31
Assets
Current Assets:
Cash $8,210
Accounts receivable 8,740
Supplies 730 $17,680
Long-term Assets:
Equipment $14,080
Total assets $31,760
Liabilities and Equity
Current liabilities:
Accounts Payable 10,000
Notes Payable 5,700 $15,700
Equity:
Common stock 11,700
Retained earnings 4,360 $16,060
Total liabilities and equity $31,760
Explanation:
a) Data and Analysis:
8/1 Cash $1,200 Accounts receivable $1,200
8/4 Accounts payable $2,770 Cash $2,770
8/9 Accounts receivable $2,540, Cash $3,510 Service revenue $6,050
8/15 Equipment $4,180 Cash $510 Accounts payable $3,670
8/19 Salaries expense $1,390, Rent expense $760, Advertising expenses $330 Cash $6,150
8/23 Cash dividend $670 Cash $670
8/26 Cash $5,700 Note payable (American Federal Bank) $5,700
8/31 Utility expenses $370 Cash $370
Tabular Analysis of the August Transactions:
Cash Accounts Supplies Equipment Accounts Common Retained
Receivable Payable Earnings
7/31 $4,600 $7,400 $730 $9,900 $9,100 $11,700 $1,830
8/1 +1,200 -1,200
8/4 -2,770 -2,770
8/9 +3,510 +2,540 +6,050
8/15 -510 +4,180 +3,670
8/19 -2,480 -2,480
8/23 -670 -670
8/26 +5,700 +5,700
8/31 -370 -370
8/31 $8,210 $8,740 $730 $14,080 $15,700 $11,700 $4,360
Parth and Brittany have been your best friends since grade school. You have decided to quit your respective jobs and start up a bakery together since you all love cupcakes. Parth insists he wants to start the business as a partnership. Amber says that she wants to start the business as a corporation. You want to weigh in and give your opinion as to the best form of business. 1. What are the options for business form
Answers
Answer: Business as a partnership and business as a corporation
Explanation: they are both types of business or jobs that can be done by anyone. a partnership is when two people help each in one business, but if you are talking about corporation is more people than to friend that want to start a business
Suppose a food pantry received a donation and allowed volunteers to vote on how the funds were to be spent. Three options were provided, with the donation only covering the cost of one project. The projects included improvements to the building, additional purchases of food, and purchasing a vehicle for food delivery. The majority of volunteers voted for purchasing a vehicle for food delivery with building improvements coming in second. Since only one project could be funded, what is the opportunity cost of the decision to purchase a vehicle
Answers
Answer:
improvements to the building,
Explanation:
Opportunity cost is the foregone advantage of not setting certain options in decision making. When a particular option is preferred over others, then benefit from the other options not selected are forfeited. The forfeited benefits represent the opportunity cost.
The value of opportunity cost is equated to the value of the next best alternative. Where there were more than two alternatives available, the next best alternative from the chosen option becomes the opportunity cost. In this case, improvement to the building was voted the second preferred option; hence it becomes the opportunity cost.
If production is increased to 700 boxes per day after the change in work rules, what is the new productivity?
Answers
Answer:
The new productivity is "29.17 boxes per hour". A further solution is provided below.
Explanation:
The given number of boxes,
= 700 boxes
After the change in the work rule,
The productivity will be:
= \(\frac{700 \ boxes}{3\times 8 \ hours}\)
= \(\frac{700 \ boxes}{24 \ hours}\)
= \(29.17 \ boxes \ per \ hr\)
chapter 5 homework principals of microeconomics
Answers
Elasticity of demand is the rise or fall in demand for a good resulting from a change in the good's price. If demand varies significantly when prices vary, it is considered to be elastic.
What is Elasticity of demand?
The quantity requested for a good depends on how sensitively it responds to its price. When prices rise, almost all products see a fall in demand; however, certain products see a bigger decline in demand than others. A 1% price rise, while holding all other variables equal, will result in a given percentage change in the quantity needed. If the elasticity is equal to two, a one percent price increase results in a two percent decrease in quantity demanded.
Other elasticities are used to determine how the quantity needed changes in respect to other factors.
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