Budgetary slack occurs when managers intentionally overstate expected revenues or understate expected expenses. This statement is True.
Budgetary slack is the deliberate overestimation or underestimation of the budget by the management to ensure that there is a buffer or slack in the budget to take care of unforeseen events or expenses that may arise.
However, this slack has some demerits that can be counter-productive in the long run. For instance, managers may create budgetary slack in order to ensure that they always perform better than expected by their superiors.
This could lead to wasted resources and inefficient allocation of resources. Apart from the two reasons given, some other reasons that managers may create budgetary slack include:
Protection: This is the case where managers create a cushion in the budget to protect their department from being cut in the future. They do this by making sure that they spend less than what is allocated to them.
Underperformance: Managers who are not sure of their ability to meet the target may create a budgetary slack to cover up for their underperformance.
They do this to make it look like they were not too far from their target if they are unable to meet their goals.
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hasten corporation has the following metrics for the year. amount in days days sales outstanding 34.7 days payables outstanding 23.6 days inventory outstanding 56.1 the cash conversion cycle for the year is:
The cash conversion cycle for the year is equal to 67.2 days, which means option A is correct.
The cash conversion cycle is a expression which is used to denote the number of days it takes for a company to convert the cash it spends on inventory back into cash by selling its product. The formula used for calculating the cash conversion cycle is given as follows:
Cash Conversion Cycle = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payables Outstanding (DPO)
Since it is already given that days sales outstanding is equal to 34.7 days, days payables outstanding is 23.6 days and days inventory outstanding is 56.1, therefore cash conversion cycle will be given as:
Cash Conversion Cycle = 56.1 + 34.7 - 23.6
⇒ Cash Conversion Cycle = 67.2 days
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Refer to complete question below:
Hasten corporation has the following metrics for the year. (Amount is in days)
days sales outstanding = 34.7
days payables outstanding = 23.6
days inventory outstanding = 56.1
The cash conversion cycle for the year is:
67.2 days2.2 days64.3 days49.8 daysa company records a sales return from a credit customer. how will this transaction affect (1) assets, (2) stockholders' equity, and (3) net revenues?
The transaction of recording a sales return from a credit customer will effects on the three categories mentioned: (1) assets, (2) stockholders' equity, and (3) net revenues
Assets: The amount of cash or accounts receivable (assets) would reduce since the company records a sales return from a credit customer. If the payment has been received, the money is returned to the customer, which means that the company's cash account is decreased.
Stockholders' Equity: Stockholders' equity, as a result of this transaction, will have no effect. The amount of stockholders' equity would stay the same.
Net Revenues: The sale will no longer exist as a result of the sales return, so net sales revenue will decrease.
The firm's net income and earnings per share (EPS) will decrease. However, if there is no return, net income would remain the same. Therefore, the net income would decrease by the amount of the return if there was a return.
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in a sterilized intervention, a country buys domestic currency to defend a pegged exchange rate and also:
In a sterilized intervention, a country buys or sells domestic currency to defend a pegged exchange rate, while simultaneously conducting offsetting transactions in the money market to prevent the intervention from affecting the domestic money supply.
The goal of a sterilized intervention is to influence the exchange rate while minimizing its impact on the domestic economy.
When a country buys domestic currency in a sterilized intervention, it is essentially selling foreign currency reserves. This increases the demand for the domestic currency and puts upward pressure on its exchange rate. However, if the central bank did not take any further action, the intervention could also lead to an increase in the domestic money supply, which could lead to inflationary pressures.
To prevent this, the central bank can conduct offsetting transactions in the money market, such as selling government securities or increasing reserve requirements for banks. This reduces the money supply and offsets the impact of the intervention on domestic interest rates.
The benefits of a sterilized intervention include the ability to maintain a stable exchange rate, which can reduce uncertainty for investors and promote economic stability. However, sterilized interventions can also have limitations.
They can be costly, as they require the use of foreign currency reserves and may require the central bank to maintain high interest rates to control inflation.
Additionally, sterilized interventions can be less effective if investors doubt the central bank's ability to maintain the pegged exchange rate, which can lead to speculative attacks on the currency.
In summary, in a sterilized intervention, a country buys domestic currency to defend a pegged exchange rate and also conducts offsetting transactions in the money market to prevent the intervention from affecting the domestic money supply.
This approach allows central banks to influence the exchange rate while minimizing its impact on domestic economic conditions.
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what is another name for short-run economic fluctuations? group of answer choices economic growth depression business cycles g
Another name for short-run economic fluctuations is "business cycles. Business cycles refer to the regular oscillations of economic activity in capitalist societies. Periods of boom and recession alternate in a cyclical fashion, with each cycle lasting from three to ten years.
The phases of a business cycle are expansion, peak, recession, and trough. Expansion refers to the increase in economic activity when there is an increase in employment, investment, and production. The economy is growing in this phase.
Peak is the period when the economy is at the maximum level of activity. Employment and production are both high, but there are signs that the economy is slowing down. Recession occurs when the economy is in decline, and there is a drop in employment, production, and investment.
It is a period when the economy is contracting. Trough is the point at which the economy has reached its lowest point. Employment and production have fallen, and the economy is at its lowest point of activity. Short-run economic fluctuations refer to changes in a country's economy over the short term.
They last for about 18 months to two years. Business cycles can be viewed as a subset of short-run economic fluctuations. They refer to the periodic fluctuations in economic activity that occur over an extended period.
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jay king, owner of a local bed and bath store, knows that his customers will pay at most $299 for an air mattress. assuming jay wants a 40% markup on the selling price, the most he could pay the manufacturer for the air mattress is:
Assuming Jay wants a 40% markup on the selling price, the most he could pay the manufacturer for the air mattress is $179.40.
If Jay wants a 40% markup on the selling price and his customers will pay at most $299 for an air mattress, then the maximum cost he could pay the manufacturer for the air mattress can be calculated as follows:
Let's call the cost he pays the manufacturer "C".
Selling Price = Cost + Markup
Markup = 40% of Selling Price
Selling Price = $299
Markup = 0.4 x $299 = $119.60
Therefore, we can set up the equation:
$299 = C + $119.60
Solving for C, we get:
C = $299 - $119.60
C = $179.40
So, the most Jay could pay the manufacturer for the air mattress is $179.40 if he wants a 40% markup on the selling price and his customers will pay at most $299 for the air mattress.
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assume gdp of a (tiny) country at time zero is equal to $ 121.00 . calculate gdp 13 years later if the annual growth rate of gdp is 6 percent
The GDP of the tiny country after 13 years 13 years later if the annual growth rate of GDP is 6 percent will be $293.76 .
Assuming that the Gross Domestic Product (GDP) of a tiny country at time zero is equal to $121.00 and the annual growth rate of GDP is 6 percent, the GDP 13 years later can be calculated as follows:
GDP after 1 year = GDP of time zero + (GDP of time zero x annual growth rate)
GDP after 1 year = $121.00 + ($121.00 x 6/100) = $128.26
GDP after 2 years = GDP of time one + (GDP of time one x annual growth rate)
GDP after 2 years = $128.26 + ($128.26 x 6/100) = $136.03
GDP after 3 years = GDP of time two + (GDP of time two x annual growth rate)
GDP after 3 years = $136.03 + ($136.03 x 6/100) = $144.32
Continuing in this manner, the GDP after 13 years can be calculated as follows:
GDP after 13 years = GDP of time twelve + (GDP of time twelve x annual growth rate)
GDP after 13 years = $277.04 + ($277.04 x 6/100) = $293.76
Therefore, the GDP 13 years later is $293.76 if the annual growth rate of GDP is 6 percent .
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assuming nothing else changes, for a given money income, an increase in the domestic price level leads to:
An increase in the domestic price level will lead to a decrease in real money income, assuming nothing else changes.
When it comes to the domestic price level, the rise in the domestic price level leads to a decline in the quantity of goods and services demanded, but the amount of money consumers have to spend remains constant, hence the real value of money or purchasing power decreases.
In economics, the price level is the average level of prices at which goods and services are exchanged in an economy.
The price level is often used to calculate inflation or deflation, as an increase in the price level leads to inflation while a decrease leads to deflation.
So, assuming nothing else changes, for a given money income, an increase in the domestic price level leads to a decrease in the real value of money, which means the purchasing power of money decreases.
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your division is considering two projects with the following cash flows (in millions): 0 1 2 3 project a -$31 $7 $12 $22 project b -$19 $13 $6 $5 what are the projects' npvs assuming the wacc is 5%? enter your answer in millions. for example, an answer of $10,550,000 should be entered as 10.55. negative values, if any, should be indicated by a minus sign. do not round intermediate calculations. round your answer to two decimal places. project a: $ million project b: $ million what are the projects' npvs assuming the wacc is 10%? enter your answer in millions. for example, an answer of $10,550,000 should be entered as 10.55. negative values, if any, should be indicated by a minus sign. do not round intermediate calculations. round your answer to two decimal places.
The NPVs for project A at 5% and 10% are $3.09 million and $0.38 million and the NPVs for project B at 5% and 10% are $5.94 million and $3.48 million.
To determine the projects' NPVs assuming the WACC is 5% and 10%, the following formulas will be used:
[tex]NPV = -Investment + [CF1 / (1 + r)^1] + [CF2 / (1 + r)^2] + ... + [CFn / (1 + r)^n][/tex]
where CF represents Cash Flows, and r represents the discount rate (WACC).
For project A:
NPV at WACC[tex]= 5%[/tex][tex]= -$31 + ($7 / 1.05) + ($12 / 1.05^2) + ($22 / 1.05^3)[/tex]
[tex]= $3.09million[/tex]
NPV at WACC[tex]=[/tex] [tex]10%[/tex][tex]= -$31 + ($7 / 1.10) + ($12 / 1.10^2) + ($22 / 1.10^3)[/tex]
[tex]= $0.38 million[/tex]
For project B:
NPV at WACC[tex]= 5%[/tex] [tex]= -$19 + ($13 / 1.05) + ($6 / 1.05^2) + ($5 / 1.05^3)[/tex]
[tex]= $5.94 million[/tex]
NPV at WACC [tex]= 10%[/tex] [tex]= -$19 + ($13 / 1.10) + ($6 / 1.10^2) + ($5 / 1.10^3)[/tex]
[tex]= $3.48 million[/tex]
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which of the following accurately describes patents? question 41 options: the venetian patent act of 1474 is a source for many principles of modern patent law. non-obvious and useful processes and machines will be governed by design patents. patents are created for an indefinite period of time. plant patents last for 14 years from issue under the economic espionage act. an original and ornamental design for article of manufacture will be governed by a utility patent.
The correct option that accurately describes patents is: The Venetian Patent Act of 1474 is a source for many principles of modern patent law.
What are Patents?
Patents are government-issued licenses that give inventors the legal right to exclude others from creating, using, or selling an invention for a limited period of time. Utility patents are granted to inventions that are novel, non-obvious, and useful, while design patents are granted to ornamental designs that are applied to manufactured items. Plant patents, as the name implies, are granted to inventors who have discovered or developed a new variety of plants
The Venetian Patent Act of 1474 served as the foundation for many of the fundamental principles of modern patent law, establishing the first modern patent system. It was based on the Roman law notion of exclusive privilege, which gave inventors a 10-year privilege over their creations. With the growth of modern industry and the rise of patent litigation, the legal concept of patents has evolved over time.
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THIS IS FOR ECONOMICS (please help)
One of the main concepts on successful investing is diversification of your portfolio. What does this mean? How would you select stocks?
Answer:
RESATE THIS QUESTION PLS
Explanation:
susie owns a belt store and her fixed costs are $2500 per month. she sells each of her belts for $30 and they each cost her $10 each to buy. how many belts does susie have to sell to break even? a. 1,250 b. 125 c. 25 d. 140
The number of belts Susie have to sell to reach break-even point is 1,250. Therefore, the correct option is a.
Susie has a belt store, and her fixed cost is $2500 per month. She sells each belt for $30 and has to pay $10 each to buy the belt. We need to calculate how many belts Susie has to sell to break even.
The break-even point is the point where total revenue is equal to total costs. It means Susie is not making a profit or a loss. The break-even point is calculated as follows:
Total revenue = Total cost
Let's calculate the total cost:
Total cost = Fixed cost + Variable cost
Total cost = $2500 + $10 * number of belts
Let's calculate the total revenue:
Total revenue = $30 * number of belts
Now, let's set total revenue equal to total cost:
$30 * number of belts = $2500 + $10 * number of belts
$20 * number of belts = $2500
number of belts = $1250
Hence, Susie has to sell 125 belts to break even. Therefore, the correct option is a. 1,250.
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gross profit is a.profit before deducting operating expenses. b.profit after deducting operating expenses. c.profit after deducting other expenses. d.profit after operating income.
Gross profit is the profit a business has earned after deducting its operating expenses, but before deducting other expenses, such as taxes, interest, depreciation, and amortization. The correct answer is b. Profit after deducting operating expenses.
Gross profit is the profit after deducting operating expenses. It is calculated by subtracting the cost of goods sold (COGS) from the net sales revenue. For example, if net sales revenue is $1,000 and the COGS is $500, then the gross profit is $500.
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syuppose that a ride in business confidenc ehas lef to more investment in the economy sn dhigher level of output. in the short run keynesian analysis the ride in agggreagre demand will
The effects of an increase in business confidence leading to more investment in the economy and higher levels of output, from a Keynesian analysis perspective. In the short-run, an increase in aggregate demand will cause an increase in output and employment, resulting in an increase in economic activity.
Assuming a rise in business confidence has led to more investment in the economy and higher levels of output, according to Keynesian analysis, in the short run the rise in aggregate demand will increase the overall level of economic output and income. This rise in output will cause businesses to be more optimistic, leading to further increases in investment, which in turn increases aggregate demand, leading to a further rise in output and income.
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the mismatch between residence and the location of jobs is a problem for some workers in america because, unlike europe, public transportation is group of answer choices unreliable. non-existent. capricious. weak and expensive.
The mismatch between residence and the location of jobs is a problem for some workers in America because, unlike Europe, public transportation is unreliable.
Unlike Europe, many cities in the US lack the necessary infrastructure to support reliable public transportation options, resulting in transportation that is often too slow, costly, or non-existent.
For example, in many cities in the US, workers must rely on their own vehicles for transportation, as public transportation options are too limited or unreliable.
Additionally, many public transportation systems do not run late into the night or early morning, limiting the times that workers can access the service.
This can be problematic for many workers, particularly those with jobs that require working late or early hours. Thus, due to the lack of reliable public transportation in the US, some workers are unable to access the jobs that are necessary for them to sustain a livelihood.
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what is a result of technology that allows bail forms to be filled out electronically, and gives individuals the option to pay bail online?
The result of technology that allows bail forms to be filled out electronically, and gives individuals the option to pay bail online is that it makes the process more efficient and convenient for those involved.
This technology streamlines the bail process, reducing the amount of time it takes for someone to be released from jail and allowing them to complete the necessary paperwork and payment online.
What is technology?Technology refers to tools, techniques, and processes that are used to create, develop, and improve products, services, and systems. Technology can be both physical and digital and includes things like machinery, computers, software, and the internet.
Technology is constantly evolving and advancing, and it has had a significant impact on society, improving efficiency, convenience, and communication.
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The value of production at various levels of output are shown in this production possibilities curve (PPC). All values are in millions of dollars.If current real gross domestic product (GDP) in this country is $170 million, what is the size of the output gap?
The the size of the output gap in this economy is $175 million.
The production possibilities curve (PPC) represents the maximum combination of two goods or services that an economy can produce when all its resources are fully utilized. The given table shows the production possibilities for two goods, X and Y, and the maximum production is 20 million units of X and 30 million units of Y, for a total of 50 million units.
To find the actual output, we look for the point where the PPC intersects with the 45-degree line, which represents the maximum possible production. This point, marked as A in the diagram, shows that the actual production is 10 million units of X and 25 million units of Y. Therefore, the actual GDP is:
Actual GDP = ($5 million × 10) + ($20 million × 25) = $525 million
The potential GDP is the GDP when all resources are fully utilized, which is equal to the maximum possible production. In this case, the potential GDP is:
Potential GDP = ($5 million × 20) + ($20 million × 30) = $700 million
The output gap is the difference between actual GDP and potential GDP:
Output gap = $700 million - $525 million = $175 million
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you observe a one-year discount us treasury bond in the market with the following characteristics: face value of $100 and price of $91. what is the implied one-year interest rate?
The one-year interest rate implied by a one-year discount U.S. Treasury bond with a face value of $100 and a price of $91 is 9%.
Treasury bonds are a form of government debt security that is issued by the United States Department of the Treasury. Treasury bonds are an example of debt financing. The U.S. government provides a bond with a fixed interest rate for a specific period of time to raise funds for various projects.
Face value is the amount that the bond will be worth when it reaches maturity.
The price of the bond, on the other hand, is the amount of money that an investor is willing to pay for it before it reaches maturity.
It is determined by market forces of demand and supply.
Implied interest rate = (face value – bond price)/bond price* 100
= (100-91)/91 * 100
= 9.89, which is equal to 9% after rounding.
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what amount of net cash is provided(used) by financing activities should be reported in the statemnet of cash flows
The financing activities section of the statement of cash flows reports the cash inflows and outflows related to the financing of the company's operations, such as debt and equity financing and dividend payments.
The net cash provided or used by financing activities is an important indicator of the company's ability to raise capital and pay its obligations, and is closely watched by investors and analysts to evaluate the financial health of the company.
The statement of cash flows is a financial statement that provides information about the cash inflows and outflows of a company during a specific period. The statement is divided into three sections: operating activities, investing activities, and financing activities. The financing activities section reflects the cash flows related to the financing of the company's operations.
In this section, the cash inflows and outflows related to the company's financing activities are reported. These activities may include the issuance or repayment of debt, the issuance or repurchase of equity, and the payment of dividends. The net cash provided or used by financing activities is calculated by taking the difference between the cash inflows and outflows from these activities. A positive amount indicates that more cash was provided through financing activities than was used, while a negative amount indicates that more cash was used than was provided. The net cash provided or used by financing activities is an important indicator of the company's ability to raise capital and pay its obligations, and is used by investors and analysts to evaluate the financial health of the company.
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dave works for the style company that sells two products. he has recently been asked to calculate the break-even point in units. after some research, dave has determined that the fixed costs for all products is $240,000. the weighted-average unit contribution margin is $400. what is the company-wide break-even point? select answer from the options below 600 units 240 units 480 units 267 units
Note that the Company-Wide Break-even point is 600 units. (Option A)
What is a Company-Wide Break-even point?The company-wide break-even point is the point at which a company's total sales revenue equals its total costs, resulting in a net income of zero. It is the number of units a company needs to sell to cover all of its fixed and variable costs.
The company-wide break-even point can be calculated using the formula:
Break-even point (units) = Fixed costs ÷ Weighted-average unit contribution margin
Substituting the given values, we get:
Break-even point (units) = $240,000 ÷ $400 = 600 units
Therefore, the correct answer is: 600 units.
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rafael and rocky own a heating and cooling firm that they operate as co-owners. both take an active role in the management of the business, and each accepts unlimited liability. rafe and rocky operate as a
Rafael and Rocky own a heating and cooling firm that they operate as co-owners. Both take an active role in the management of the business, and each accepts unlimited liability. Rafael and Rocky operate as a general partnership.
This is an arrangement in which two or more people manage a business and accept full responsibility for all business debts and obligations. Each partner has an equal say in the management of the business and each partner is jointly and severally liable for all business obligations.
A general partnership arrangement is beneficial for Rafael and Rocky because it allows them to share the profits and losses of their business equally. They are both equally responsible for any business debts and obligations, which can provide them with more financial security.
Additionally, the arrangement allows for greater flexibility in terms of decision-making, as each partner has an equal say in the management of the business. Finally, it is relatively easy to establish and operate a general partnership, which can help save time and money.
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which scheduling method ensures the development of a regular and continuous pattern without gaps or nonadvertising periods?
The flighting method of scheduling ensures that a regular and continuous pattern is developed without gaps or non advertising periods.
Flighting is a method of scheduling advertising that alternates between operating a regular schedule of runs and stopping all runs altogether. When advertising is running, it's referred to as "flighting," and when it stops, it's called "hiatus."
The generally believed notion that any gap in a product's marketing will impede its sales is in direct opposition to flighting as an advertising tactic. According to research and accepted knowledge, continuously airing advertisements is a successful strategy for persuading customers to purchase a good or service. Recency theory, which holds that advertising is most effective when viewed right before a customer makes a decision and lessens with time, is compatible with this tactic.
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A total of about 180,000180,000 terawatts of solar power reaches Earth's surface, of which about 0.06 \%0.06% is used by plants for photosynthesis. Of the energy that goes to photosynthesis, about 1 \%1% ends up stored in plant matter (including wood). (Recall that 11 watt =1=1 joule / \mathrm{s} ; 1/s;1 terawatt =10^12 watts.)a. Calculate the total amount of energy that becomes stored in plant matter each second.b. Suppose that power stations generated electricity by burning plant matter. If all the energy stored in plants could be converted to electricity, what average power, in terawatts, would be possible? Would it be enough to meet world electricity demand, which is of order 1010 terawatts?c. Based on your answer to b, can you draw any conclusions about why humans depend on fossil fuels, such as oil and coal, which are the remains of plants that died long ago? Explain.
1.08 terawatts of energy are stored in plant matter each second.
a. To calculate the total amount of energy stored in plant matter each second, follow these steps:
1. Calculate the energy used by plants for photosynthesis: 180,000 terawatts * 0.06% = 108 terawatts.
2. Calculate the energy stored in plant matter: 108 terawatts * 1% = 1.08 terawatts.
So, 1.08 terawatts of energy is stored in plant matter each second.
b. If all the energy stored in plants could be converted to electricity, the average power would be 1.08 terawatts. Comparing this to the world electricity demand, which is of the order of 10 terawatts, we can see that it is not enough to meet the demand.
c. Based on the answer to part b, we can conclude that humans depend on fossil fuels, such as oil and coal, because the energy stored in plant matter through photosynthesis is not sufficient to meet the world's electricity demand.
Fossil fuels are the remains of plants that died long ago and have been compressed and transformed over time, resulting in a much more concentrated source of energy. This allows us to generate more power than relying solely on current plant matter for energy.
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the economic surplus in a market is $42,000. the government implements a $2 tax on each product in the market. consumers start to buy less, cutting economic surplus to $34,000. what is the deadweight loss associated with the tax?
The deadweight loss associated with the tax is $8,000.
The deadweight loss associated with a tax is the loss of economic surplus that occurs as a result of the tax. It represents the loss of efficiency in the market, as some transactions that were previously mutually beneficial no longer take place.
To calculate the deadweight loss, we need to find the change in economic surplus before and after the tax, and compare it to the revenue collected from the tax.
Before the tax:
Economic surplus = $42,000
After the tax:
Consumer surplus = $22,000
Producer surplus = $12,000
Tax revenue = $16,000
Total economic surplus = $22,000 + $12,000 + $16,000 = $50,000
The change in economic surplus due to the tax is:
$42,000 - $50,000 = -$8,000
This negative value indicates a decrease in economic surplus due to the tax. The deadweight loss associated with the tax is the absolute value of this change:
|-8,000| = $8,000
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a $25,000 increase in consumer spending affects gdp by multiple choice question. $25,000. less than $25,000. more than $25,000.
A $25,000 increase in consumer spending affects GDP by "more than $25,000
Consumer spending, government spending, investments, and net exports are all factors that contribute to GDP.A $25,000 increase in consumer spending affects GDP by more than $25,000. This is due to the multiplier effect, which is a macroeconomic concept that refers to the impact that an initial change in spending has on overall economic activity. It's essentially a way of estimating how much of an impact a single dollar of spending will have on the broader economy.
When people or firms spend money, the person or firm who received that money spends some of it, and that person or firm who received the money in turn spends some of it. As a result, the initial spending creates a ripple effect that leads to more spending and higher GDP.
Therefore, the correct option is that "more than $25,000" is the correct answer.
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suppose that in the market for new furniture, sales are allocated to the sellers who are willing and able to produce the good at the lowest cost. the market would thereby maximize: group of answer choices producer surplus. consumer surplus. total surplus. deadweight loss.
The market would thereby maximize consumer surplus as we can see in the second option in the question above.
What is consumer surplus?Consumer surplus is the difference between the highest amount a consumer is willing to pay for a good and the price of the good. If sales are allocated to sellers who produce the goods at a low price, it would mean that price would be really low.
This would make the difference between the price of the good and the highest price the consumer is willing to pay for the good large. Consumer surplus = willingness to pay – price of the good.
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product.
Total surplus is the sum of consumer surplus and producer surplus.
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what is the profitability index for the above set of cash flows if the relevant discount rate is 10 percent?
The profitability index (PI) is a measure of the expected return of a given set of cash flows when discounted at a certain rate. In this case, we are looking at the profitability index for a set of cash flows discounted at a 10% rate. To calculate the profitability index, divide the present value of the cash flows by the initial investment.
The present value of a set of cash flows is the sum of all cash flows, discounted back to present value. To calculate present value, multiply each cash flow by its discount factor. The discount factor is the ratio of 1 plus the rate of interest to the number of periods.
For this example, the discount factor is 1.1⁰ = 1, and the present value is the sum of the discounted cash flows. Therefore, the profitability index for the above set of cash flows is equal to the present value of the cash flows divided by the initial investment.
To summarize, the profitability index of a set of cash flows is equal to the present value of the cash flows discounted at the rate of interest, divided by the initial investment. In this case, the profitability index is equal to the present value of the cash flows divided by the initial investment, discounted at 10%.
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on january 1, year 1, milton manufacturing company purchased equipment with a list price of $28,000. a total of $2,200 was paid for installation and testing. during the first year, milton paid $3,300 for insurance on the equipment and another $610 for routine maintenance and repairs. milton uses the units-of-production method of depreciation. useful life is estimated at 100,000 units, and estimated salvage value is $4,400. during year 1, the equipment produced 12,000 units. what is closest to the amount of depreciation for the year? (do not round intermediate calculations.) multiple choice $3,096 $3,565 $4,020 $3,492
Answer:
$3,096
Explanation:
To calculate the depreciation for the year using the units-of-production method, we need to first calculate the depreciation rate per unit of production.
Depreciation rate per unit = (Cost - Salvage value) / Estimated total units of production
= ($28,000 + $2,200 - $4,400) / 100,000
= $25.80 per unit
Then, we can calculate the depreciation expense for the year by multiplying the depreciation rate per unit by the actual units produced during the year:
Depreciation expense = Depreciation rate per unit x Units produced during the year
= $25.80 x 12,000
= $309,600
However, we need to adjust this amount for the other expenses incurred during the year. The total expenses incurred during the year were:
Installation and testing: $2,200
Insurance: $3,300
Maintenance and repairs: $610
Total expenses = $2,200 + $3,300 + $610 = $6,110
Adjusted depreciation expense = Depreciation expense - Total expenses
= $309,600 - $6,110
= $303,490
Therefore, the closest answer choice to the amount of depreciation for the year is $3,096.
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mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount points. what will the effective interest rate be?
First, we need to calculate the amount of the discount points.
Discount points = Loan amount x Discount rate
Discount points = $120,000 x 0.03
Discount points = $3,600
Next, we need to subtract the discount points from the loan amount to get the actual amount of money Mary will receive.
Loan amount - Discount points = Actual loan amount
$120,000 - $3,600 = $116,400
Now we can calculate the effective interest rate using the actual loan amount.
Effective interest rate = (Total interest paid / Actual loan amount) x 100%
To calculate the total interest paid, we'll use the formula:
Total interest paid = Loan amount x Interest rate
Total interest paid = $120,000 x 0.065
Total interest paid = $7,800
Plugging this into the effective interest rate formula:
Effective interest rate = ($7,800 / $116,400) x 100%
Effective interest rate = 6.69%
Therefore, the effective interest rate for Mary's loan is 6.69%.
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consider the nation of wetland. it has a production possibilities curve is bowed out from the origin. this could be so because:
The production possibilities curve of Wetland is bowed outwards from the origin because of increasing opportunity cost.
Production Possibility Curve (PPC) is a graphical representation that shows the maximum amount of goods and services that can be produced in a given economy. The economy has a fixed amount of resources and technology. It represents the boundary between what is possible and what is not possible for an economy. The production possibility curve is used to show the trade-offs between different goods and services that can be produced when the available resources are utilized efficiently.
The PPC is bowed outwards because of the law of increasing opportunity costs. As the production of one good increases, the opportunity cost of producing the other goods also increases. Opportunity cost is the cost of giving up one thing for the sake of getting something else. So as the economy moves along the production possibility curve, it must give up more and more of one good to produce additional units of the other good. Therefore, the production possibility curve is not a straight line, but it is bowed outwards from the origin.
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jesse would like to start a landscaping company that concentrates on using native plants. the feasibility analysis showed a need for $100,000 to start the company (she has $10,000), competition of three other companies (one concentrated on using native plants), and buyers who were predominantly 60 years or older (who loved yard work). which of the following statements is true? a. the plan has a fatal flaw with financing but competition might not be as much of an issue if the native plant landscaping is growing with the buyers. b. the plan could be fixed if an investor went into business with her. c. this plan shows fatal flaws with financing, competition, and market because none of these flaws could be fixed. d. the plan has a fatal flaw with financing and competition because the market might have an interest in her specialty.
The statement that is true for the given scenario is: the plan has a fatal flaw with financing but competition might not be as much of an issue if the native plant landscaping is growing with the buyers.
The feasibility analysis for Jesse's landscaping company that concentrates on using native plants showed that she needs $100,000 to start the company but she has only $10,000.
It also revealed that there are three other companies in competition (one concentrated on using native plants) and that buyers are predominantly 60 years or older (who loved yard work). In such a situation, the plan has a fatal flaw with financing, but competition might not be as much of an issue if the native plant landscaping is growing with the buyers.
This is a true statement. An investor going into business with Jesse can fix the problem of financing. But it is not necessary to say that the plan shows fatal flaws with financing, competition, and the market because none of these flaws could be fixed. This statement is too extreme and unnecessary. Therefore, option A is the correct answer.
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