Capital is mobile: when it is taxed heavily here, it flees somewhere else, meaning lower investment and employment in the United States, and because capital income taxes discourage investment or drive it overseas, they generate little if any tax revenue. Bush's tax cut substantially increased economic growth, boosted the stock market, and increased business investment. The jewel of Bush tax plan was the elimination of the dividend tax on individuals. Another key economic growth provision of the tax plan was the acceleration of income tax rate reductions. According to economic experts, if fully implemented, the Bush tax cut would increase stock values immediately by 5% to 15% and would reduce the cost of capital for businesses by 10% to 30%, depending on the industry.
Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income. b. If the sales outlook for the coming three years were to increase to 30,000,000, the newly implemented system would prove valuable to B.E. Company. If production is kept the same, the company is predicted to sell every unit produced which would avoid a stockpile of inventory and also safeguarding an extra 5,000,000 units in ending inventory in case sales go above 30,000,000.
Jones decides to buy Smithon Corporation he should buy it with the exchange in stocks instead of buying the Corporation outright. This will lower his acquisition cost and in return lower his taxable income since there is no recognition of a gain or loss on an acquisition company with a stock-for-stock exchange. If he decides to buy Smithon Manufacturing he will be able to change it to and S Corp and follow the fiscal year ending on December 31st. By changing it to an S corporation he will have the profits go directly to his personal income and avoid double taxation. A merger would best be used in this situation since it will help lower his taxable income and he can improve his operations and competitiveness.
The selling price would only increase because the absolute value of -2.5 is 2.5 which are greater than 1 meaning it is elastic and an increase in price leads to a reduction in total revenue. So, to increase total sales revenue, the firm should lower the selling price. b. What happens to the demand for beer if the price of soda falls by 2%? Explain your answer.
In this period Coca-Cola can redeem its Series A notes. If interest rates in the market have gone down at the time of the call date, the issuer (Coca-cola) will be able to refinance his debt at a cheaper level and so will call the bonds. Another way to look at it is that as interest rates have gone down, the price of the bond has gone up. Therefore, it is advantageous to buy the bonds back at the par value.1 ð Interest rate goes down, Coca-cola is apt to call back the Series A notes. Interest rate goes up, Coca-cola have no reason to call back the Series A notes.
The substitution effect is the effect on the quantity of a good demanded by the consumer as a result of the relative price being different and this factor alone. In this case, the price of both black and white colour televisions fall, whilst the price of all other goods remain constant. This may lead to individuals being more inclined to spend money on consuming both black and white, and colour televisions as they are relatively cheaper than other goods. The income effect of a decrease in the price of the good is the effect on the quantity demanded due to the fact that the consumer’s real income has changed and that factor alone. In this particular case, the consumer’s real income has increased as a result of the fact that the price of both black and white televisions and coloured televisions have fallen.
7 Chapter 7 Consumer Choice and Elasticity QUESTIONS 1 THROUGH 10 ARE A SUGGESTED CHAPTER QUIZ. 1. If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on cola, and Smith is a utility-maximizing consumer, he should a. decrease his spending on cola. b. decrease his spending on cola and increase his spending on shirts. c. increase his spending on shirts.
Other ways in which Apple could improve their operational activities is by reducing their carbon footprint. This is because Apple creates a big carbon footprint by outsourcing from countries which are thousands of miles away, therefore causing a lot of air miles to transport the product to western countries to sell. Many climate changes are against this practice and protest against Apple because of their unethical actions. However in order to cut down on air miles and stop create pollution, Apple should relocate their factories or supplies to an area or country which is more nearer to their base. Through relocating Apple would also be offering new job opportunities to more local economies in countries in the West, where their main customer base is.
“For instance, the fall in the wage lowers people’s income and thereby reduces demand. That reduction may feed back to firms and reduce the demand for their goods, which might reduce the firms’ demand for workers” (Colander, The Limitation of Supply/Demand Analysis, 2010). “If these effects do occur, and are important enough to affect the result, they have to be added for the analysis to be complete. A complete analysis always includes the relevant feedback effects” (Colander, The Limitation of Supply/Demand Analysis,
The U.S. prices should fall as countries like India offer their services cheaper compared to them. It would require that the Americans should have more disposable income which could then be spent in other part of the economy. d) Who might benefit from the globalization of health care? Who might lose? The increasing health care cost is likely to continue to put pressure on the industry to find cheaper alternatives to handling not only direct patient