a. To obtain the long run equilibrium, number of firms in the industry should be infinity, and it is calculated by: qi= (a-c) / [(n+1)*b] b. For two firms: Quantity: q1=q2= (a-c)/[(n+1)*b]= (100-20)/3 = 26.67 Price: P=100-(2*26.67)=46.67 Cost: Cost= 20*26.67=789.4 Profit: Profit=46.67*26.67-789.4=0 For Three firms: Quantity: q1=q2= q3 = 20 Price: P=60 Cost: Cost= 296 Profit: Profit=904 For Four firms: Quantity: q1=q2= q3 =
Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities. This could be due to quick expansion of inventory with the intention of increasing sales. While this is currently considered a weakness and is concerning, a rise in the ratio should be seen by 2013 due to the increase of suggested sales. 3. I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year.
a. Reduction in price will cause the contribution margin to decrease, thus, breakeven point will increase. b. Increase in Direct Labor cost will increase the cost and will cost the contribution margin to decrease, thus, the breakeven point will increase. c. Installation of new ventilating equipment produced depreciation (fixed cost) which will decrease contribution margin, thus the breakeven point will increase.
A 6% increase in Electricity costs. 1. A 2.5% increase in material cost When the material costs increases, the affect will occur on the master budget. The 2.5 % increase on the material cost means we will be paying more; as a result the profit will be less, unless we increase the selling price, reduction of employees (redundancy), to cover the change. Here below are show the calculation of the change: Material cost is 50355.15 2.5% of 50355.15 = 50355.15x 2.5 = 1258.87 100 The new material cost is = 50355.15 + 1258.87 =
The author’s main theory is that the economy is headed for a recession. The text book defines fiscal policy as: Changes in government spending and tax collections designed to achieve a full-employment and non inflationary domestic output. Government spending is understated and slightly overlooked in the article. The author only hints of the fact that federal government spending on defense is down. “Another negative factor was a 6.6 percent drop, on an annualized basis, in federal defense spending.” She supports that the decrease in GDP is directly related to the decrease in government spending g which proves how fiscal policy can affect overall economic growth.
Consumer price and producer price in 2009 to 2012 continue to drop and raise the price for consumers was not steady. The direction and magnitude of price change in the Producer Price Index for finished goods anticipates a similar change in the Consumer Price Index for all items. When this assumed relationship is contradicted by the actual movements of the two series. The answer is that conceptual and definitional differences between the PPI and CPI—differences which are consistent with the uses of the two measures—contribute to the differences in their price movements. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output.
d) The equilibrium interest rate increases to bring desired investment into equilibrium with the reduced quantity of national saving. e) The equilibrium quantity of investment is reduced via the increase in the interest rate by an amount equal to the increase in government spending. Question 5 (15 marks) a) capital is added. No, MPK does not diminish because it does not decline as more is also acceptable. b) L = 100: L = 110: L = 120: 0. .
Question 1 2 out of 2 points | | | Probabilistic techniques assume that no uncertainty exists in model parameters. Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | Question 2 2 out of 2 points | | | In general, an increase in price increases the break even point if all costs are held constant. Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | Question 3 2 out of 2 points | | | If variable costs increase, but price and fixed costs are held constant, the break even point will decrease. Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | Question 4 2 out of 2 points | | | Fixed cost is the difference between total cost and total variable cost. Answer | | | | | Selected Answer: | True | Correct Answer: | True | | | | | Question 5 0 out of 2 points | | | P(A | B) is the probability of event A, if we already know that event B has occurred.
One fallacy is that trade is a zero sum activity, if one trading party gains, the other must lost. 2. Imports reduce employment and act as a drag on the economy, while exports promote growth and employment. This fallacy stems from a failure to consider the link between imports and exports. 3.
Whenever student surveys are carried out negative results are neither shown on video screens nor published in prospectuses, only the good is shown. Staff is always advised not to leave computers unattended and to always shred printouts of student details. Personal information