Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
e. Which price index rises faster, the GDP deflator (Paasche) index or the fixed-weight index (Laspeyres) index 1 Question 3 (20 marks) . . Suppose that an economy’s production function is = . a. What fractions of income do capital and labor receive?
Profit Maximization is the process that a firm uses to establish where the best output and price levels are, in order to maximize its return. There are two primary methods that can be used to establish profit maximization. One method is the Marginal Revenue minus the Marginal Cost (MR-MC) method. When utilizing this method economists assume that profit would be at its highest when MR and MC are equal, which denotes that for every item made MP=MR-MC. When / if MR is higher than MC then MP would result in a profit for Company A.
Their total revenue will be subtracted from their total expense which will be their net income. The net income and revenue will be times by 100 will be the profit margin. The net income plus depreciation will equal their cash flow. D. Suppose the change had halved, rather than doubled, the firm’s depreciation expense. Now, what would be the impact on net income, total profit margin, and cash flow?
In the short-run, a larger government deficit would cause an increase to “total planned expenditures and higher aggregate demand “(Miller, 2012, pg. 308). The real GDP equilibrium would rise above the full-employment level because of deficit spending. The price level would also increase. In the long-run, the economy “adjusted to changes in all factors” and the “equilibrium real GDP remains at its full-employment level” even though the increase in the budget deficit causes a rise in the aggregate demand.
(p. 191) ______________ theory is typically associated with greater profits. a. Signaling b. Compensating wage differentials C. Efficiency wage d. Human capital 4. (p. 193) Implications of _______________ theory are that pay level affects an employer's ability to recruit.
An increase in wages will increase the average variable cost. The more people required to produce additional units of output will be more expensive due to an increase in wages. A lower material cost will result in a lower average variable cost because more units can produced at a lower cost. If the firm produces the same amount of units the cost will fall. The fixed tax will not change the average variable cost.
The gross profit ratio (gross profit divided by net sales) also indicates how well selling prices provide for expenses in an organization (Kimmel, Weygandt, & Kieso, 2009). The return on assets ratio (net income divided by average total assets) indicates how well an organization employs its assets. The asset turnover ratio (net sales divided by average total assets) further indicates asset utilization to produce sales (Kimmel, Weygandt, & Kieso, 2009). TRI profitability ratios are presented in Table Three, below. Ratio analysis for TRI illustrates conservative debt levels and ability to service additional debt.
1. Provide the definitions of throughput, inventory and operational expense given in The Goal. How do they compare with the traditional definitions? Do you find them useful, and why? Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell.
When government spending is increased, the amount of the increase in aggregate demand primarily depends on: A. The average propensity to consume B. The size of the multiplier C. Income taxes D. Exchange rates 5. Which fiscal policy would be the most expansionary? A.