The owner of a lemon is willing to sell for $1,000; the owner of a plum for $2,000. Buyers have a WTP of $2,400 for plums and $1,200 for lemons. If quality is easy to verify (lemons have lots of rust; plums still have good-looking paint jobs), then this market works smoothly. Lemons sell for a price between $1,000 and $1,200 while plums sell for a price between $2,000 and $2,400. But what happens if potential buyers cannot observe quality?
Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return. Thus, she should choose the corporate bond. When the state rate is 10%, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond would still yield $1,125 or $30,000 x [.05 x (1-.25)] after tax because state rates don’t affect after- tax returns from Treasury bonds. The corporate bond yields $1,215 or $30,000 x [.06 x (1 - .25 - .10(1-.25))] after tax. Again, note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
The Herrestad Company has a classic problem: two products that use fixed overhead disproportionately ("Activity based costing", n.d.). That is, according to the data given in Table A below, product A uses more production runs and more sales reps than product B. Also, there are far fewer units of Product A, meaning that each unit requires a great deal of overhead resources to support. Although the sales price of Product A is high, and therefore one might think that they are charging enough to carry all this extra overhead attention, but profitability analysis indicates otherwise. Table A Use of fixed overhead resources by product line Productionruns(not$) Numberofsalesreps(not$) Total 100 25 ProdA 65 15 ProdB 35 10 Profitability will be reviewed in two parts, first we will analyze the contribution margin, and then product line profitability overall, including fixed costs.
“Discuss the extent to which a monopoly provider of transport will always increase economic efficiency” (20) Economic efficiency is where both allocative and productive efficiency occur, this is where price is equal to marginal cost and the least possible amount of scarce resources are used to produce the maximum output. A monopoly can refer to a single firm in a market or owning 25% and 40% of the market share. The traditional monopoly theory states that there will be productive and allocative inefficiency in the market since, the firm will hold back supply to gain a higher price. It will not produce where average revenue meets marginal costs. In terms of resource allocation this may mean that demand is not fully met by supply.
Once the business begins to expand they will experience economies of scale but this is only in the very short run as the line of best fit along the diagram begins to plateau. Once the firm has begun to experience this, they become static and they cannot expand anymore if they want to keep ATC at the lowest possible point. If the firm continues to expand they move into the short run and experience the law of diminishing returns. This is due to the firm experiencing a divorce between ownership & control of the day-to-day running of the business. This is also called diseconomies of scale, where ATC increases as output rises.
This factor affects directly the elasticity of almost every item, excluding monopolistic ones like oil or electricity in which we have less margin of action to find substitutes. For the rest, as consumers, we need to understand that the more variety of choices we have, the strongest our reaction to the change in price will be. Therefore, we could choose the perfect product that will respond to our needs of preference and price. Elasticity is also important for consumers because it varies depending on the type of product and the amount of money accorded to it. In the type of product we could find commodities but also luxuries.
It is the level of output at which the economy’s resources are fully employed or more realistically, at which unemployment is at its natural rate. When the economy is operating at less than full employment that means there are idle resources. The idle resources can be put back to work without raising per unit costs. After all an unemployed worker will be happy to get their jobs back and wouldn’t ask for a pay raise. So output can expand and as long as less than full employment very little pressure for the price level to rise.
Usually is lower in almond milk. In carbohydrates is a big difference, Soy milk has about 24g and almond milk only 16g. At this point almond milk has the advantage. Now for vitamins is another story. Soy milk is richer in female friendly B vitamins, and has 10% of your folate RDA.
Monopoly Diagram In the above diagram the firm maximises profit where MR=MC at output Qm. This output is allocatively inefficient because P > MC. This means consumers may face shortages and prices will tend to be higher, and output lower, than what would exist in a market with low barriers to entry. Also, if the firm faces little competition it will have less incentive to develop new products and respond to the needs of the consumers, leading to less innovation and less choice for consumers. The firm is also productively inefficient, because it does not produce on the lowest point of the AC curve.
Lower salaries are a part of this benefit, but it goes much deeper. For example, each employee you don't working on site means one less computer you need to purchase and maintain. It also means that you spend less money on electricity to power the computer. The savings can be enormous depending upon your business operations. What is IaaS?