Answer:
The answer is B.
Explanation:
Economic profit is the difference between total revenue and both explicit cost and implicit cost. i.e Total revenue - explicit cost - implicit cost.
Explicit cost is also known as accounting cost. They are the cost that are directly related to the production of goods and services while implicit cost is the opportunity cost of chosen to produce the goods and services.
In perfectly competitive market, firms continue to enter the when economic profit is still positive (with this, they are generating normal profit) but cease to enter when the profit drops to zero(with this, they are making loss)
So therefore, firms will enter until economic profits are zero.
A price ceiling set below an equilibrium price tends to cause persistent imbalances in the market because a. Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage. b. Quantity supplied exceeds quantity demanded but price cannot fall to remove the surplus. c. Quantity supplied exceeds quantity demanded but price cannot rise to remove the shortage. d. Quantity demanded exceeds quantity supplied but price cannot fall to remove the surplus.
Answer:
a. Quantity demanded exceeds quantity supplied but price cannot rise to remove the shortage.
Explanation:
Price ceiling is the maximum amount that can be charged for a good or service. Price ceiling is usually set by the government or an agency of the government.
For price ceiling to be binding, it should be set below equilibrium price.
When there's a price ceiling below equilibrium price, quantity supplied would fall because market price is below equilibrium price. The fall in quantity supplied would lead to an excess of quantity demanded over supply and as a result there would be shortages.
Market forces cannot act to eliminate the shortage (increase the price) because of the price ceiling.
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Tyco International once owned businesses that manufactured industrial tape, medical supplies, and security systems. Tyco International was an example of ______.
Answer:
Conglomerate
Explanation:
Tyco international is an example of a conglomerate because they are involved in several business entities such as manufacturing medical supplies, industrial tape and security systems at the same time under a corperate body.
Conglomerate are often multinational companies. They are usually very large company composed of several combined companies that is either formed by takeovers or mergers.
Conglomerate involves in production of products that are not necessarily related to one another mostly as in the case of Tyco international. The produce different product that are not related to each other.
Final answer:
Tyco International was an example of a conglomerate, which is a group of businesses that come together under one name and organization but produce or manufacture many different products.
Explanation:
Tyco International, which once owned businesses that manufactured industrial tape, medical supplies, and security systems, is an example of a conglomerate. A conglomerate is a group of businesses that come together under one name and organization but produce or manufacture many different products. Tyco International diversified its operations by acquiring companies in various industries to protect itself from decline in individual sectors.
Regardless of on whom a tax is levied, sellers face which of the following?
A a decrease in the amount of money they receive
B an increase in the amount of money they receive
C an increase in demand for their good or service
D a decrease in demand for their good or service
Answer:
A a decrease in the amount of money they receive
Explanation:
If the seller levies the tax on the customer, the tax will increase the price of a product and in turn decrease the demand for the product. Decreased demand, in turn, will reduce the total revenue.
But if the seller levies the tax on themself, it will not increase the product price but lower the seller revenue directly. Either way, the revenue of the seller will be decreased.
Final answer:
Sellers typically experience a decrease in the amount of money they receive when a tax is levied due to changes in market prices and demand. Tax incidence analysis helps to understand how tax burdens are distributed between buyers and sellers and indicates how changes in elasticity affect the economic behavior of consumers and producers.
Explanation:
Regardless of whom a tax is levied, sellers will typically face a decrease in the amount of money they receive for their goods or services. This occurs because a tax on a product raises its cost, potentially leading to a decrease in quantity demanded or forcing the seller to lower the price they receive to maintain demand. Furthermore, the effect of a tax can be illustrated through tax incidence, which shows how the tax burden is shared between buyers and sellers. A tax on sellers can shift the supply curve upwards, while a tax on buyers shifts the demand curve downwards. Regardless, the result is a higher effective price for buyers and a lower net receipt for sellers.
From a financial market perspective, a decline in interest rates can occur due to a rise in the supply of money or loanable funds. Conversely, an increase in the number of loans made and received is associated with either a rise in the demand for loans or a rise in the supply of loanable funds. In terms of tax revenue, elasticities of demand and supply determine the tax incidence and the amount of revenue generated. Specifically, if demand is very elastic, consumers are likely to reduce the quantity purchased rather than pay higher prices. Similarly, if supply is very elastic, sellers are likely to reduce the quantity sold rather than accept lower prices.
Treptron Inc., a software company, has a standing plan that details the specific set of steps to be undertaken when an employee delivers consistently poor performance during his or her probation period. Given this information, the standing plan in this scenario can be referred to as a(n) _____
Answer:
procedure
Explanation:
Procedure -
It refers to the various step , in a proper order , for the complete project or any activity , is referred to as a procedure .
The procedure is written in a very orderly fashion in order to explain all the steps in a very brief manner .
A proper set of instruction is very important to complete any specified task successfully .
Hence , from the given information of the question ,
The correct answer is procedure .
Alex Smith rents storage space to college students who go home for the summer but do not want to haul all of their property home and back. The business is profitable during the summer months, but when the storage space is unoccupied in the off-season, Alex loses money. Which of the following characteristics of service is most likely the source of Alex's problem?a) intangibility
b) perishability
c) inconsistency
d) variability
e) inseparability
Answer:
d) variability
Explanation:
Variability is the quality of a service that does not follow a fixed, or predictable pattern, following instead a changing (or variable), or unpredictable pattern.
Seasonality is a type of variability that occurs when a business is subject to very rigid time constraints: in some periods of time it booms, and in other periods, it busts.
Alex's business is seasonal because it only becomes profitable during the summer months, while the other three seasons represent a net loss for him.
an economy as a whole, a. wages must equal profit. b. consumption must equal income. c. income must equal expenditure. d. consumption must equal saving.
The correct statement about an economy as a whole is that income must equal expenditure. This principle, known as income-expenditure equality, means the total amount of income earned in an economy will equal the total spent on goods and services.
Explanation:In an economy as a whole, the correct statement would be that income must equal expenditure. This principle is known as the income-expenditure equality and it is foundational to macroeconomic theory. The basis behind this theory is that the total amount of income earned in an economy, when it is in equilibrium, will equal the total amount spent on goods and services. This creates a circular flow of money. For example, people earn income by providing labor, and they spend that income on goods and services. Therefore, most of the income people earn goes back into the economy as expenditure.
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In an economy, aggregate expenditure must equal real GDP at equilibrium. The national saving and investment identity states that the quantity supplied and demanded in the financial capital market must be equal. The equilibrium can also be found mathematically by setting national income equal to aggregate expenditure.
Explanation:When the macroeconomy is in equilibrium, it must be true that the aggregate expenditures in the economy are equal to the real GDP-because by definition, GDP is the measure of what is spent on final sales of goods and services in the economy. Thus, the equilibrium calculated with a Keynesian cross diagram will always end up where aggregate expenditure and output are equal—which will only occur along the 45-degree line.
The national saving and investment identity must always hold true because, by definition, the quantity supplied and quantity demanded in the financial capital market must always be equal. However, the formula will look somewhat different if the government budget is in deficit rather than surplus or if the balance of trade is in surplus rather than deficit. For example, in 1999 and 2000, the U.S. government had budget surpluses, although the economy was still experiencing trade deficits. When the government was running budget surpluses, it was acting as a saver rather than a borrower, and supplying rather than demanding financial capital. As a result, we would write the national saving and investment identity during this time as:
Step 11. Find equilibrium mathematically, knowing that national income is equal to aggregate expenditure.
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You play racquetball at a community club. You have two options for paying for court time. Option A: You pay $12 for court time each time you play. Option B: You buy a club membership for $120 and then pay $2 each time you play. a. Write and solve a linear system to determine the number of visits for which the cost would be the same for each option. b. For what numbers of visits is option B less expensive
Answer: y = 12x
Y = 2x + 120
a). X = 12
b). X= 14
Explanation: for the two options cost to be the same, you equate the two equations.
For the visit of option B to be less expensive, X will be greater than 12
Answer:
a) The answer is 12 visits (b) number of visits greater than 12
Explanation:
Option A = $12 per visit
Option B = $120 for membership $2 for each time you play
We have to equate the two options to get a linear system
Let each visit be x
A = 12x
B = 120 + 2x
equating A and B
12x = 120 + 2x
120= 10x
x = 12. The answer is 12 visits
b) the number of visits for option b is less expensive is any visit greater than the equilibrium cost for both options. example if I visit for a 13th time then
option A = 12 X 13 = 156
option B = 120 + 2(13) = 146
Which type of market research is data that an entrepreneur collects himself or herself; for example, from a survey of potential customers, and then analyzes?
Answer:
Primary Research Data.
Explanation:
Entrepreneur can collect the primary data by themselves. They can collect in numerous available methods and options. They can collect it either with the help of questionnaires or by taking interviews. Many more options like open ended questionnaires or close ended questionnaires then can be opted accordingly. Likewise, in-depth interviews can be conducted to collect more valuable insights about the customers which definitely can be very helpful fo the entrepreneurs in order to make strategical and tactical level decisions quite effectively.
Under a job-order system of cost accounting, the dollar amount of the general ledger entry involved in the transfer of inventory from work-in-process to finished goods is the sum of the costs charged to all jobs:_________.
Answer:
Under a job-order system of cost accounting, the dollar amount of the general ledger entry involved in the transfer of inventory from work-in-process to finished goods is the sum of the costs charged to all jobs - The entry to transfer inventory from WIP to FG is to debit finished goods and credit work-in- process.
Explanation:
In 2010, U.S. gross domestic product (GDP) was roughly $14.6 trillion. Given that the U.S. population was roughly 308 million people, per capita GDP in the United States in 2010 was roughly:_______.a) $4,760 b) $47,403 c) $0.22. d) $475,990 e) $22,000
Answer:
B) $47,403
Explanation:
GDP per capita = total GDP / total population
GDP per capita in 2010 = $14,600,000,000,000 / 308,000,000 people = $47,402.60
This is the GDP per capita in nominal or current dollars, not the real GDP per capita which is calculated using base dollars. The GDP per capita is useful to compare how different economies are performing, but it is not a good indicator of individual wealth within a country.
Donna works in an auditing firm and her manager is extremely happy with the quality of her work. When the department head sends out an e-mail highlighting the common errors made while auditing a client's files, Donna does not bother to read the e-mail. This is because she knows that those errors were not made by her. This scenario best exemplifies:_______.a. selective perception.
b. stereotyping.
c. self-monitoring.
d. projection.
Answer:
a. selective perception
Explanation:
Selective perception refers to only perceiving what an individual wants to, ignoring the viewpoint and ideas which oppose or challenge their own basis of perception.
In the given case, Donna who works in an audit firm was notified of the errors which as per her, she didn't commit. Instead of responding to such a mail or confronting the situation and explaining herself, she rather chose to ignore the mail altogether.
This classifies as a case for selective perception.
From the perspective of the consumer, the factory system meant ________. Group of answer choices cheaper manufactured goods fewer choices in manufactured goods acute shortages of many manufactured items lower quality manufactured goods manufactured goods priced beyond the means of many consumers
Answer: Cheaper manufactured goods.
Explanation:
The factory system is a method of mass production of goods in an industrial way, which uses the line assembly system to manufacture multiple products at a lower cost, and in the least amount of time.
With this production system, the industrial era began in Great Britain, and today is the most widely used method of producing merchandise worldwide due to the low costs involved in the production.
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Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of pounds per dollar under this fixed exchange regime was:________.A) £4.8665/$.B) £0.2055/$.C) always changing because the price of gold was always changing.D) unknown because there is not enough information to answer this question.
Answer:
B. £0.2055/$
Explanation:
Given that
An Ounce of gold cost = $20.67 in US dollars
An ounce of gold cost = £4.2474 in British pounds.
Therefore,
Exchange rate per 1 dollar
= 4.2474 ÷ 20.67
= 0.20548
= 0.2055.
This means that 1 dollar is equivalent to 0.2055 British dollars at that time using that exchange rate.
£0.2055/$
Under the gold standard, the exchange rate of pounds per dollar was determined by dividing the fixed gold prices of both currencies. For an ounce of gold at $20.67 and £4.2474, the exchange rate was approximately £0.2055 per dollar.
Explanation:Under the historical gold standard of currency exchange between 1879 and 1914, the price of an ounce of gold was fixed at both $20.67 in the United States and £4.2474 in British pounds. To find the exchange rate of pounds per dollar, we perform a simple division calculation of the two fixed gold prices.
The calculation is as follows:
Divide the British pound gold price by the American dollar gold price (£4.2474 / $20.67).This division equals approximately £0.2055.Therefore, the exchange rate was £0.2055 per US dollar during this fixed exchange regime.The exchange rate under the gold standard was stable and determined by the relative gold content in the currencies of different countries. It wasn't always changing, as the gold prices were themselves fixed. This system provided a measure of international monetary stability until the onset of World War I, whereafter many countries suspended the gold standard to print more of their currencies to pay for military expenditures.
If the marginal product of labor falls whenever more labor is used, and labor is the only factor of production used by the firm, than at every output level the firm's short-run average variable cost exceeds marginal cost. T/F
Answer:
False
Explanation:
If the marginal product of labor falls whenever more labor is used, and labor is the only factor of production used by the firm, than at every output level the firm's short-run average variable cost is less than marginal cost.
At the point of diminishing marginal productivity or returns, while marginal product is falling, marginal cost is rising because they have an inverse relationship.
Furthermore, at the point of diminishing returns, with marginal product falling with increasing output, marginal cost will rise above average cost because the cost of each additional unit of labor will be higher than the the previous, hence the average will be lower.
Apple restricts its computer manufacturing line to only a few basic models that can be assembled in four minutes, which gives customers a good choice with quick delivery. This is an example of:______.
Answer: Unsegmented Marketing.
Explanation:
Apple company decision to use a single phone design to meet the consumption need of all their customers and phone lovers in the market is an example of Unsegmented Marketing. In Unsegmented Marketing a producer makes a product or service that is capable of meeting all consumers needs at once.
Answer:
unsegmented marketing
Explanation:
An unsegmented marketing strategy (A.K.A. mass marketing) takes place when the producer of a good or service views their potential market as homogeneous and therefore carries out only one single marketing program to try to reach their customers. This single marketing program generally includes one (or few very similar products), one price (or very similar prices), one single promotional effort and a similar distribution system for every customer.
In this case, Apple has probably determined that most of their potential clients fall under one category, and that they value short delivery times very much. That is why their product line depth is actually pretty shallow.
This happens not only with computers, but also with iPhones and iPads. If you compare Apple's product mix length to other manufacturer like Samsumg, they offer very limited variations of their different product lines.
Mb inc. has an independent, permanent work group that develops and revises codes of ethics, suggests ways the organization can contribute toward the environment, and regularly reviews other specific issues and concerns within the organization. this is an example of a _____.
Answer:
The correct answer is Committee.
Explanation:
A committee within the organizational structure refers to a group of employees that focus on some topic of relevance to the organization. These employees emerge as representatives of the total number of workers, and are democratically elected for a certain time to perform these functions. What is sought with this type of structure is to have greater communication and to have the ability to propose and request changes for the benefit of all.
Chief financial officer Barry submits travel and expense reports that are completely genuine and encourages employees in his division to always give accurate and correct information. Barry is using the ethical initiative called:________.a. leading by example. b. open-book management. c. accepting whistleblowers. d. developinf formal mechanism for dealing with ethical problems.
The price of a bouquet of roses in France is 4 euros. Tom Smith, a frequent international traveler found that a similar bouquet of roses cost only 3 euros in Germany. A benefit of adopting the euro as a common currency is that it
A benefit of adopting the euro as a common currency is that it makes it easier to compare prices across Europe.
Explanation:When the same currency type is used in different group of people or different geographic locations, it refers to the common currency. In European Nations the common currency that is being used in Euro and in U.S the common currency used is dollar. There are many benefits that are associated with the usage of common currency.
It helps in reduction of transaction cost, Price transparency, expands markets, enhances the currency stability,etc.In the example given, the prices of roses at different regions of Europe were found to be different. The prices of the rises are expressed in Euros. The use of common currency here facilitates and makes easier to compare prices across Europe.
A benefit of adopting the euro as a common currency is that it makes it easier to compare prices across Europe.
What is Currency?This is defined as a system of money in general use in a particular country at a specific time.
Adoption of the euro made it easier for Tom Smith to compare the prices of the rose in the two European countries.
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The Patriot Act requires that telecommunications carriers and manufacturers of telecommunications equipment modify and design their equipment, facilities, and services to ensure that they have built-in surveillance capabilities.1. True2. False
Answer:
2. False
Explanation:
It is false that a patriots act needs the telecom carriers and the manufacture of the telecom equipment to modify and design the facility and services to ensure that they have built-in surveillance capabilities that affect the telecommunication system of the country.On October 1, Year 1, Little Co. enters into a contract with a customer to build a factory on the customer’s land for $1,000,000. The construction of the factory is expected to be completed at the end of Year 5. Based on Little’s accounting policies, the progress toward completion of the factory is measured using the input method based on costs incurred. During Year 1, Little incurred $450,000 in costs in respect to this contract and billed the customer for $600,000. At the end of Year 1, Little cannot reasonably est.
The firm's accounting profit was $50,000, calculated by subtracting explicit costs from sales revenue. To find the economic profit, which was $20,000, the opportunity cost of not renting out the land must also be considered and subtracted from the accounting profit.
To calculate a firm's accounting profit, we deduct the total explicit costs from its total sales revenue. In the given scenario, the firm's sales revenue was $1 million, and its explicit costs for labor, capital, and materials were $600,000, $150,000, and $200,000 respectively.
Therefore, the accounting profit equals $1,000,000 (sales revenue) - $600,000 (labor) - $150,000 (capital) - $200,000 (materials) = $50,000.
For the economic profit, we consider both explicit costs and implicit costs, such as opportunity costs. The firm could have rented out the land where its factory is situated for $30,000 per year, which is an opportunity cost. Hence, the economic profit is the accounting profit minus the opportunity cost, which is $50,000 (accounting profit) - $30,000 (opportunity cost) = $20,000.
Marissa and Jessica, sisters born two years apart, grew up in an impoverished, violent neighborhood. As adults, Marissa is chronically jobless and is addicted to drugs while Jessica is a professor of economics at a community college. What might explain their different life outcomes?
Answer:
differential susceptibility
Explanation:
Differential susceptibility model was proposed by Jay Belsky, this theory explains the way two different individuals respond to the effect of their environment. In this theory there is the plastic group (which Marissa belong to) and the fixed group (which Jessica belong to). The plastic group are largely affected by the positive and negatives in their environment when compared to the fixed group.
The theory explains that people do not vary in the level at which they become vulnerable to the negative effect in their environment but that generally it is based on their developmental plasticity.
Two firms, such as a small local, family-owned Italian restaurant and Olive Garden, share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors. true or false
Two firms, such as a small local, family-owned Italian restaurant and Olive Garden, share few markets and have little similarity in resources, but are nonetheless direct and mutually acknowledged competitors - False
Explanation:A state of rivalry that exists between any company that sells identical or similar products and services refers to the competitors. There are two types of competitors such as direct and indirect competitors. Direct competitors are the firms that sells same kind of goods and services. They also focus on the same market segment and also customers.
Indirect competitors refers to those companies that sells similar goods and services but, they will not be having similar end goals. The given statement is false since the firms given are sharing only few of the markets and also have less similarity in the resources. Hence they cannot be competitors either directly or indirectly.
A ________ may be desirable as a market entry strategy if one company does not have the necessary financial, physical, or managerial resources to enter a foreign market alone, or if the arrangement is required by the foreign government.
Answer:
joint venture
Explanation:
A joint venture is basically a business entity set up by two other companies (or even more companies that associate with each other) to serve a specific market or accomplish a specific project or task, but the two parent companies continue to operate separately form each other. For example, in China the government used to require that foreign companies form joint ventures with local companies in order for them to start operating there.
Credit reports will include
a- your grade point average
b-names of family members
c-past due balances
d-library fines
past due balances
Answer: Option C.
Explanation:
Your credit report contains individual data, credit account history, credit requests and open records. This data is accounted for by your banks and loan bosses to the credit authorities.
These four classifications are: distinguishing data, credit accounts, credit requests and open records.
Of the approaches to pursuing international markets, developing a ________ involves the greatest commitment and risk. joint venture strategic alliance franchise foreign subsidiary
Answer:
D. Foreign Subsidiary
Explanation:
Foreign Subsidiary is a company either party owned or fully owned by another large corporation whose headquarters is based in another country. It implies that the company or organization did not start development or operations organically un the country they operate. Development of foreign subsidiaries is one of the main ways of pursuing international markets. It involves the greatest risk and commitment as against other options listed in the question due to factors like cost and time of establishing a foreign Subsidiary, compliance risk, taxation, immigration rules, securing secure office spaces and accommodations for employees, required investment and so on. These are things a company won't have to consider if they decides in joint venture, strategic alliance or franchising when pursuing international markets.
Developing a foreign subsidiary involves the highest commitment and risk among the approaches to pursuing international markets because it requires significant investment and exposes the company to the risk of instability in the foreign country.
Explanation:Of the approaches to pursuing international markets, developing a foreign subsidiary involves the greatest commitment and risk. This is because it requires a substantial investment in creating a separate entity in the foreign country, which includes not just setting up the infrastructure but also complying with the laws, regulations, and customs of the foreign country.
This also includes the potential risk of political, economic, or social instability in that country directly affecting the subsidiary’s operations, thereby leading to loss of investment. In comparison, other approaches such as a joint venture, strategic alliance, or franchise, although they have their risks, do not require the same level of financial commitment and do not expose the company to the same level of risk, as the company is not solely responsible for the venture’s success.
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Furniture Store runs an ad in the local Sunday newspaper announcing a Veteran's Day special on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. If Joe goes into the store sometime during the day on Veteran's day and tries to buy a Brandname chairside table, but is told the store has sold out of that particular table, according to the court in Lefkowitz v. Great Minneapolis Surplus Store, Inc.:
Answer:
The store is unlikely to have been in breach of the contract because while the circumstances of the case surrounding its advertising suggest that the advertisement was meant to be like other advertisements.
The offer to the public to make a bid, as well as the store did not approve or accept Joe's request.
At the beginning of the month, the baking department of Mario Company had no beginning work in process inventory. At the end of the month, 800 units that were 75% complete with respect to materials were in the in the ending work in process inventory of its baking department. During the month, 1,200 units were completed and transferred to Finished Goods. Assuming that the weighted-average method is used, the equivalent units in the ending work in process inventory with respect to materials of the baking department equal:_______.
Answer:
600 Units
Explanation:
Given:
Opening balance of inventory = 0 units
Ending balance of the month = 800 units
Finished units during the month = 1,200 units
Completed work in progress = 75% = 0.75
Ending work in process inventory = ?
Computation of ending work in process inventory:
Ending work in process inventory = Ending balance of the month × Completed work in progress
= 800 × 0.75
= 600 units
Final answer:
The equivalent units in the ending work in process inventory with respect to materials, using the weighted-average method, are 600 units.
Explanation:
To calculate the equivalent units in ending work in process inventory with respect to materials using the weighted-average method in a baking department with no beginning inventory. At month's end, there are 800 units that are 75% complete. To find the equivalent units for materials for these partially complete units, simply multiply the number of units by the percentage completion for materials. Thus, the equivalent units with respect to materials in the ending work in process inventory are 600 (800 units × 75%).
Upon discovering fraudulent data in a client’s tax return that the client would not correct, a CPA withdraws from the engagement. How should the CPA respond if asked by the successor CPA why the relationship was terminated?
Answer:
I would suggest that the client requests permission for us to discuss all matters on a platter.
Answer:
Even though a client cannot force CPA to engage in illegal activities, like any other employer cannot force an employee to commit a crime, there exists a -accountant-client privilege that cannot be violated. This means that the accountant cannot disclose any information regarding past clients unless ordered by a court or authorized by the client himself/herself.
So, before discussing any previous events, the successor CPA must obtain the client's permission to discuss any events related to the previous relationship.
An investment offers $157 per year forever, with the first payment occurring today. If the interest rate is 6.7% (per year, with annual interest compounding), the value of the entire investment today is $_____________.
Answer:
$2,500
Explanation:
we need to calculate the present value using the perpetuity formula plus the initial payment:
present value of this perpetuity = cash flow year 0 + (yearly cash flow / annual interest rate)
PV = $157 (earned today) + $157 / 6.7% = $157 + $2,343.28 = $2,500.28 ≈ $2,500
The market for land is competitive and in equilibrium at the rental rate of $500 per acre and the supply of land is perfectly inelastic at 1000 acres. If the demand for land falls and the rental rate falls to $400 per acre, the total economic rent on this land _____ by _____.
Answer:
Falls by $100,000
Explanation:
In this question, we are asked to calculate and state what happens when demand for land falls and as a result, there is also a fall in rental rate.
Firstly, we cost the total of 1000 acres. The price of 1000 acres is simply the multiplication of the 1000 acres by the $500 unit price= 500 * 1,000 = $500,000
We now calculate the price or worth of the land when demand falls
This is mathematically equal to 400 * 1000 = $400,000
Now, the net economic rent fall would be $500,00 - $400,000 = $100,000
Hence, there would be a fall of $100,000 as the demand for land falls