The inverse demand curve a monopoly faces is p = 130 - Q. The firm's cost curve is C(Q)= 30 +5Q. What is the profit-maximizing solution? The profit-maximizing quantity is (Round your answer to two decimal places.) The profit-maximizing price is $ (round your answer to two decimal places.) What is the firm's economic profit? The firm earns a profit of $ (round your answer to two decimal places.) How does your answer change if C(q) = 150 +5Q? The increase in fixed cost A. has no effect on the equilibrium price and quantity, but profit will decrease. B. has no effect on the equilibrium quantity, but the equilibrium price increases and profit increases. c. has no effect on the equilibrium quantity, but the equilibrium price increases and profit decreases. D. causes the firm to increase both the price and quantity, and profit increases,
Answers
The firm's profit maximizing quantity is 47.5 units while profit maximizing price is $52.5. The increase in fixed cost A. has no effect on the equilibrium price and quantity, but profit will decrease.
Determine the TR (Total revenue) function as the inverse demand function times Q given the inverse demand function. The MR function is then derived by deriving its first-order conditions with respect to Q.
TR = P×Q
= [130 - Q]×Q
= 130Q - Q²
The TR function is 130Q - Q²
MR = d(TR) / d(Q)
= d(130Q - Q²) / d(Q)
= 130 - 2Q
The MR function equals 130 - 2Q.
Determine the first-order conditions of the cost function (C) to obtain the MC function of the monopoly.
MC = d(TC) / d(Q)
= d(30 + 5Q) / d(Q)
= 5
Now, substitute MR for MC and solve for Q.
MR = MC
130 - 2Q = 5
125 = 2Q
Q = 62.5
Profitability is greatest at 62.5 units of output.
Put Q as 62.5 in the inverse demand equation and solve for P. P = 130 - Q = 130 - 62.5 = 67.5
Profits are greatest when the price reaches $67.5.
C = 150 + 5Q is the new cost function.
Determine the new MC function by following the steps below:
MC = 30 + 5Q / d(Q) = 5
Because the MC remains constant, the profit-maximizing quantity and price remain 47.5 units and $52.5, respectively.
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Related Questions
Consider the following price indexes: 95 in 2011, 100 in 2012, 129 in 2913, 131 in 2014, and 160 in 2015. If the cost of the market basket in 2012 is $3,500, what is the cost of the same basket of goods and services in 2015?
Answers
If the cost of a market basket of goods and services is $3,500 in 2012, the cost of the same market basket in 2015 is $5,600.
What is the market basket?According to common definitions, a market basket is a selected mix of goods and services.
The market basket is commonly used to track the price performance of a specific market or segment, especially with regard to inflation.
An example of a market basket is the Consumer Price Index (CPI). The CPI is an estimate of the average change of price paid for a specific basket of goods and services over time.
Data and Calculations:Date Price Index
2011 95
2012 100
2013 129
2014 131
2015 160
Cost of market basket in 2012 = $3,500
Cost of market basket of goods and services in 2015 = $5,600 ($3,500/100 x 160)
Thus, if the cost of a market basket of goods and services is $3,500 in 2012, the cost of the same market basket in 2015 is $5,600.
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in an assignment problem one agent can do parts of several tasks. (True or False)
Answers
The given statement "In an assignment problem, one agent can do parts of several tasks" is False because Assignment problems typically involve assigning a specific number of agents to a specific number of tasks.
Assignment problems typically involve assigning a specific number of agents to a specific number of tasks in a one-to-one manner, ensuring that each task is performed by one agent and each agent is assigned to only one task. The objective is often to minimize the total cost or time spent on completing all tasks, while considering the individual capabilities of each agent.
However, it is important to note that there are variations of assignment problems that may allow agents to be assigned to multiple tasks or work on parts of several tasks, such as the generalized assignment problem or multi-objective assignment problems. In these cases, the main goal is still to optimize the overall outcome, but the constraints and structure of the problem may differ from the traditional assignment problem.
In summary, the statement is generally false in the context of a standard assignment problem but can be true for variations or extensions of the assignment problem that allow for more flexible agent-task assignments.
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How does a notice board help in providing information?
Answers
Answer:
to boost the marble of employees
Answer:
A notice board can display graphs, data, facts and other relevant information
Explanation:
A notice board saves time, keep people informed, and can be serve for many purposes.
Activity-based costing (ABC) Group of answer choices is less complex than a traditional costing system. uses a single pre-determined overhead rate. can be used only by service companies. provides enhanced control over overhead costs
Answers
The correct option is:
Provides enhanced control over overhead costs.
Activity-based costing (ABC) is a more complex costing system compared to traditional costing. ABC system allocates indirect costs to products or services based on the activities involved in producing or providing them. This approach provides a more accurate cost estimation of the products or services by considering the different activities involved in the production or provision process.
ABC system can be used by both manufacturing and service companies, and it provides enhanced control over overhead costs by identifying the activities that consume resources and the cost drivers associated with those activities. This information helps managers to make better decisions on cost reduction and process improvement. Therefore, option c ("can be used only by service companies") and option b ("uses a single pre-determined overhead rate") are incorrect.
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Which of the following statements are not true of satisfied customers?
A. Satisfied customers tend to stay loyal.
B. Customers will spend more money with a company for great customer service.
C. Satisfied customers do not share their experiences with other people.
D. All of the above
Answers
OPTION (C) Satisfied customers do not share their experiences with other people. When customers feel satisfied from the services or products from a particular company, they are tend to share their experience with their friends and families. So that they can too get benefitted from the same.
Who are Customers?In sales, commerce, and economics, a customer is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for money or some other valuable consideration.
What is meant by 'Services'?A service is any activity or benefit that one party can offer to another, which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
What is a Company?A company, abbreviated as co., is a legal entity representing an association of people, whether legal, natural, or a mixture of both, with a specific task or objective. Company members share a common purpose and unite to achieve specific, declared goals.
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Do you believe the government should play a role in speeding up or slowing down the economy
Answers
Answer:
Yes I do believe they should because it is important to speed up economy's rate of growth
A writer, an illustrator, a publisher and an agent would form a
a. Functional team
b. Choss-functional team
C. Management team
d. Corporate team
Answers
Answer:
b. Cross-functional team
Explanation:
A cross-functional team is composed of individuals with different skill sets. It is formed to accomplish a task that requires the input of different functional skills. Organizations form cross-functional teams by picking its members from various departments in the company. Cross-functional teams are always temporary and are disbanded when their mission is accomplished.
A writer, an illustrator, a publisher, and an agent have diverse skill sets. The team they would form is cross-functional
Assume bob did use margin to buy his verizon stock. also, assume he paid another $40 to sell his stock and sold the stock for $25 a share. how much profit did he make on his verizon stock investment?
Answers
To calculate the profit made on his Verizon stock investment, we need to know the number of shares Bob bought and the purchase price per share. Once we have this information, we can calculate the total cost of the investment.
From there, we can determine the total revenue from selling the stock and subtract the costs to find the profit. Find the number of shares Bob bought: The question doesn't provide this information, so we'll assume a hypothetical number of shares, let's say 100 shares. Determine the purchase price per share: Again, the question doesn't specify this information, so we'll assume a hypothetical purchase price of $20 per share. Calculate the total cost of the investment: Multiply the number of shares (100) by the purchase price per share ($20) to find the total cost. In this case, the total cost would be $2,000 (100 shares x $20 per share). Calculate the revenue from selling the stock: The question states that Bob sold the stock for $25 per share, so we can multiply the number of shares (100) by the selling price per share ($25) to find the total revenue. In this case, the total revenue would be $2,500 (100 shares x $25 per share).
Determine the costs incurred: The question mentions that Bob paid an additional $40 to sell his stock. We can include this as part of the costs. Calculate the profit: Subtract the total cost ($2,000) plus any additional costs ($40) from the total revenue ($2,500) to find the profit. In this case, the profit would be $460 ($2,500 - $2,000 - $40). Therefore, Bob made a profit of $460 on his Verizon stock investment.
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Ruth is taking ASVAB exam. Match each question with the correct section.
Arithmetic Reasoning
Electronics Information
General Science
Reset Next
Answers
Answer: See explanation
Explanation:
Here's the complete question:
Ruth is taking ASVAB exam. Match each question with the correct section
Arithmetic Reasoning
Electronics Information
General Science
Question
Section
How is an object's weight related to its
mass?
How many 44-passenger buses will it
take to carry 100 people?
What does a transformer do?
Arithmetic Reasoning - How many 44-passenger buses will it take to carry 100 people?
Electronics Information - What does a transformer do?
General Science - How is an object's weight related to its mass?
Answer:
Arithmetic Reasoning - How many 44-passenger buses will it take to carry 100 people?
Electronics Information - What does a transformer do?
General Science - How is an object's weight related to its mass?
Explanation:
Because i took the test and got it right : )
HELP
State the minimum monthly income and hourly wage per worker needed to cover monthly expenses for the family you used in part a. Then explain how to calculate the hourly wage based on the monthly income and state the hourly wage. Assume that each full-time worker works four 40-hour work weeks per month, and each part-time worker works two 40-hour weeks per month.
chart:
Housing = $938
Food = $598
Child Care = $769
Transportation = $1,042
Health Care = $699
Other Necessities = $620
Taxes = $741
Answers
How to calc :
(1)Hourly - # of weeks = 52 or 48
(2)# of weeks times 40 to get hours worked
(3)Depending on ans to (2) 64884/ans to (2) to calc hourly rate
On 52 week year ;
Part time hourly - $62.39
Full time hourly $31.20
On 48 week year (seems to be the one asked for even though it’s inaccurate)
Part time hourly - $67.59
Full time hourly - $33.80
Answer:
Full-time worker minimum monthly income = US$ 7,846.40, Part-time worker minimum monthly income = US$ 7,846.40, Full-time worker hourly wage = US$ 49.04
Explanation:
Explain how Transnet could respond to disruption as a risk by
making use of the ‘risk management process’
Answers
Transnet can ensure that it is prepared to deal with disruption risks. This process allows Transnet to identify potential disruptions, assess their impact, and develop and implement strategies to reduce their likelihood and mitigate their consequences. This helps Transnet to ensure that its services continue to operate smoothly, even in the face of disruptions.
Transnet could respond to disruption as a risk by making use of the ‘risk management process’ as follows:
Transnet is a state-owned enterprise that is responsible for managing South Africa's railway, ports, and pipeline infrastructure. It must respond to disruption risks in order to ensure that its services continue to run without interruption. Transnet's risk management process can assist it in identifying and addressing potential disruptions.
Explanation
Transnet's risk management process has the following steps:
1. Identify risks: The first step is to determine the sources of disruption and the likelihood of these risks occurring.
2. Analyze risks: The next stage is to assess the potential impact of these disruptions on Transnet's services and to prioritize them based on their severity
.3. Develop risk management strategies: The next stage is to develop strategies for reducing the likelihood of these risks and mitigating their consequences.
4. Implement risk management strategies: The next stage is to implement the strategies and monitor their effectiveness.
5. Review and improve the risk management process: The last stage is to evaluate the effectiveness of the process and make adjustments where necessary.
Conclusion
Therefore, by following this risk management process, Transnet can ensure that it is prepared to deal with disruption risks. This process allows Transnet to identify potential disruptions, assess their impact, and develop and implement strategies to reduce their likelihood and mitigate their consequences. This helps Transnet to ensure that its services continue to operate smoothly, even in the face of disruptions.
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1) The heart beats approximately ________ times each day. A) 1,000 B) 10,000 C) 100,000 D) 1,000,000 E) 10,000,000
Answers
you have decided both to open a savings account and to purchase a vehicle. you would like a savings account with the highest interest rate and a vehicle loan with a low interest rate. you currently have a checking account at bank a. from the banks listed below, determine with which bank you should open a savings account and at which bank should you apply for your vehicle loan.
Answers
To determine the best bank for a savings account and a vehicle loan, you should consider the interest rates offered by each bank. The highest interest rate for a savings account is desired, while the lowest interest rate for a vehicle loan is preferred.
When deciding which bank to open a savings account with and which bank to apply for a vehicle loan, it is important to consider the interest rates offered by each bank. The higher the interest rate, the more money you will earn on your savings and the less money you will pay in interest on your loan.From the given information, the best bank to open a savings account with is Bank C, as it offers the highest interest rate. The best bank to apply for a vehicle loan with is Bank B, as it offers the lowest interest rate.Therefore, it is recommended that you open a savings account with Bank C and apply for a vehicle loan with Bank B.Learn more about savings account: https://brainly.com/question/738615
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Melissa is very good at her Revenue job. Which skills does Melissa most likely have?
performing specialized work to support an embassy
analyzing information from discussions or applications
public speaking and debating
reviewing and analyzing tax forms!
Answers
Answer:
reviewing and analyzing tax forms!
Explanation:
Revenue is the total value of goods and services sold by a business in a financial period. However, the revenue department or a revenue officer refers to civil servants who collect taxes and other revenues on behalf of the government.
Melisa could probably be working in a government agency tasked with collecting revenue, such as the US's IRS. If she is very good at her job, it means she is an expert in reviewing and analyzing tax forms.
Answer:
reviewing and analyzing tax forms
Explanation:
I copied the other dude
1. Some bacteria are helpful to the body and:
a. cause cavities
b. die quickly outside other living cells
c. help the digestive system function properly
d. give you energy
2. Germs produce toxins in the body that can make you:
a. sneeze a lot
b. cough
c. have diarrhea
d. all of the above
3.List three ways to keep germs from spreading.
4. Describe the proper way to wash hands.
5. Describe what the immune system does for the body.
6. An antigen:
a. is an unknown substance that infects the body
b. is a protein that attaches itself to germs to get rid of them
c. destroys germs in the body
d. is a type of immunity you are born with
7. True or false: Vaccinations help to provide us with adaptive immunity, which is immunity that develops as we are exposed to diseases. T F
8. White blood cells help to:
a. infect the body
b. provide passive immunity
c. destroy infections
d. weaken your immune system
9. A specialized protein that recognizes invaders to the body and attaches to them is called:
a. an antigen
b. an antibody
c. a complement
d. a T cell
10. True or false: It’s OK not to wash my hands after using the bathroom at home because it's cleaner than a public restroom. T F
Answers
Answer:
I messaged you the asnwer.
Explanation:
Your older sister, Anna is trying to figure out how she's going to pay for college in the Fall. Anna is going over her options with you one night and she narrows it down to either putting her college education on your parents’ credit card or taking out a student loan. Which one would you suggest and why?
Answers
Answer:
They should take a student loan it less risky cause you will need to pay way more money if you do a credit card but a student loan they make a price and keep it that way till you pay them
They should take out a student loan since it is less dangerous than using a credit card, which requires more higher payments. With a student loan, the price is set up front and remains that way until you pay the lender.
What is the cheapest way to get a student loan?Among undergraduate and graduate student loan options, federal direct subsidized loans are the cheapest and most flexible. Only undergraduate borrowers with financial need as determined by the information in the Free Application for Federal Student Aid, or FAFSA can get subsidized loans.How much can I get in a student loan?If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.What type of student loan should I get?If you're unsure what type of loan to choose, a good rule of thumb is to pick one that offers a low interest rate, multiple repayment options and borrower protections. A federal direct loan checks all of those boxes and is a good place to start.Learn more about student loan here:
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If you purchase a $220,000 and make a 20% down payment, how much would 1 point cost at closing?
$440
$1,000
$1,760
$2,000
$2,200
Answers
If you purchase a $220,000 and make a 20% down payment, 1 point cost at closing would be $1,760. Option c is the correct choice.
To calculate the cost of 1 point at closing, we first need to determine the total loan amount. With a 20% down payment on a $220,000 home, the loan amount would be $176,000. If you purchase a $220,000 property and make a 20% down payment, one point at closing would cost as follows,
First, we need to calculate the mortgage amount by subtracting the down payment from the property's purchase price. A 20% down payment on a $220,000 property is equal to,
$220,000 * 0.20 = $44,000.
Next, subtract the down payment from the purchase price to find the mortgage amount,
$220,000 - $44,000 = $176,000.
One point is equivalent to 1% of the mortgage amount. To calculate the cost of 1 point, multiply the mortgage amount by 0.01,
$176,000 * 0.01 = $1,760.
So, the cost of 1 point at closing would be $1,760. Option c is the correct choice.
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Busines
What does it mean for an employee to demonstrate professionalism by conducting oneself in a
manner appropriate for the profession and the workplace?
Answers
An organization or enterprising entity engaging in commercial, industrial, or professional activity is referred to as a business.
What do you mean by business?An organization or enterprising entity connection in commercial, industrial, or professional activity exists referred to as a business. Businesses can be for-profit corporations or charitable institutions. Limited liability firms, sole proprietorships, corporations, and partnerships are among the several types of businesses. It entails having proper and effective communication as well as constantly looking for methods to be productive. Employers seek candidates with a strong sense of responsibility, ethics, and teamwork as well as excellent interpersonal, communication, and problem-solving abilities. Professionalism results when you combine these abilities.Deliver quality work on time, adhere to deadlines, and arrive for meetings on time. Be courteous and upbeat at all times, even when others aren't. Being professional can help you make a good first impression, foster fruitful relationships with others, and build a solid reputation within your company and sector.To learn more about business refer to:
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Which of the following examples describes using data to achieve business results? Select all that apply.A. A large retailer performs data analysis on product purchases to create better promotions.B. A video streaming service analyzes user preferences to customize movie recommendations.C. A movie theater tracks the number of weekend movie goers for three months.D. A grocery chain collects data on sale items and pricing from each store.
Answers
If the theater were to analyze the attendance data to make decisions about scheduling movies, pricing, or marketing, then it would be using data to achieve business results.
The following examples describe using data to achieve business results:
A. A large retailer performs data analysis on product purchases to create better promotions.
B. A video streaming service analyzes user preferences to customize movie recommendations.
D. A grocery chain collects data on sale items and pricing from each store.
Option C) A movie theater tracks the number of weekend moviegoers for three months, is not necessarily using data to achieve business results. It is simply tracking attendance data for informational purposes.
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Which method of corporate finance is predominately used by "GROWTH companies"?
A-retained earnings
B-new stock issues
C-borrowing
D-none of these are used by “growth companies"
Answers
Answer:
The method of corporate finance that is predominately used by "GROWTH companies" is B: "new stock issues."
Explanation:
Growth companies are companies that are expanding rapidly and reinvesting their profits back into the business to fuel further growth. As such, they typically need to raise additional capital to support their expansion plans. One way they can do this is by issuing new stock, which allows them to sell ownership stakes in the company to investors in exchange for funding. This can be an attractive option for growth companies because it does not require them to take on debt, which can be costly and risky, and it also does not reduce their retained earnings, which they can continue to reinvest in the business. Retained earnings and borrowing are also commonly used methods of corporate finance, but they may not be as suitable for growth companies depending on their specific circumstances.
Imagine you are a sales manager and need to tell an employee that his sales numbers have not been very good and he needs to improve them in the next month. Would email be a good choice for this intradepartmental communication? Why or why not?
Answers
Yes, email would be a good choice of telling an employee that his/her sales have not been good.
As just sending a simple email is easy, fast and efficient and it gets the word to that employee as quick as possible
Answer:
Yes, an email would be a good choice of communication. Because then you can alert him/her/them that their sales have not been good this month and have receipts that you gave them a warning.
what causes the winner’s curse? buying a firm with principal-agent problems buying a firm with a competitive disadvantage underpaying for an acquisition overpaying for an acquisition
Answers
The winner's curse refers to a phenomenon in which the winning bidder in an auction or competitive bidding process ends up overpaying for the acquisition. Several factors can contribute to the winner's curse.
Firstly, buying a firm with principal-agent problems can lead to the winner's curse. Principal-agent problems arise when there is a misalignment of interests between the owners (principals) and the managers (agents) of the firm. If the winning bidder fails to accurately assess the extent of these problems, they may overestimate the firm's value and end up paying too much.
Secondly, buying a firm with a competitive disadvantage can also contribute to the winner's curse. If the winning bidder overlooks or underestimates the firm's weaknesses or market challenges, they may pay more than the firm's true value, leading to overpayment.
Furthermore, underpaying for an acquisition can also result in the winner's curse. If the winning bidder significantly underestimates the value of the firm or fails to consider its growth potential, they may secure the acquisition with a low bid but later realize that the firm was worth much more.
Lastly, overpaying for an acquisition is a direct cause of the winner's curse. Bidders may get caught up in the competitive nature of the auction and be willing to pay a premium price to secure the deal. However, they may later discover that their bid was too high compared to the actual value of the firm.
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Wavetel, a hardware company based in Europe, acquires Telior, its competitor in a neighboring country. Identify the market-entry strategy that best describes Wavetel's move. Joint venture Direct foreign investment Franchising Indirect exporting
Answers
Answer:
Direct foreign investment.
Explanation:
A foreign direct investment commonly used by abbreviation FDI refers to a cross border investment in a business venture by a firm or individual of the country. In a broad sense, FDI occurs when a stockholder establishes overseas business activities or possesses foreign stock holdings in a foreign firm. FDI is a crucial component of global economic development since it establishes secure and long term trade linkages. FDI is an essential factor for the transfer of technology and infrastructure development and between different nations of the world. As per the question, Wavetel acquires a business firm in a neighboring country and it is a classic example of FDI.
Project: Interview
1. Write a summary of the information that was discussed in your interview. Type your summary here.
2. Describe three insights about this career that you learned from your interview.
3. Is this career still one that you are interested in? If not, what changed your mind?
minimum of 200 words each
Answers
A professional interview is a stage where information about the candidate's professional profile, experiences and job details are discussed.
How can an interview influence the candidate's vision?The candidate is able to develop insights into the career for which they are aiming for a position in the job market, through the information provided by the recruiter about the position and the characteristics desired by professionals, such as:
CommunicationCreativityFlexibilityTherefore, in a marketing career, for example, there are several characteristics that correspond to the most demanded in a candidate, due to the speed of market changes that demand constant innovation and creativity.
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Answer:
Explanation:
k
The ______ is when a higher price level reduces the purchasing power of the public's accumulated savings balances. Multiple choice question. international-trade effect real-balances effect price-level effect interest-rate effect
Answers
Answer:
Explanation:
Hi
The price-level effect is regarded as a situation in which the purchasing power of the customer of its total accumulated savings balances.
How does price level affect the purchasing power of a person?Price level refers to an amount for which a certain product is available for sale. It is assumed that the savings of the consumer who is willing to buy does NOT change in the meanwhile.
If the price level of a product decreases, the net disposable income in the hands of a consumer will ultimately increase. Similarly, when the price level is higher, the net disposable income in the hands of the consumer is reduced, leading to a decrease in its purchasing power.
For example, when the savings of a person is 100 and the Product A costs 50 the consumer buys 2 units; When the prices are increased to 100, now the consumer can buy only 1 unit of Product A, indicating a decrease in the purchasing power of the person.
Hence, the price level effect is when the higher price level reduces the purchasing power of the public's savings.
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"What a given group of people appreciates" are their ___________. A. Cultural contexts b. Culture shock c. Cultural education d. Cultural values Please select the best answer from the choices provided A B C D
Answers
Answer:
d. Cultural values
Explanation:
Cultural values are the values and norms that are followed by a distinct society or a group of people. In other terms, values and norms developed within the society to form its basis are said to be the cultural values. The people believe, follow, and appreciate the values. They help in defining the ways of living and leading the life. The behavior, nature, and thinking of the society is influenced or structured as per the cultural values.
Answer:
D
Explanation:
I just took the assignment
In Canada in 2009, during the economic recession, the unemployment rate was 8.4 percent. If the natural rate of unemployment is assumed to be 6.5 percent, then the real unemployment rate exceeded the natural rate by 1.9 percent (8.4 minus 6.5). This means that GDP could have been 3.8 percent higher (1.9 percent times 2). The actual real GDP during the economic downturn in 2009 was $1 549.8 billion, but it could have been 3.8 percent higher, or $58.9 billion more, in terms of dollars ($1 549.8 × 0.038). This figure represents the GDP gap. The potential GDP of the Canadian economy in 2009 was $1 608.7 billion—if only it had been able to achieve full employment.
This GDP gap can have a compounding effect over time. In Figure 12.6, the significance of labelling the two axes "Capital Goods" and "Consumer Goods" lies in the fact that, if the economy were fully utilizing its resources, the potential for producing more capital goods, without sacrificing any consumer goods, exists. The production of more capital goods in the present would translate into an outward shift of the production possibilities curve in the future because more capital goods would be available as inputs for the production process. If a country produces at point A, its future production possibilities curve (PPC) only shifts to PPC1 because of the relatively smaller amount of capital goods it is adding to the productive resource base compared with point B. If that same country were to produce at point B, its future PPC curve shifts to PPC2 instead because it has added relatively more capital goods for use in production without sacrificing any consumer good production. In future years, this "loss" of capital goods would continue to hold PPC curves to levels below what they could have been. This means that the GDP gap in the present has a significant long-term impact in the future—the loss of potential growth.
APPLYING ECONOMIC THINKING
1. In 2016, Canada’s GDP was $1 803.3 billion, and the unemployment rate was 7.0 percent. If the natural rate of unemployment is 6.5 percent, what was Canada’s GDP gap in 2016?
2. The data in the table below are from the Organisation for Economic Co-operation and Development (OECD). The "natural rate of unemployment" in the OECD table is called the Non-Accelerating Inflation Rate of Unemployment (NAIRU). Calculate the GDP gap for each country presented in the table. (Data from stats.oecd.org)Country 2015 Nominal GDP ($ billions) 2015 Unemployment Rate (%) NAIRU (Natural Unemployment Rate) (%) Australia 6.1 5.6 1638.1 (AUD) Canada 6.9 6.6 1995.0 (CAD) Greece 24.9 16.0 176.0 (euro) Korea 3.6 3.4 1486 076.4 (won) Spain 22.0 15.5 1080.0 (euro) 5.3 4.5 United States 18 120.7 (USD).
Answers
The potential GDP of the US economy in 2015 was $18 410.6 billion if it had been able to achieve full employment.
1. If the natural rate of unemployment is 6.5 percent, then the real unemployment rate exceeded the natural rate by 0.5 percent (7.0 minus 6.5). This means that GDP could have been 1.0 percent higher (0.5 percent times 2). The actual real GDP in 2016 was $1 803.3 billion, but it could have been 1.0 percent higher, or $18.0 billion more, in terms of dollars ($1 803.3 × 0.01). This figure represents the GDP gap. The potential GDP of the Canadian economy in 2016 was $1 821.3 billion if it had been able to achieve full employment.
Therefore, Canada’s GDP gap in 2016 was $18.0 billion.
2. GDP gap for each country is as follows:Australia: If the natural rate of unemployment is 5.6 percent, then the real unemployment rate exceeded the natural rate by 0.7 percent (6.3 minus 5.6). This means that GDP could have been 1.4 percent higher (0.7 percent times 2). The actual real GDP in 2015 was 1638.1 billion Australian dollars, but it could have been 1.4 percent higher, or 22.9 billion Australian dollars more, in terms of dollars (1638.1 × 0.014). This figure represents the GDP gap. The potential GDP of the Australian economy in 2015 was 1660.9 billion Australian dollars if it had been able to achieve full employment.
Canada: As calculated in Part 1, Canada’s GDP gap in 2015 was $18.0 billion.
Greece: If the natural rate of unemployment is 18.0 percent, then the real unemployment rate exceeded the natural rate by 2.0 percent (16.0 minus 18.0). This means that GDP could have been 4.0 percent higher (2.0 percent times 2). The actual real GDP in 2015 was 176.0 billion euros, but it could have been 4.0 percent higher, or 7.0 billion euros more, in terms of euros (176.0 × 0.04). This figure represents the GDP gap. The potential GDP of the Greek economy in 2015 was 183.0 billion euros if it had been able to achieve full employment.
Korea: If the natural rate of unemployment is 3.4 percent, then the real unemployment rate exceeded the natural rate by 0.6 percent (4.0 minus 3.4). This means that GDP could have been 1.2 percent higher (0.6 percent times 2). The actual real GDP in 2015 was 1 486.4 trillion won, but it could have been 1.2 percent higher, or 17.8 trillion won more, in terms of won (1 486.4 × 0.012). This figure represents the GDP gap. The potential GDP of the Korean economy in 2015 was 1 504.2 trillion won if it had been able to achieve full employment.
Spain: If the natural rate of unemployment is 15.5 percent, then the real unemployment rate exceeded the natural rate by 0.5 percent (16.0 minus 15.5). This means that GDP could have been 1.0 percent higher (0.5 percent times 2). The actual real GDP in 2015 was 1 080.0 billion euros, but it could have been 1.0 percent higher, or 10.8 billion euros more, in terms of euros (1 080.0 × 0.01). This figure represents the GDP gap. The potential GDP of the Spanish economy in 2015 was 1 090.8 billion euros if it had been able to achieve full employment.
United States: If the natural rate of unemployment is 4.5 percent, then the real unemployment rate exceeded the natural rate by 0.8 percent (5.3 minus 4.5). This means that GDP could have been 1.6 percent higher (0.8 percent times 2). The actual real GDP in 2015 was $18 120.7 billion, but it could have been 1.6 percent higher, or $289.9 billion more, in terms of dollars ($18 120.7 × 0.016). This figure represents the GDP gap.
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the primary objective of financial reporting is to provide information
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The provision of information is the primary goal of financial reporting; however, the overall goal of financial reporting is to provide information about a company's finances while adhering to regulations.
What is Financial Reporting?Businesses communicate financial information to internal and external stakeholders through financial reporting. Financial reports are used by external stakeholders to determine a company's current and future financial health, including regulatory agencies, current, and potential shareholders, investors, and lenders.
Income Statements are a type of financial statement.
Statements of Cash FlowBooks of AccountsThe assets, liabilities, and equity of a company are shown on a balance sheet for a predetermined time period, typically one quarter.
Conference calls and press releases about quarterly earnings and other information. annual and quarterly reports to shareholders. Information about a company's finances is available online.
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your roommate says, "sales taxes are reported as an expense in the income statement." do you agree?
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When an item is sold to a customer, sales tax applies. This is categorized as a current liability that must be paid to the government rather than a cost.
Does VAT correspond to sales tax?A flat tax assessed on an item is known as value-added tax (VAT). It is similar to a sales tax in some ways, but unlike a sales tax, the consumer pays the entire amount owed to the government at the point of sale. With a VAT, different parties to a transaction each pay a portion of the tax.
What is an illustration of a sales tax?Take a look at this sales tax illustration. Before you check out at The Clothing Boutique, you should estimate your final bill after taxes. The sum of the prices of the items in your cart adds up to $100. In that county, the sales tax is 9.5%, so you would divide $100 by 9.5% (100 x 0.095).
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what is the best free editing app for gamers?