Improves motivation and retention The price of A equals $30 and the price of B equals $70. \text{Prepaid rent}&&\text{2,000}\\ 1.zero economic profit, but could have a positive accouting profit. Recall that stockholders are residual claimants. Study with Quizlet and memorize flashcards containing terms like A share of common stock represents a(n): A. claim from a lender against a borrower. 25 terms. What are economic resources? B. are essential to the reallocation of resources from less desired to more desired goods. Also, with low share prices many more people participate in the stock market which means a larger source of funds for companies seeking financing and basic principles of economics tells us that the greater the supply, everything else constant the lower the price. 1. a horizontal line equal to the minimum point on the typical firm's average total cost curve. For consumers, the bubbles can lead to increased wealth for some individuals who as a result may consume more, save less, buy expensive automobiles, homes, vacations etc. During an economic recession, U.S. Treasury securities are relatively more attractive than stocks, so we would expect that investors would purchase more of them relative to equity shares. **KEY INDICATORS** Mibanco at year-end $2013$: What is the method of reporting for each party if this charity is provided variance powers that enable it to change the beneficiary? So the result is the bubbles and their subsequent bursts result in real investment and spending that is inefficient. a. HR managers lack business acumen. To provide these services he must rent an office for $12 comma 00012,000 per year, hire a secretary for $24 comma 00024,000, and spend $5 comma 0005,000 per year in advertising. "Through the profit potential that encourages development of new technology.". Study with Quizlet and memorize flashcards containing terms like Economic growth, Economic growth is normally calculated as a percentage rate of growth per quarter or per, Real GDP per capita means GDP ____________ a. per country b. in real terms c. divided by capital stock d. per person and more. \text{Merchandise inventory (9 @ \$240)}&&\text{2,160}\\ In recent years, what has been the general worldwide trend regarding tariffs? ** Paid an additional$6,000 to settle some of the accounts payable. A. Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government. b. Henderson purchased a nine-month boat insurance policy on November 1 for$8,100. Based on the information provided in the question; the Dnext_year and Din_two_years will = $6.00. beer and marijuana are complementary goods. D. a liability that people are willing to accept in exchange for goods and services., A barter economy is an economy where based on the production data, which of the following statements about the marginal product of the fifth worker is true, As output of a firm increases, the difference Identify the ways in which a bondholder's rights differ from those of a stockholder. Tests were also conducted with Uzi and Black Hills ammunition. These coefficients reveal that a 1 percent increase in income will increase the quantity of movies demanded by 3.4 percent, of dental services by 1 percent, and of clothing by 0.5 percent. They can enhance their resource productivity. In 2017, two beer drinkers in California filed a lawsuit against Kona Brewing Company, which sells Kona beer. Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams. C. have no influence on the composition of domestic output. Blindfold the participants and ask them to hold their noses. Use the graph to the right, which shows the demand and cost for Angelica's beef brisket sandwiches, to answer the questions that follow. While the fixed investment in new oil sands projects is prohibitive, variable costs can be in the low $20 range (say, $23) per barrel." Profits 4. This negotiation will occur as long as property ownership is well defined, only a few people are involved, and bargaining costs are low. What will happen to the quantity of McDonald's cheeseburgers demanded? Which method provides a better measure of a company's economic activity each period? We expect that business cycles will affect: In the event of bankruptcy, stockholders: All other things equal, a decrease in the equity risk premium leads to a(n): The basic dividend-discount model is a bit of an oversimplification for valuing stocks because it: The required stock return an investor seeks can best be represented by which of the following? ), In the long run, the number of farm stands selling peppers in Milledgeville each day will. Previously, the government did not permit foreigners to purchase domestic stock. The income elasticities of demand for movies, dental services, and clothing have been estimated to be +3.4, +1, and +.5, respectively. What is the main effect of increasing opportunity costs? increase profits by making the demand curve for the product more inelastic. How much wheat will Ali choose to produce per month in order to maximize his profits in the short run? What does behavioral economics have to say about each of the following statements? The article observed, "The gains show no signs of stopping, given the [increasing] U.S. demand.". To maximize profits or minimize losses this firm should produce. The figure to the right represents the cost structure for a perfectly competitive wheat farmer with her average total cost (ATC) curve and marginal cost (MC) curve. Because hides were more expensive, it became more costly to produce leather, reducing the supply and raising the price of leather goods. At the end of two years your portfolio is worth: You start with a portfolio valued at $500. Neoclassical economics focuses on providing more options; behavioral economics focuses on helping people make better decisions with the options available. Which method provides a better measure of a company's economic activity each period? Besides this, it offers current accounts, savings, deposit accounts and insurance products to private individuals - many of whom find it difficult to gain support from traditional commercial banks. Study with Quizlet and memorize flashcards containing terms like What is an opportunity cost? On the other hand, if the company's estimate or forecast is wrong and the expansion does not prove profitable, the stockholders will see a lower return than they would have without the expansion. The figure to the right represents the cost structure for a perfectly competitive firm with its average total cost (ATC) curve, average variable (AVC) curve, and marginal cost (MC) curve. This is a two-part question: We have a firm that needs $1000 to obtain a new machine for its business. Why are resources also called factors of production? Thus, LoJack provides both private benefits and positive externalities. Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Alexander Holmes, Barbara Illowsky, Susan Dean. Creative destruction refers to the process by which the creation of new products and production techniques destroys the market positions of firms committed to producing only existing products or using outdated methods. "Sinc The LoJack car recovery system allows the police to track stolen cars. differentiate its product and produce at lower average cost than competitors. At the time the column was written, the price of oil was about $5050 per barrel. Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. What possibilities exist to explain the claim made by many professional portfolio managers that they can exceed the average stock market return year after year? d. Increases goal congruence, Henderson Fishing Charters has collected the following data for the December 31 So, politicians have a political incentive to support high levels of spending by only moderate levels of taxation. Does the market system result in allocative efficiency? It is believed the stock will sell for $100 one year from now, and an investor has a discount (interest) rate of 6% (0.06). Interpret these coefficients. If only the price of stock B increases by 10%, the price of B will rise to $77, and the index will have a value of 53.5, or an increase of 7%. Jacques is planning to set up a $70,000 investment portfolio. Round up to the next $100.14,356$, or 14,400 . If the domestic price in Canada is $0.75 and the domestic price in the United States is $1.00, what will Canadian companies do? If Bobby sell 20 glasses of lemonade for $0.20 per cup, and his average total cost is $0.17, what are his economic profits for the day? The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. 15 terms. This behavior could be explained by: Professor Jeremy Siegel, of the University of Pennsylvania, did research showing that: Professor Jeremy Siegel, of the University of Pennsylvania, conducted research that showed that: Mutual funds are characterized by the fact that they all: Index funds are often preferred to other mutual funds because: When stock prices reflect fundamental values: The fact that returns from the stock market are less volatile over long-periods of time suggests that: Stock market bubbles typically lead to all of the following except: Which of the following could cause a stock market bubble? 15 terms. Which country has an abundant labor force suited to produce labor-intensive goods? A professional money manager who has an exceptional year will attract a lot of attention and money. Contrast how a market system and a command economy try to cope with economic scarcity. a. earn economic losses. If competitive industry Y is incurring substantial losses, output will: Businesses are sellers of final products. With bankruptcy more likely during a recession, the expected losses associated with being a residual claimant are higher. The other company, we will call B, has a stock price of $100 per share and has 1000 shares outstanding. The quantities of jeans sold per day at various prices are shown in the table below. \text{a. demand} & \text{f. complement }\\ In a competitive market economy firms will select the least-cost production technique because: Coordination problem under central planning. Why does a local McDonald's face a downward-sloping demand curve for its Quarter Pounder? Basically, limited liability says an investor can only lose what he/she paid for the stock (invested) in the first place. Illinois Driver's Test 2019. Is there an altitude at which the pressure is exactly zero? (1) Managed funds or mutual funds tended to perform worse than index funds. Discuss the political incentives that helped motivate federal politicians to approve budget deficits in all but five years between 1960 and 2015. In the morning, Ike's stockbroker calls to tell him that he has gained $1,000 on his stock portfolio. Assume the individual has a discount rate of 8% (0.08). What effect does advertising have on firm profits? The resource markets are where the owners of the resources (the households) sell their resources to the buyers of the resources (businesses). The market system's answer to the fundamental question "How will the system promote progress?" True or False? Workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. Philosophy Study Set. C) uncertainty concerning the occurrence of loss. Distinguish between the resource market and the product market in the circular flow model. Study with Quizlet and memorize flashcards containing terms like The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use., ________ costs are the monetary payments a firm makes to purchase resources from others., Your company's total sales revenue for the month is $150,000; the costs to The first part of the question is to (a) determine the payment to the equity holders under the following three scenarios: (i) the first is the firm uses 0% debt financing; (ii) the second is the firm uses 50% debt financing, and (iii) the third finds the firm using 80% debt financing. Chartists look for patterns in the price movements of a stock. josh_parker_wang. A columnist for the Wall Street Journal discussed how some firms were buying existing drilling operations in Canadian oil sands regions. If people could accurately forecast price movements in stocks, they would immediately act on those forecasts, which would cause the price of the stocks to move today. After one year, a company will pay $5 in dividends. The company treasurer reports directly to the vice president of operations. This is determined by taking the current stock prices and dividing by two, similar to the construction of the DJIA. d. Do all of the above. When the bubble bursts these individuals are left trying to adjust, which can be not only inefficient but traumatic. josh_parker_wang. 4. reallocate resources from less desired to more desired uses. The brands exist only as Web sites and on the containers the food is delivered in. **10. p=2-0.0004 x The enitre market for apples is shown in the figure below. Study with Quizlet and memorize flashcards containing terms like Accumulated Depreciation, Acreage Reporting Date, Actual Cash Value (ACV) and more. Economic systems differ from one another based on who own the factors of production and: A. 7. The hypothesis does not claim that the market price is always right. Those who have a checking or savings account, but also use financial alternatives like check cashing services are considered underbanked. Study with Quizlet and memorize flashcards containing terms like 1. The interest rate is 8%. a. They can acquire more goods and services. Multiple select question. By contrast, in the DJIA the higher priced stocks carry more weight because it is a price-weighted average. In $2014$ Mibanco's profit margin fell to under $1 \%$ and $12 \%$ of its loans to small businesses had not been repaid within one month of the required date; and $61 \%$ of its customers had also taken out loans with other banks. Staff positions are directly involved in the companys primary revenue-generating activities. Guide each person's hand to each bit of food and ask him or her to taste it and guess what it is. Discuss whether the economy would be more or less efficient if public corporations issued fewer shares of stock. The production possibilities curves in the figure show that the United States has an absolute advantage over Mexico in vegetables and beef. Taxes owed but payable in the following period. If competitive industry Y is incurring substantial losses, output will: C. contract as resources move away from industry Y. Study with Quizlet and memorize flashcards containing terms like 22) Which of the following represents the two views of managerial impact on the success or failure of the organization? What is the current value of this index? where all firms earn zero economic profits producing the output level where P = MR = MC and P = AC. In a market economy the distribution of output will be determined primarily by: B. the quantities and prices of the resources that households supply. There are many wheat farms in the United States, and there are also more than 2,000 Panera Bread restaurants. b. earn economic profits. From society's point of view the economic function of profits and losses is to: 1. promote the equal distribution of real assets and wealth. An article in the Wall Street Journal discusses the visual effects industry, which is made up of firms that provide visual effects for films and television programs. In a two-nation model, international equilibrium is determined by the ______ of one country and the ______ of the other country. **22. Which argument against free trade becomes particularly popular when the economy goes into a recession? We've seen that Panera Bread spent two years changing its recipes as part of its "clean food" strategy. Retained earnings are an accumulation of a company's net income and net losses over all the years the business has been operating. How might a monopolistically competitive firm continually earn economic profit greater than zero? True or False? D. unlimited liability to the owner of the stock., Two characteristics that make owning stock attractive are: A. unlimited liability and first claim on Study with Quizlet and memorize flashcards containing terms like A multinational enterprise is a firm that engages in foreign direct investment by directly investing in, controlling, and managing value-added activities in other countries T/F, The term "emerging markets" refers to all markets other than the developed markets T/F, GDP is the sum of value added by resident firms, What are the likely reason(s) that the market for dress shirts is not perfectly competitive? How might this underallocation get resolved via the means suggested by the Coase theorem? Government regulatory agencies sometimes fall under the sway of the industries that they are supposed to be regulating. Suppose industry A is realizing substantial economic profit. 2. The Pin_two_years will = $100.00 and i = (0.08) Ptoday will be $96.43. Retained earnings are an accumulation of a company's net income and net losses over all the years the business has been operating. **18. Use the graph to estimate the altitudes at which the pressure is $23,19 ,$ and $13$ inches of mercury. One company, we will call A, has a stock price of $25 per share and there are 10,000 shares outstanding. The most broadly based stock index in use is the: When studying world stock indexes, we observe that: When comparing stock indexes around the world we: People differ on the method by which stock should be valued. 1. firms face downward-sloping demand curves, and the products competitors sell are differentiated. \end{matrix} The underbanked represented 14% of U.S. households, or 18. Study with Quizlet and memorize flashcards containing terms like Determine whether each of the following examples would be included in Gross Domestic Product (GDP). In a market system, producer decisions are motivated by the attempt to earn profits. Michael Korda for many years was editor-in-chief at the Simon & Schuster book publishing company. ashryx. Study with Quizlet and memorize flashcards containing terms like 22) Which of the following represents the two views of managerial impact on the success or failure of the organization? Are there any costs to heuristics being "fast and frugal"? The ruling would make the price elasticity of demand more inelastic than if there were no such rule, assuming that there is not another equivalent university nearby to which students could transfer. Requirements Who make decisions regarding what to produce and how it is produced C. What kinds of products are produced in the economy and Is the bullet likely to be manufactured by Winchester? If Walter's costs are typical in the industry, we would expect that in the long run: new firms would enter the market for watches, the price would fall, and each individual firm in the market would produce fewer watches. The payment to the equity holders and the expected return are as follows, (i) for 0% debt financing, the payment is $75 - $150; with an expected return of 11.25%; (ii) with 50% debt financing the payment to equity holders will be $35 - $110; with an expected return of 14.5%; and finally, (iii) with 80% debt financing, the payment to the equity holders will be $11 - $86; with an expected return of 24.25%. C. entails the exchange of goods for goods. "Through the guiding function of prices and the incentive function of profits.". This implies that the increase in taxes of $1,000 will cause a greater level of disutility than the gain in utility Ike derives from the $1,000 increase in his stock portfolio. The market system's answer to the fundamental question "How will the system promote progress?" Assume the market for apples is. b. HR managers are not accountable for planning. d. produce a lower quantity of output than is socially optimal. What do economists mean when they say "price floors and ceilings stifle the rationing function of prices and distort resource allocation"? C. an asset that people are willing to accept in exchange for goods and services. The most efficient combination of resources in producing a given output is the combination that: B. can be obtained for the smallest money outlay. Study with Quizlet and memorize flashcards containing terms like Match the example with the correct market modification method: The Florida Orange Growers Association advocates drinking orange juice throughout the day rather than for breakfast only. Losses 2. True or False? In the evening, his accountant calls to tell him that he owes an extra $1,000 in taxes. Therefore, while these small companies don't currently pay dividends, investors may still buy stocks in these companies based on the expectation that they will pay dividends in the future. B. there are independently-acting buyers and sellers in each market. Not necessarily. What are the potential drawbacks of this system, compared to allowing both domestic and foreign investors to trade in the same market? A) omnipotent and symbolic B) omnipotent and reflective C) symbolic and interactive D) reflective and interactive, 23) The current dominant assumption in management theory suggests that Market prices act as an "invisible hand," coordinating an economy by rationing what is scarce and providing incentives to produce the most desired goods and services. Properly label this line. Money Capital Labor Land and more. An opportunity cost is what was sacrificed to do or acquire something else. This quotation best identifies the: The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. Identify each statement as true or false. Why does the Dow Jones Industrial Average have a value over 10,000 when the 30 stocks that make up the index all have values less than $200 per share? &&\text{Specific Category of}&&\text{Specific Category of}\\ This statement best describes the concept of: Which of the following is not one of the five fundamental questions? Use the five issues an investor should consider when purchasing stock to explain the popularity of mutual funds. a. To rule on trade disputes among member nations. The dividend-discount model of stock valuation: A stock has an annual dividend of $10.00 and it is expected not to grow. The average total cost and marginal cost of growing applesapples for an individual farmer are illustrated in the graph. At the end of the year, she shows an accounting profit of $85,000 on her income tax return. Since the firm is incurring short-run losses, the management is debating whether to continue operations. When Judy went to the grocery store yesterday, she bought three pounds of potatoes. C. share of ownership of the company. Utilities owed but not yet paid. The financial writer Andrew Tobias has described an incident when he was a student at Harvard Business School: Each student in the class was given large amounts of information about a particular firm and asked to determine a pricing strategy for the firm. Using the Coase theorem, we note that it will be to the advantage of individual apple growers and beekeepers to negotiate so that beekeepers (whose hives can be moved) locate their production in or near orchards. While the stockholders are owners of the firm, their liability is limited in that the bondholders cannot collect losses from the stockholders beyond the value of the company. Two major virtues of the market system are that it: Reallocate resources from less desired to more desired uses. where all firms earn zero economic profits producing the output level where P = MR = MC and P = AC. Those companies that are positively affected by the bubble and see their stock prices increase will find it relatively less expensive to raise funds and consequently may over-invest. The beer drinkers claimed that Kona was marketed as if it were brewed in Hawaii, but the beer is actually brewed in Oregon, Washington, Tennessee, and New Hampshire. Managerial accounting reports pertain to subunits of the business. D. What goods and services will be produced? If Bobby sell 20 glasses of lemonade for $0.20 per cup, and his average total cost is $0.17, what are his economic profits for the day? Illinois Driver's Test 2019. The additional money will require the manager to put these funds to use which, due to the law of diminishing marginal returns, will also make it more difficult to duplicate the return. Using ABC to allocate manufacturing overhead can help managers to: B. businesses are sellers of final products. The market price of children's mittens is $6.00 per pair. The S&P 500 gives more weight to the larger firms than the DJIA does. c. HR managers need to show how their HR practices support Which of the following is a distinguishing feature of laissez-faire capitalism? Farmer Parker's profit-maximizing level of production is 6 bushels of wheat. Based on the information provided in the question, the Dnext_year = $7.50; the Pnext_year = $200; and the i = 0.06. Are essential to the reallocation of resources from less desired goods to more desired goods. From an efficiency perspective, this is not a good thing. d. produce a lower quantity of output than is socially optimal. Compute the required stock return and current price of this stock, using the dividend-discount model. The wants of consumers are expressed in the product market with "dollar votes". We can calculate the Ptoday by using equation 8 from the chapter: The equation. Minimum ATC A market system features the private ownership of resources and the use of markets and prices to coordinate and direct the majority of economic activity. Farmer Parker will maximize profits by producing _______bushels of wheat (enter a whole number). You make a $1,000 investment in the stock of ABC Inc. Over the next year the investment decreases by 60%. Economists have debated the effects of monopolistically competitive market structures on the well-being of society. It commits to paying $21 two years from the current date. What effect does the entry of new firms have on the demand curve of an existing firm in a monopolistically competitive market? - average loan amount: $\$ 2800$ How much is invested in the CD. No, they will experience neither economic profits nor economic losses in the long run, unless they continually differentiate their products. We should expect the current price of stocks to: The impact from rapid dividend growth on a stock's current price will be. a firms ability to differentiate its product, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams, Carl S Warren, James M Reeve, Jonathan E. Duchac, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer. Managerial accounting applies only to merchandising and manufacturing companies. $$ Both managerial accounting and fi nancial accounting deal with many of the same economic events. \text{Salaries payable}&&\text{1,500}\\ In a market economy a significant change in consumers' desire for product X will: Economic profits in an industry suggest the industry: B. should be larger to better satisfy consumers' desire for the product. $$ Study with Quizlet and memorize flashcards containing terms like A share of common stock represents a(n): A. claim from a lender against a borrower. How do monopolistically competitive market structures affect consumers? \begin{array}{llllll} How many peppers should Miguel produce each day to maximize his profits? Study with Quizlet and memorize flashcards containing terms like Which of the following best summarizes why HR managers have to use strategy language when discussing the value of HR programs to senior leadership? The article notes that: "Blockbusters often have thousands of visual effects shots. What would the profit-maximizing quantity be if the market price was $6.50? Farmer Jones grows apples. An apple grower's orchard provides nectar to a neighbor's bees, while the beekeeper's bees help the apple grower by pollinating his apple blossoms. From the perspective of the theory of efficient markets, explain why it may be difficult for professional portfolio managers who have an exceptional year to continuously outperform the market average. Many small companies currently pay no dividends to their shareholders. Study with Quizlet and memorize flashcards containing terms like Which of the following restricts the volume of international trade? If we use the intensity figure from the textbook, the $1,000 loss is felt 2.5 more intensely than the $1,000 gain. Assuming a corporation has not sold stock to the public, conducting corporate business is straightforward. Xavier is breaking even and should continue to produce to continue breaking even in the long run. What are these reasons? The interaction of world supply and demand determines the equilibrium ______. They are called inputs because they go in to a production process (like ingredients go into a bowl to make a cake), with the resulting goods and services also being referred to as output. Now, the government has a plan to create two markets: one for domestic residents and one for foreign investment. b. earn economic profits. Revenue recognition upon completion On a long-term construction project, the amount in the construction in progress account represents the costs of construction plus the gross profit recognized to date, and the billings on construction represents This is a nearly impossible task." What do critics say is a flaw in the military self-sufficiency argument for protective tariffs to encourage domestic production of goods needed for national security? The nonprofit label comes from the fact that they are exempt from federal and local taxes in exchange for providing a certain amount of community benefit.. 25 terms. On one hand, they may applaud the proposal because (as we saw in the chapter), the use of leverage by a firm can increase the expected return to equity, which are the stockholders. Study with Quizlet and memorize flashcards containing terms like The ______ cost of any resource used to produce a good is the value or worth the resource would have in its best alternative use., ________ costs are the monetary payments a firm makes to purchase resources from others., Your company's total sales revenue for the month is $150,000; the costs to Suppose that you went to a farmers' market and found several different farmers selling cucumbers. \text { Woodville } & 22 & 6 Based on equation 7 in the chapter, what is the current price of this stock? You have a price-weighted index made up of two stocks, A and B. (a) The unemployment rate is 4.8 percent; (b) the unemployment rate is too high. Supplies on hand. Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamentals of Financial Management, Concise Edition. $$ These individuals may even work less or retire early. He plans on investing 20% in stock, 20% in bonds, 20% in collectibles, and the remainder into a 10-year certificate of deposit. Use a time-series plot to graphically display the currency conversion from the GBP to 1 USD. The potential losses associated with stocks are greater during economic downturns, so investors will have a higher required return on stock. Korda is very skeptical about how useful the advice in these books is: 1.How does the entry of new coffeehouses affect the profits of existing coffeehouses? the number of firms in the market for watches would remain the same, the price would remain the same, and each individual firm in the industry would continue to produce the same amount of watches. Use the graph to estimate the pressure at altitudes of $60000$ feet, $18,000$ feet, and $29,000$ feet. A student examines the graph to the right and argues. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. The theory of efficient markets says we should expect the price of the company's stock to: According to the theory of efficient markets: According to the theory of efficient markets, mutual fund managers may be expected to earn above-average returns if they: Stocks appear to present risk, yet many people have substantial parts of their wealth invested in them. This statement best describes the concept of: Expand in industry Z, as more resources will move to that industry. Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit. b. Ford Motor Company buys four tires to put on a new Ford Mustang. True or False? Corporations can only deduct net operating losses going back two years and forward 20 years. On the contrary, it implies that the prices in the market are mostly wrong, but at any given moment it is not at all easy to say whether they are too high or too low. Most of the students spent hours preparing their answers and came to class carrying many sheets of paper with their calculations. The primary effect of ______ opportunity costs is less-than-complete specialization. Economic resources are the natural, human, and manufactured inputs used to produce goods and services. When the share price of B increases by 10%, the new market value of the entire company is $110,000, ($110 1000), this increases the value of the index to $360,000 from $350,000, or 2.86%. Julia___Bryja. The expected return is increased but so is the standard deviation of that return (risk). Suppose that, on the basis of a nation's production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9,000 pizzas. When unrestrained, prices rise and fall to correct imbalances between the quantity supplied and quantity demanded in a market. In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market. The price that equates the quantities supplied and demanded globally through international trade. An increase in consumer desire for strawberries is most likely to: A. increase the number of strawberry pickers needed by farmers. Study with Quizlet and memorize flashcards containing terms like Apply revenue recognition principles to various types of transactions., Identify issues with revenue recognition at point of sale, including sales with buyback agreements, sales when right of return exists, and trade loading (or channel stuffing)., Identify instances where revenue is recognized before delivery 2. achieve full employment and price level stability. c. The U.S. Air Force purchases two new fighter jets Only realized profits with reasonable certainty are recognized in the profit and loss account However, provision is made for all known expenses and losses whether the amount is known for certain or just an estimation This treatment minimizes the reported profits and the valuation of assets 19 As the chapter points out there are four possibilities; 1) The managers have private or insider information, which is illegal; 2) They are lucky; 3) They are taking on more risk which will provide a higher return in some years but can also lead to lower than average returns for other years; and 4) Markets are not efficient. The risk premium is the compensation the investor requires due to the fact that the future selling price of the stock is uncertain. c. Improves customer relations "Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. 39 terms. alyclark21. Study with Quizlet and memorize flashcards containing terms like Which of the following restricts the volume of international trade? \ Retained earnings are an accumulation of a company's net income and net losses over all the years the business has been operating. In the last decade or so there has been a dramatic expansion of small retail convenience stores (such as 7 Eleven, Kwik Shop, and Circle K), although their prices are generally much higher than prices in large supermarkets. To find the price of the stock, we need to compute the growth rate of dividends: 6% = ($5.3 - $5)/$5. **4. These stores are selling convenience as well as the goods that are purchased there. specializing in one product and trading for the other. rnremley Plus. This growth rate for dividends is expected to continue indefinitely. If sellers find themselves at a given price with more output than consumers are willing to purchase, they will lower the price. Field tests revealed that Winchester bullets fired from the pistol had a mean velocity (at 15 feet) of 936 feet per second and a standard deviation of 10 feet per second. Because of their small size and convenient locations, they save busy consumers time. The condition of scarcity creates opportunity cost. If the market price is $56.00 per bushel of wheat, and Ali chooses to produce wheat, how much will he produce per month to maximize his profits in the short run? First, we need to compute the growth rate of dividends, g. This is equal to 5% = ($21 - $20)/$20. \text{Supplies}&&\text{150}\\ Multiple select question. \text { Whistler } & 11 & 19 \\ Study with Quizlet and memorize flashcards containing terms like Match the example with the correct market modification method: The Florida Orange Growers Association advocates drinking orange juice throughout the day rather than for breakfast only. A trading possibilities line reveals the amounts of two products a nation can obtain by ______. "Goods and services that are profitable.". based on the production data, which of the following statements about the marginal product of the fifth worker is true, As output of a firm increases, the difference **11. to skip breakfast to get a few extra minutes of sleep, to attend college, or to make a purchase. is essentially: B. How does the problem of limited and bundled choice in the public sector relate to economic efficiency? As a result they may propose mergers or acquisitions, or additional layers of management which may not be in the best interest of the stockholders. What will be the percentage change in the index from a 10% increase in the share price of company B? Rent-seeking is an appeal to the government for special benefits at taxpayers or someone else's expense. 4d. In what ways do they differ when a firm is bankrupt? What do bondholders and stockholders have in common? Other Quizlet sets. Compare/contrast the Nasdaq Composite Index with the Dow Jones Industrial Average. Study with Quizlet and memorize flashcards containing terms like Apply revenue recognition principles to various types of transactions., Identify issues with revenue recognition at point of sale, including sales with buyback agreements, sales when right of return exists, and trade loading (or channel stuffing)., Identify instances where revenue is recognized before delivery They can improve their self-sufficiency., In a model compiled to show the economic relationship between two Also (2) the fees for managed funds tend to run about 1.5% a year compared to 0.5% or less for index funds. adjusting entries: 1. a shift to the right of the market supply curve as new firms enter. What would the profit-maximizing quantity be if the market price was $5? What effect would a rule stating that university students must live in university dormitories have on the price elasticity of demand for dormitory space? 1.The graph at right represents the situation of Karl Kumquats, a kumquat grower. How much resources are available in the economy and where they are located B. The Standard & Poor's 500 Index differs from the DJIA in at least two major respects. The company received its electric bill on December 20 for $150 but will not pay it until January 5. What are the likely reason(s) that the market for electricity is not perfectly competitive? C) uncertainty concerning the occurrence of loss. 9. Which statements about tariffs and quotas are true? In fact, Professor Siegel's research points out that between the years 1871 and 1992 there was no 30-year period when bonds outperformed stocks. **16. Companies whose stocks increase the most during a stock market bubble will: The stock market bubble of the late 1990s and early 2000s: Stock market bubbles impact consumers by: Some good did come from the internet bubble of the late 1990s. Study with Quizlet and memorize flashcards containing terms like Traditionally, risk has been defined as A) any situation in which the probability of loss is one. This is an example of: C. idea that the decisions of producers must ultimately conform to consumer demands. 5. The two basic markets shown by the simple circular flow model are: Which of the following is a distinguishing feature of a command system? B) any situation in which the probability of loss is zero. a. **15. "Sinc For many indexes, the real value is to be able to compute percentage changes in the index over time. U.S. firms will produce more than 100 tons of corn and export the excess, selling it at the world price. \end{array} The stocks that make up the Dow Jones Industrial Average: If each company that made up the Dow Jones Industrial Average increased the number of their shares outstanding by 10%, but the share prices did not change, the value of the index would: The Standard & Poor's 500 Index differs from the Dow Jones Industrial Index because: Considering the S&P 500 Index, if each company's stock price increased by 10%: Which of the following statements is not true? &\text{Adjusting Entry}&\text{Accounts on the}&\text{Over /}&\text{of Accounts on the}&\text{Over /}\\ \hline \text { Holgate } & 17 & 7 \\ B. one's assets net of one's liabilities at any point in time. ** Recognized the revenue earned from transaction 13. What will be the percentage change in the index from a 10% increase in the share price of company A? The concept of consumer sovereignty refers to situations in which consumers are represented on the board of directors of large corporations. What explains the success of the convenience stores? The columnist estimated that the fixed cost of a new oil sands drilling operation could be $95 per barrel. What are the four direct effects of a tariff? Study with Quizlet and memorize flashcards containing terms like 1. Corporations can only deduct net operating losses going back two years and forward 20 years. What impact do you think this had on the supply of cattle hides, hide prices, the supply of leather goods, and the price of leather goods? Soylent Green is a perfectly competitive firm that produces soybeans. Please select all that apply. We can employ the formula from the text: 100. What price would an individual be willing to pay today for a stock that is expected to sell for $100 two years from now and which pays an annual dividend that is $6.00? 1. is produced up to the point where the marginal benefit for consumers equal the marginal cost of producing it. If the short-run price of corn falls to $1.30 per cob, Cathy should: shut down, because the market price is below the AVC. Suppose you decide to open a copy store. Who make decisions regarding what to produce and how it is produced C. What kinds of products are produced in the economy and Following a bumpy launch week that saw frequent server trouble and bloated player queues, Blizzard has announced that over 25 million Overwatch 2 players have logged on in its first 10 days. How might the government be able to address these issues? **14. fall because the supply of beef will increase as new firms enter the industry. Discuss how changes in economic conditions are likely to affect the equity-risk premium and stock prices. This is an example of a, Jennifer buys a piece of costume jewelry for $33, for which she was willing to pay $42. Farmers quiz. is essentially: The regulatory mechanism of the market system is: The most efficient combination of resources in producing any output is the combination that: Producers would not react because no price or profit signals occurred. And others focus on the financial statements, where they determine a stock's fundamental value from current assets and estimates of future profitability. The city council of Pine Bluffs is considering boosting the number of police \sin an effort to minimise crime. POLSKI. Study with Quizlet and memorize flashcards containing terms like Which of the following are functions of exports assistance centers (EACs), Darla's bicycle ship in the United States is experiencing a slowdown in its growth. From society's point of view the economic function of profits and losses is to: D. reallocate resources from less desired to more desired uses. What do neoclassical economics and behavioral economics believe about giving people options? This means that if both countries use the same amount of resources on those products, ______. If the interest rate is 6% (0.06) what does the dividend-discount model predict the current price of the stock should be? Two characteristics that make owning stock attractive are: Voting rights in a corporation are held by the: The fact that common stockholders are residual claimants means the stockholders: If a public corporation goes bankrupt and does not have enough assets to pay off all creditors: The concept of limited liability says a stockholder of a corporation: Which of the following statements is most correct? 6. No, the demand curve is not horizontal because Chicken McNuggets are not identical to other chicken products. You hear someone claim that stocks are less risky than bonds. Reporting after incorporation. Losses 2. The bank issues working capital and loans to micro-entrepreneurs and small and mediumsized businesses. **9. If Ike is loss averse he will feel losses more intensely than gains. The current value of the index is 50. (b) What profit-maximizing price per soda should Coastal charge, how many sodas per day would it expect to sell at this price, and what would be the daily profits? As a result, they not only recover 90% of LoJack-equipped cars that are stolen but also arrest many auto thieves and shut down many "chop shops" that take apart stolen vehicles to get at their used parts. What is rent seeking and how does it differ from the kinds of profit maximization and profit seeking that we discussed in previous chapters? B. share in the company's debts. ** The population of Mexico was $116$ million in $2013$ and was growing at a rate of $1.07\%$ per year, compounded continuously. Which of the following are ways Darla's business could engage in the global market., A weak Does the concept of limited liability make owning stocks more or less attractive? Other Quizlet sets. Week 1. What does this statement mean? d. produce a lower quantity of output than is socially optimal. Using this, draw a scatter diagram. If a firm is bankrupt, then its creditors must be paid first. Edward Scahill produces table lamps in the perfectly competitive desk lamp market. $0.60 The market price of corn is $2.20 per cob. If we ignore risk, which of the following represents the dividend-discount model formula for the fundamental price of a stock? Study with Quizlet and memorize flashcards containing terms like 1. ** Paid $3,500 of advertising expense during the year. The chief acquired a sample of the data listed below. Study with Quizlet and memorize flashcards containing terms like T/F - Downloading music into a computers random access memory, or RAM, without authorization is copyright infringement., T/F - A franchisee's breach of the duty of honesty and fidelity can be enough to allow a franchisor to terminate a franchise even if their contract contains a notice-and-cure provision, Donuts Whole Jennifer experiences. B. are essential to the reallocation of resources from less desired to more desired goods. This clearly makes stock ownership more attractive. The ability of stockholders to influence these choices enhances the attractiveness of owning shares and therefore increases the willingness of individuals to purchase stocks. D. B. Neoclassical Study with Quizlet and memorize flashcards containing terms like A share of common stock represents a(n): A. claim from a lender against a borrower. Suppose the market for oranges is perfectly competitive and that the market price for a crate of oranges is $16 per crate. In the previous example we plotted the USD to 1 EUR for a 6-month time period. Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors. What do you expect to happen in this market as it approaches long-run equilibrium? The simple circular flow model shows that: C. households are on the selling side of the resource market and on the buying side of the product market. Economizing requires that any particular good be produced by the nation having the ______ domestic opportunity cost, or the ______ advantage for that good. 4c. The value of company B is $100,000, which we obtain by taking the share price of $1000 and multiplying by 1000 shares outstanding. Farmer Brown grows cottoncotton. 289 a. As of December 31, H enderson has completed the charter. Wheat is a homogeneous good, while Panera Bread is able to differentiate its food from other restaurants. The market system's answer to the fundamental question "Who will get the goods and services?" Other Quizlet sets. \text{Retained earnings}&&\text{39,190}\\ The managers and directors on the other hand may prefer job security and look at the increased risk as decreasing this job security if the results are poor, so may steer away from opportunities that stockholders would welcome. The country produces more of its most profitable goods. What does it mean if an income elasticity coefficient is negative? 1.There are about 400 wineries in California's Napa Valley. He has described the many books that have become bestsellers by promising to give readers financial advice that will make them wealthy, by, for example, buying and selling real estate. Subscriptions received in advance by a magazine publisher. A) omnipotent and symbolic B) omnipotent and reflective C) symbolic and interactive D) reflective and interactive, 23) The current dominant assumption in management theory suggests that
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What he/she Paid for the stock ( invested ) in the first place year will attract a of! Allocate manufacturing overhead can help managers to: the equation 13 $ inches of.! Competitive desk lamp market local McDonald 's face a downward-sloping demand curves, and there are wheat! These choices enhances the attractiveness of owning shares and therefore increases the willingness of individuals to purchase domestic.! Directly to the fundamental question `` how will the system promote progress? &! They save busy consumers time factors of production and: a at various prices are shown in the share of... Tons of corn is $ 16 per crate } { llllll } how many peppers should produce... As Web sites and on the price that equates the quantities of jeans sold day. Look for patterns in the figure to the vice president of operations police to stolen... Focuses on helping people make systematic errors on equation 7 in the morning, Ike stockbroker... Increase in the first place Kumquats, a and B situation of Karl,. Question ; the Dnext_year and Din_two_years will = $ 100.00 and i = ( 0.08 Ptoday! Applesapples for an individual farmer are illustrated in the United States, and manufactured inputs used to goods.
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