The inflation rate between 2010 and 2011 is 4%.
What is the inflation rate between 2010 and 2011 if a basket of goods was priced $100 in 2010 and $104 in 2011?To calculate the inflation rate between 2010 and 2011, we can use the following formula:
Inflation Rate = ((Final Price - Initial Price) / Initial Price) * 100
Given that the basket of goods was priced $100 in 2010 (Initial Price) and $104 in 2011 (Final Price), we can substitute these values into the formula:
Inflation Rate = (($104 - $100) / $100) * 100
Inflation Rate = ($4 / $100) * 100
Inflation Rate = 0.04 * 100
Inflation Rate = 4%
Therefore, the inflation rate between 2010 and 2011 is 4%.
This means that the price level of the basket of goods increased by 4% from 2010 to 2011.
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Q1. A firm's total cost function is c(y) = y² + (a + B)y + 100ß. p = $50. Find the best output level, y*.
The required solution is `(a + B - 50)/2`.
The firm's total cost function is, `c(y) = y² + (a + B)y + 100ß`.The price is, `p = $50`.To find: The best output level, `y*`.
Formula used: Total Revenue = Price × Quantity Total Cost = Fixed Cost + Variable Cost Total Profit = Total Revenue - Total Cost. To find the best output level, we need to find out the profit and then derive the total profit equation by differentiating the profit equation with respect to the output level and equate it to zero.
Here, the total cost function can be represented as follows: c(y) = y² + (a + B)y + 100ß Using the formula, Total Revenue = Price × Quantity or, R(y) = p × y= $50 × y= 50yUsing the above cost and revenue equation, Total Profit = Total Revenue - Total Cost or, P(y) = R(y) - C(y)or, P(y) = 50y - (y² + (a + B)y + 100ß)or, P(y) = - y² - (a + B - 50)y - 100ß
Differentiate the profit function with respect to output level to get the maximum profit .p'(y) = - 2y - (a + B - 50)Setting `p'(y) = 0`, we get- 2y - (a + B - 50) = 0or, 2y = - (a + B - 50)or, y = `(a + B - 50)/2`. Therefore, the best output level, `y*` is `y = (a + B - 50)/2`.Hence, the required solution is `(a + B - 50)/2`.
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Please do part D - zero coupon and part E entirely. Show
your steps.
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,00
Ai. The price of a zero-coupon bond is $463.19, ii. The price of the bond is $1,134.20, iii. 10% coupon bond is $1,000.00.
Bi. The price of the zero-coupon bond will remain the same at $1,000.00, ii. 8% coupon bond is $500.25, iii. The price remains the same at $1,000.00
What are the responses to other questions?a. If all three bonds are priced to yield 8% to maturity, the prices of the bonds are as follows:
(i) Zero-coupon bond: The formula to calculate the price of a zero-coupon bond is given by P = F / (1 + r)ⁿ, where P is the price, F is the face value, r is the yield rate, and n is the number of years to maturity.
In this case, the face value is $1,000, the yield rate is 8% (0.08), and the number of years to maturity is 10. Plugging in these values, we get:
P = 1000 / (1 + 0.08)¹⁰ = $463.19
(ii) 8% coupon bond: The price of the bond can be calculated by discounting the annual coupon payments and the face value using the yield rate.
The annual coupon payment is $80, the yield rate is 8% (0.08), and the number of years to maturity is 10. Since the coupon payment is an annuity, we can use the present value of an annuity formula to calculate the price.
P = (C / r) × (1 - 1 / (1 + r)ⁿ) + F / (1 + r)ⁿ
= (80 / 0.08) × (1 - 1 / (1 + 0.08)¹⁰) + 1000 / (1 + 0.08)¹⁰
= $909.09 + $225.11
= $1,134.20
(iii) 10% coupon bond: Using the same approach as the 8% coupon bond:
P = (C / r) × (1 - 1 / (1 + r)ⁿ) + F / (1 + r)ⁿ
= (100 / 0.08) × (1 - 1 / (1 + 0.08)¹⁰) + 1000 / (1 + 0.08)¹⁰
= $1,000.00
b. If you expect the yields to maturity to be 8% at the beginning of next year, the prices of the bonds will be:
(i) Zero-coupon bond: The price of the zero-coupon bond will remain the same at $1,000.00 since there are no coupon payments.
(ii) 8% coupon bond: The price can be calculated using the same approach as in part (a)(ii) but with a yield rate of 8% for the next year.
P = (80 / 0.08) × (1 - 1 / (1 + 0.08)⁹) + 1000 / (1 + 0.08)⁹
= $500.25
(iii) 10% coupon bond: The price remains the same at $1,000.00 since the coupon rate and yield rate are the same.
c. The before-tax holding-period return on each bond is equal to the yield rate, which is 8% for all three bonds.
d. If your tax bracket is 30% on ordinary income and 20% on capital gains income, the after-tax rate of return on each bond can be calculated as follows:
(i) Zero-coupon bond:
Pre-tax rate of return: 8%
After-tax rate of return: 8% (no tax on capital gains)
(ii) 8% coupon bond:
Pre-tax rate of return: 8%
After-tax rate of return: 8% - (8% × 30%) = 5.60%
(iii) 10% coupon
bond:
Pre-tax rate of return: 8%
After-tax rate of return: 8% - (8% × 30%) = 5.60%
e. If you expect the yields to maturity on each bond to be 7% at the beginning of next year, the calculations for parts (b)-(d) will change accordingly:
(b) The prices of the bonds will be as follows:
(i) Zero-coupon bond: $1,000.00 (no change)
(ii) 8% coupon bond: $454.55
(iii) 10% coupon bond: $1,000.00 (no change)
(d) The after-tax rate of return on each bond will be as follows:
(i) Zero-coupon bond: 7% (no tax on capital gains)
(ii) 8% coupon bond: 7% - (7% × 30%) = 4.90%
(iii) 10% coupon bond: 7% - (7% × 30%) = 4.90%
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The complete question goes thus:
Assume you have a 1-year investment horizon and are trying to choose among three bonds. All have the same degree of default risk and mature in 10 years. The first is a zero-coupon bond that pays $1,000 at maturity. The second has an 8% coupon rate and pays the $80 coupon once per year. The third has a 10% coupon rate and pays the $100 coupon once per year. a. If all three bonds are now priced to yield 8% to maturity, what are the prices of (i) the zero-coupon bond; (ii) the 8% coupon bond; (iii) the 10% coupon bond? (Round your answers to 2 decimal places.) Zero Coupon Current prices $ Price 1 year from now 8% Coupon Pre-tax rate of return 463.19 $ 10% Coupon 1,134.20 b. If you expect their yields to maturity to be 8% at the beginning of next year, what will be the price of each bond? (Round your answers to 2 decimal places.) 1,000.00 $ Zero Coupon 8% Coupon 10% Coupon $ 500.25 $ 1,000.00 $ 1,124.94 c. What is your before-tax holding-period return on each bond? (Round your answers to 2 decimal places.) Zero Coupon 8.00 % 8% Coupon 8.00 % 10% Coupon 8.00 % d. If your tax bracket is 30% on ordinary income and 20% on capital gains income, what will be the after-tax rate of return on each bond? (Round your answers to 2 decimal places.) After-tax rate of return Zero Coupon Price 1 year from now Pre-tax rate of return After-tax rate of return % 8% Coupon 5.60 % e. Recalculate your answers to parts (b)-(d) under the assumption that you expect the yields to maturity on each bond to be 7% at the beginning of next year. (Round your answers to 2 decimal places.) Zero Coupon % % 10% Coupon 5.52 % 8% Coupon % % 10% Coupon % %
Solve the problem. Round dollars to the nearest cent and rates to the nearest tenth of a percent. The cost of an item is $76. For a special year- end sale the price is marked down 20%. Find the selling price of the item. A. $63.33 B. $91.20 C. $60.80 D. $15.20
Given, the cost of an item = $76Rate of discount = 20%To find the selling price of the item at the end of the year, we have to subtract the discount price from the original price.
We know that the discount on an item is given by discount rate / 100 × Original price Since 20% is the rate of discount, therefore the discount on the item = 20 / 100 × 76= $15.20Therefore, the selling price of the item is given by: Selling price = Cost of item − Discount Selling price = 76 − 15.20 = $60.80The selling price of the item is $60.80.Hence, the main answer is option C, $60.80.
Given, the cost of an item = $76Rate of discount = 20%To find the selling price of the item at the end of the year, we have to subtract the discount price from the original price. We know that the discount on an item is given by discount rate / 100 × Original price Since 20% is the rate of discount, therefore the discount on the item = 20 / 100 × 76= $15.20Therefore, the selling price of the item is given by: Selling price = Cost of item − Discount Selling price = 76 − 15.20 = $60.80The selling price of the item is $60.80.Therefore, the main answer is option C, $60.80, and the explanation consists of 120 words.
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Because companies expect they will have product recalls in the normal course of doing business - recalls have no impact on a company's supply chain. True or False
Recalls can significantly impact a company's supply chain because companies expect they will have product recalls in the normal course of doing business. So, the statement is false.
Product recalls involve identifying, retrieving, and replacing defective or unsafe products, which can disrupt the regular flow of goods through the supply chain. The process of recall requires coordination with suppliers, distributors, and retailers to ensure affected products are removed and replaced, leading to potential delays and additional costs.
Moreover, recalls can damage a company's reputation, resulting in decreased consumer trust and reduced demand for their products. To mitigate these effects, companies need to have effective recall management systems in place and work closely with their supply chain partners to minimize disruptions and maintain customer satisfaction.
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when personal financial statements are prepared, a presentation of financial data that is intended to communicate an entity's economic resources or obligations on a specific date is referred to as which of the following? a statement of changes in net worth b statement of financial condition c statement of economic resources and obligations d statement of personal assets
When personal financial statements are prepared, a presentation of financial data that is intended to communicate an entity's economic resources or obligations on a specific date is referred to as the statement of financial condition because it provides a clear picture of an individual's financial standing at a given moment in time. The correct answer is option (b).
The statement of financial condition, also known as a balance sheet or a statement of financial position, shows the organization's financial condition at a given point in time. The statement of financial condition shows the business's assets, liabilities, and equity, which may include owner investments.
The statement of financial condition is the statement that provides a summary of an entity's financial position at a particular time. It is generally prepared by using the accounting equation:Assets = Liabilities + Equity. So, option B. Statement of financial condition is the correct answer.
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Nataro, Incorporated, has sales of $666,000, costs of $328,000, depreciation expense of $72,000, interest expense of $46,000, a tax rate of 24 percent, and paid out $48,000 in cash dividends. What is the addition to retained earnings? (Do not round intermediate calculations.) Addition to retained earnings
The addition to retained earnings for Nataro, Incorporated is $119,200
To calculate the addition to retained earnings, we need to start with the net income, subtract dividends, and account for taxes.
Net income can be calculated as follows:
Net Income = Sales - Costs - Depreciation Expense - Interest Expense
Net Income = $666,000 - $328,000 - $72,000 - $46,000
Net Income = $220,000
Next, we need to calculate the tax expense:
Tax Expense = Net Income * Tax Rate
Tax Expense = $220,000 * 0.24
Tax Expense = $52,800
Now we can calculate the addition to retained earnings:
Addition to Retained Earnings = Net Income - Tax Expense - Dividends
Addition to Retained Earnings = $220,000 - $52,800 - $48,000
Addition to Retained Earnings = $119,200
Therefore, the addition to retained earnings for Nataro, Incorporated is $119,200.
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Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 30 years, are callable 6 years from today at $1,025. They sell at a price of $1,331.28, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.
a. What is the best estimate of these bonds' remaining life? Round your answer to the nearest whole number.
years
b. If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?
a) For estimating the remaining life of the bonds we need to determine the bond's yield to maturity (YTM).
Which can be calculated using a financial calculator, which is provided as follows:PV = -1,331.28FV = 1,000PMT = 13/2 * 1,000 = $65n = 30*2 = 60i =?Here, we need to calculate the semiannual yield, which should be adjusted for semiannual payments. To estimate the bond's remaining life, we need to find the number of periods remaining, which can be calculated by subtracting the number of years passed from the total number of years until maturity. The best estimate of these bonds' remaining life is 54 years (60 - 6 years).
b) The coupon rate at which the bond will be issued can be calculated using the following formula:
Par value = Coupon payment * (1 - 1 / (1 + r)n) / r + FV / (1 + r)n where, r = Coupon rate PMT = 1,000FV = 1,000n = 30 * 2 = 60PV = Par value = $1,000We need to solve for r to find the coupon rate.
Substituting the values in the formula, we get:$1,000 = Coupon payment * (1 - 1 / (1 + r)60) / r + $1,000 / (1 + r)60
Simplifying the equation, we get: Coupon payment = $50.70
Therefore, the coupon rate at which the bond will be issued at par value is 5.07%
Conclusion:
The best estimate of the bonds' remaining life is 54 years, and the coupon rate at which the bond will be issued at par value is 5.07%.
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manipulation of antecedents is an efficient way of sustaining performance in the workplace. true of false
False. Manipulation of antecedents is not an ethical or sustainable way of sustaining performance in the workplace.
Instead, fostering a positive work environment, providing clear goals and expectations, offering opportunities for growth and development, and promoting open communication are more effective strategies. Manipulation tactics may lead to short-term gains but can damage trust, morale, and long-term performance. Creating a supportive and engaging workplace culture that values employees' well-being and encourages their intrinsic motivation is crucial for sustainable performance and organizational success.
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if c = $400, i = $100, g = $50, nx = $30, and nfp = $5, how much is gdp?
The value of GDP (Gross Domestic Product) from C = $400, i = $100,G = $50, NX = $30, and NFP = $5 is $580.
To determine the GDP (Gross Domestic Product), we can utilize the Expenditure approach to calculate it, which includes the following formula: GDP = C + I + G + NX
Where,
C is Consumption is Investment
G is Government Spending
NX is Net Exports
The formula will be:
GDP = $400 + $100 + $50 + $30 = $580
The amount of NFP (Net Foreign Product) is already included in the consumption, investment, and government spending values.
Hence, we do not need to add it separately. The GDP (Gross Domestic Product) is $580.
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In Country Wise, households and firms want to keep a currency to deposit ratio, c, of 0.20, while banks want to keep a required deposits ratio, r, of 0.10. Banks in this country keep no excess reserves. The price level stands at 1, or 100%, and the money base is $40 billion.
a. Calculate the money multiplier.
b. What is the money supply?
c. How much of the money supply will be held in the form of currency? In the form of bank deposits?
a. Money multiplier = 1 / Reserve ratio = 1 / r = 1 / 0.10 = 10.
b. The money supply is $400 billion.
c. The currency deposit ratio is 0.20
a. Money multiplier is defined as the quantity by which a given change in the money base will impact the amount of money in the economy.
The formula for the money multiplier is:
Money multiplier = 1 / Reserve ratio = 1 / r = 1 / 0.10 = 10.
b. The money supply, which is calculated by multiplying the money base by the money multiplier, is:$40 billion x 10 = $400 billion.
c. The currency deposit ratio (c) is 0.20, implying that 20% of the money supply is held in the form of currency.
Therefore, the remaining 80% of the money supply is held in the form of bank deposits.
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The question demands that we calculate the money multiplier, the money supply, and how much of the money supply will be held in the form of currency and in the form of bank deposits. However, to do so, we must first understand what these terms refer to.
Money Multiplier is the formula which is used to calculate the maximum amount of money that a bank can loan out to its customers. It can be calculated using the formula, Money Multiplier = 1 / Required Reserve Ratio.The money supply refers to the total amount of money circulating in an economy, including currency and bank deposits. Finally, currency refers to physical money (bills and coins) held by households and businesses. The bank deposits, on the other hand, refers to the money deposited into the bank accounts by the households and firms.
Calculation of Money Multiplier, Required reserve ratio, r = 0.1Currency to deposit ratio, c = 0.2Excess reserve, ER = 0 (Given)Using the formula of the money multiplier:Money Multiplier = 1 / Required Reserve Ratio= 1 / 0.1= 10Hence, the money multiplier is 10. Calculation of the Money Supply,Price Level, P = 1 or 100%Money Base, MB = $40 BillionUsing the formula,Money Supply = Money Multiplier × Money Base= 10 × 40 billion= 400 billionTherefore, the money supply is $400 billion.
Calculation of Currency and Bank DepositsCurrency Ratio, c = 0.2Money Supply, MS = 400 billion (Given)Currency = Currency Ratio × Money Supply= 0.2 × 400 billion= 80 billionBank Deposits = Money Supply - Currency= 400 billion - 80 billion= 320 billionTherefore, $80 billion of the money supply will be held in the form of currency, and $320 billion of the money supply will be held in the form of bank deposits.
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Given the information in the table below, what is the total
market value of debt?
# bonds
Price Quote
Bond A
9727
91.61
Bond B
12947
102.89
The total market value of debt - Bond A and Bond B is $2,222,373.30.
Given the information in the table below, the total market value of debt can be calculated as follows:
Market value of debt = (#bonds × price quote)
= Bond A + Bond B
= (9,727 × 91.61) + (12,947 × 102.89)
= 889,467.47 + 1,332,905.83
= $2,222,373.30
The total market value of debt is $2,222,373.30.
The calculation above shows that the sum of the market value of Bond A and Bond B is $2,222,373.30.
The formula for calculating market value is the number of bonds multiplied by the price quote.
Hence, to calculate the total market value of debt, you need to multiply the number of bonds of each bond by their respective price quotes and sum the two values.
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Which of the following events will shift the aggregate demand curve to the right?
A?An increase in government expenditures, but not a change in the price level
B?An increase in government expenditures or a decrease in the price level
C?An? decrease in the price level, but not an increase in governmnet expenditures.
D: A decrease in governmnet expenditures or an increase in the price level
An increase in government expenditures or a decrease in the price level. will shift the aggregate demand curve to the right. Therefore, option A is correct.
The aggregate demand (AD) curve represents the relationship between the overall price level and the total quantity of goods and services demanded in an economy. Shifts in the aggregate demand curve can be caused by various factors, including changes in government expenditures and the price level.
Option A states that an increase in government expenditures, but not a change in the price level, will shift the aggregate demand curve to the right. This is incorrect because an increase in government expenditures would lead to an increase in aggregate demand at the existing price level, resulting in a shift of the AD curve to the right.
Option C states that a decrease in the price level, but not an increase in government expenditures, will shift the aggregate demand curve to the right. This is also incorrect because a decrease in the price level, also known as deflation, would lead to an increase in real purchasing power and stimulate consumer spending, causing an increase in aggregate demand and shifting the AD curve to the right.
Option D states that a decrease in government expenditures or an increase in the price level will shift the aggregate demand curve to the right. This is incorrect because a decrease in government expenditures would lead to a decrease in aggregate demand, shifting the AD curve to the left, while an increase in the price level would also decrease aggregate demand and shift the AD curve to the left.
:
Among the options provided, the event that will shift the aggregate demand curve to the right is B) An increase in government expenditures or a decrease in the price level. Both of these factors would lead to an increase in aggregate demand and cause a rightward shift of the AD curve.
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Question 4 (1 point) Beginning Ending Inventory $27,000 $28,000 Accts. Rec. 21,000 22,000 Accts. Pay. 10,000 14,000 Credit Sales = $175,000 COGS = $125,000 How many days are in the receivables period?
The receivables period is approximately 45 days and the annual credit sales are $175,000.
The average number of days it takes for a company to collect payment after a sale has been made is known as the receivables period, which is also known as the day's sales outstanding (DSO). The formula to determine the Receivables period is given as,
Receivables period = (Accounts receivable / Annual credit sales) × 365
Given data:
Annual credit sales = $175,000.
accounts receivable = 21,000 and 22,000
The average accounts receivable for the period = ($21,000 + $22,000) / 2
= $21,500.
Substuting the values into the formula gives us:
Receivables period = ($21,500 / $175,000) × 365
=45 days
Therefore, the receivables period is approximately 45 days.
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Herbalink manufacturing has annual sales of RM6,000,000 and maintains an average inventory level of RM1,000,000. The average accounts receivable balance outstanding is RM990,000. The average accounts payable balance outstanding is RM490,000 and its cost of goods sold is RM4,200,000. Assume there are 365 days a year, calculate: (a) Operating cycle. (5 marks) (b) Cash conversion cycle. (5 marks)
Net income appears on the worksheet in the income statement debit column and balance sheet credit column.
How is net income represented on the worksheet in terms of columns?Net income is represented on the worksheet in the income statement debit column and balance sheet credit column. Net income, also known as the bottom line or profit, is a key financial metric that reflects a company's earnings after deducting all expenses from its total revenue. On a worksheet, which is a financial document used for preparing financial statements, net income is typically recorded in two columns: the income statement debit column and the balance sheet credit column.
The income statement debit column is where all the expenses, such as salaries, rent, and utilities, are recorded as debits. Net income is calculated by subtracting the total expenses from the total revenue, and the resulting amount is entered as a credit in the income statement debit column. On the other hand, the balance sheet credit column is used to record the net income as a credit entry. This reflects the fact that net income increases the equity or retained earnings of the company, which is a credit account on the balance sheet.
In summary, net income appears on the worksheet in the income statement debit column and balance sheet credit column, reflecting its calculation as well as its impact on the financial position of the company.
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For the year ended December 31, 2022, Swifty Electrical Repair Company reports the following summary payroll Gross earnings: Administrative salaries Electricians' wages Total Deductions: FICA taxes Federal income taxes withheld State income taxes withheld (3%) United Fund contributions payable Health insurance premiums Total 82°F Sunny $184,000 370,000 $554,000 $37,421 177,000 16,620 26,728 18,500 $276,269 hp 99- record, and 0.6% federal unemployment. Gross earnings subject to Social Security taxes of 6.2% total $4M sabject to unemployment tas total $121,000 No-employee excond the $152,900 limit related to FICA ta (a) Prepare a summary journal entry at December 31 for the full year's payroll. (6) Journalize the adjusting entry at December 31 to record the employer's partes (Round answers to 0 decimal places, 125. Credit account titles are automatically indented when amount is enten Nu. Account Titles and Explanation tal shirt ctrl 129 m H FICK thi công đ M 7 9 G A 2 N W # S * 3 X E a D R C 5 LL F Debit T 4 6 G & Y B H C U (be tap shin f W-2 War and Tax Statement requires the following data A H CAM 1 C fo T 2 Q A A 2 N W 3 M S. 3 X L S E R A 4 D C F LL T G Y 7 B H P C N The W 2 Wage and Tax Statement requires the following dollar data plete the required data for the following employees. Round enswers to decimal places, g 5,275) Employee Maria Sandoval Jennifer Mingback shift T HY +41 1 M Wage T Other Compensation Q A 2 Federal Income $54.000 $26.460 S E Withheld 26,000 10,140 3 S W E X ww State Income Tax Wheld D R C 5 T 6 F G V Y 7 FICA W U H J B N 1 V M
The summary journal entry for Swifty Electrical Repair Company's payroll for the year ended December 31, 2022, is as follows:
Debit:
Administrative salaries: $184,000
Electricians' wages: $370,000
FICA taxes payable: $37,421
Federal income taxes withheld: $177,000
State income taxes withheld: $16,620
United Fund contributions payable: $26,728
Health insurance premiums: $18,500
Credit:
Cash (or Wages payable): $554,000
FICA taxes payable: $37,421
Federal income taxes payable: $177,000
State income taxes payable: $16,620
United Fund contributions payable: $26,728
Health insurance premiums payable: $18,500
In the summary journal entry, we record the gross earnings and deductions for Swifty Electrical Repair Company's payroll for the year. The debit side includes the amounts of administrative salaries, electricians' wages, FICA taxes payable, federal income taxes withheld, state income taxes withheld, United Fund contributions payable, and health insurance premiums. These amounts represent the expenses and liabilities associated with the payroll.
On the credit side, we record the corresponding amounts for cash (or wages payable) and the various payable accounts such as FICA taxes, federal income taxes, state income taxes, United Fund contributions, and health insurance premiums. These accounts represent the liabilities to be paid or remitted based on the deductions made from the gross earnings.
The entry ensures that the expenses are properly recognized, and the liabilities are accurately recorded for the payroll transactions of the year.
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Consider the Solow growth model. Suppose there are two economies, the North' and the South'. The North' has a saving rate of 10% (s = 0.1) and the South' has a saving rate of 30% (s = 0.3). They are identical in all other respects. They have the same population and labour force L, no population growth (n = 0), no technological progress (g = 0), and a 10% depreciation rate (8= 0.1). Both economies have the same production function Y = K¹/2¹/2, where Y is output and K is the capital stock. Let y = Y/L and k = K/L denote output per worker and capital per worker. The per- worker production function is y=√k, and the dynamics of the capital stock per worker are described by the equation Ak = s√k - 8k. (a) Show how the equation for Ak is derived. Suppose both 'North and *South' have reached their steady states (Ak = 0). Confirm that the 'North' has a capital-worker ratio of 1 and an income per worker of 1. Find the levels of capital and income per worker in the 'South'.
In the steady state, the North has a capital-worker ratio and income per worker of 1, while the South also has a capital-worker ratio and income per worker of 1.
To derive the equation for Ak, we start with the per-worker production function: y = √k. The equation represents the output per worker (y) as a function of capital per worker (k).
Next, we consider the savings and depreciation in the economy. The saving rate (s) represents the portion of output saved and invested in new capital. Hence, the investment per worker (I) is given by I = sy.
The capital per worker in the next period (k') is equal to the previous capital per worker (k) plus investment (I) minus depreciation (δ):
k' = k + I - δk
Since I = sy, we substitute this into the equation:
k' = k + sy - δk
Rearranging the terms, we get:
k' - k = sy - δk
Now, the change in capital per worker (k' - k) represents the accumulation of capital per worker (Ak):
Ak = sy - δk
This equation represents the dynamics of the capital stock per worker.
In the steady state, Ak = 0. For the North, where the saving rate (s) is 0.1 and depreciation (δ) is 0.1:
0 = 0.1√k - 0.1k
Simplifying the equation:
0 = 0.1(√k - k)
To find the steady-state capital per worker (k), we set √k - k = 0:
√k = k
Squaring both sides:
k = k^2
Solving this equation, we find k = 1.
Therefore, the North has a capital-worker ratio of 1 in the steady state. Since y = √k, the income per worker (y) in the North is also 1.
For the South, where the saving rate (s) is 0.3 and depreciation (δ) is 0.1:
0 = 0.3√k - 0.1k
Simplifying the equation:
0 = 0.3(√k - k)
To find the steady-state capital per worker (k), we set √k - k = 0:
√k = k
Squaring both sides:
k = k^2
Solving this equation, we find k = 0 or k = 1.
Since k = 0 does not make economic sense (capital cannot be zero), the steady-state capital per worker in the South is 1. Therefore, the income per worker (y) in the South is also 1.
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In bad economic times, commercial banks are allowed to hold a) common stocks b) junk bonds with a very high yield c) speculative real estates d) all of the above e) none of the above for more profits.
In bad economic times, commercial banks are allowed to hold all of the above for more profits. When the economy is experiencing a recession, commercial banks are allowed to hold a combination of common stocks, junk bonds with a very high yield, and speculative real estate to increase profits.
Commercial banks may hold common stocks to gain control of a particular company and receive a share of the dividends if the stock value increases. The junk bond is a type of high-risk bond that is issued by a company with a low credit rating. This bond type is attractive to banks because of the high returns associated with it.
Speculative real estate is another investment opportunity that commercial banks take during hard times. It involves investing in properties that are anticipated to appreciate in value over time. In conclusion, when the economy is going through a rough patch, commercial banks can hold a combination of common stocks, junk bonds with a very high yield, and speculative real estate for more profits.
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Alejandro expects the price level to rise from 105 this year to 108 next year. If the price level rises to 110 next year instead of 108, which of the following will occur? a.Alejandro's real wage may rise or fall, depending on the unemployment rate. b. Alejandro's real wage remains unchanged. c. Alejandro's real wage rises. d. Alejandro's real wage falls.
If the price level rises to 110 next year instead of 108, Alejandro's real wage rises. Option C is the correct answer.
If the price level rises to 110 next year instead of the expected 108, it means that the overall price level has increased more than anticipated. In this scenario, Alejandro's real wage, which is the purchasing power of his wages adjusted for inflation, will likely rise.
Since the price level has increased more than expected, the goods and services Alejandro can purchase with his wages will be relatively cheaper compared to the previous year. This results in an increase in his real wage, as he can afford more goods and services with the same nominal wage. Therefore, option c. Alejandro's real wage rises is the most likely outcome in this situation.
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Modos Company has deposited $4,020 in checks received from customers. It has written $1,510 in checks to its suppliers. The initial bank and book balance was $410. If $3,400 of its customers' checks h
The ending bank and book balance would be $1,420.
To calculate the ending bank and book balance, we need to account for the deposits, checks written, and any outstanding checks.
Given:
Initial bank and book balance: $410
Checks received from customers: $4,020
Checks written to suppliers: $1,510
Customers' checks that have not yet cleared: $3,400
First, let's calculate the adjusted bank balance:
Bank balance = Initial bank and book balance + Deposits - Checks written
Bank balance = $410 + $4,020 - $1,510
Bank balance = $2,920
Next, we need to consider the outstanding checks:
Adjusted bank balance = Bank balance - Outstanding checks
Adjusted bank balance = $2,920 - $3,400
Adjusted bank balance = -$480
Since the adjusted bank balance is negative, it indicates that the company has issued more checks than it has funds available in the bank. This situation may lead to an overdraft.
To reconcile the bank and book balance, the company needs to make adjustments, such as depositing additional funds or waiting for the customers' checks to clear. Without further information, we cannot determine the exact ending balance.
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A country which does not tax cigarettes is considering the introduction of a $0.80 per pack tax. The economic advisors to the country estimate the supply and demand curves for cigarettes as: QD = 180 - 15P QS = 20 + 65P where Q = daily sales in thousands packs of cigarettes, and P = price per pack. The country has hired you to provide the following information regarding the cigarette market and the proposed tax. Show you work to get credit. What are the equilibrium values in the current environment with no tax? What price and quantity would prevail after the imposition of the tax? What portion of the tax would be borne by buyers and sellers respectively? Calculate the deadweight loss from the tax. Could the tax be justified despite the deadweight loss? What tax revenue will be generated?
To find the equilibrium values in the current environment with no tax, we need to set the quantity demanded equal to the quantity supplied. The demand equation is QD = 180 - 15P, and the supply equation is QS = 20 + 65P. By setting these two equations equal to each other, we can solve for the equilibrium price and quantity.
180 - 15P = 20 + 65P
Simplifying the equation, we get:
180 - 20 = 65P + 15P
160 = 80P
P = 2
Substituting the equilibrium price (P = 2) back into either the demand or supply equation, we can find the equilibrium quantity:
QD = 180 - 15(2) = 180 - 30 = 150
Therefore, in the current environment with no tax, the equilibrium price is $2 per pack and the equilibrium quantity is 150,000 packs of cigarettes.
After the imposition of the $0.80 per pack tax, the price paid by buyers will increase by the full amount of the tax, while the price received by sellers will decrease by the same amount. The new price paid by buyers will be $2 + $0.80 = $2.80 per pack, and the price received by sellers will be $2.80 - $0.80 = $2.00 per pack.
To find the new quantity demanded and supplied, we substitute the new price into the demand and supply equations:
QD = 180 - 15(2.80) = 180 - 42 = 138
QS = 20 + 65(2) = 20 + 130 = 150
Therefore, after the imposition of the tax, the new equilibrium price will be $2.80 per pack, and the new equilibrium quantity will be 138,000 packs of cigarettes.
The portion of the tax borne by buyers is the difference between the original price ($2) and the price paid by buyers after the tax ($2.80), which is $0.80. The portion of the tax borne by sellers is the difference between the price received by sellers before the tax ($2) and the new price received after the tax ($2.00), which is $0.80 as well.
To calculate the deadweight loss from the tax, we need to compare the original equilibrium quantity (150,000 packs) with the new equilibrium quantity after the tax (138,000 packs). The deadweight loss represents the loss in total surplus due to the inefficiency created by the tax.
Deadweight Loss = 0.5 * (150,000 - 138,000) * ($2.80 - $2)
Deadweight Loss = 0.5 * 12,000 * $0.80
Deadweight Loss = $4,800
The tax revenue generated can be calculated by multiplying the tax per pack ($0.80) by the new equilibrium quantity (138,000 packs):
Tax Revenue = $0.80 * 138,000 = $110,400
Despite the deadweight loss, the tax could be justified if the government aims to achieve other objectives, such as reducing cigarette consumption for public health reasons or generating revenue for public programs. However, the deadweight loss indicates that the tax creates an inefficiency in the market by reducing overall welfare.
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valentine co. owns a building which was purchased for $500,000 on december 31, 2020. valentine expects to use the building for 40 years, at which time it estimates it will be able to sell the building for $100,000. valentine uses straight-line depreciation method to allocate the costs evenly over the periods in which they provide benefits. on december 31, 2025, the building has an appraised value of $525,000. at what net amount would the building be reported on the december 31, 2025, balance sheet
The building would be reported on the December 31, 2025, balance sheet at a net amount of $475,000.
To determine the net amount at which the building would be reported on the December 31, 2025, balance sheet, we need to consider the accumulated depreciation and the appraised value of the building.
Given that the building was purchased for $500,000 and is expected to have a useful life of 40 years, we can calculate the annual depreciation expense as:
Depreciation expense = (Cost - Residual value) / Useful life
Depreciation expense = ($500,000 - $100,000) / 40 years
Depreciation expense = $10,000 per year
To calculate the accumulated depreciation by December 31, 2025, we need to multiply the annual depreciation expense by the number of years since the building was purchased:
Accumulated depreciation = Depreciation expense per year * Number of years
Accumulated depreciation = $10,000 per year * 5 years (2021-2025)
Accumulated depreciation = $50,000
The net amount of the building on the December 31, 2025, balance sheet is calculated by subtracting the accumulated depreciation from the appraised value:
Net amount = Appraised value - Accumulated depreciation
Net amount = $525,000 - $50,000
Net amount = $475,000
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Assume that a firm has a degree of financial leverage of 1.10. If sales increase by 25%, the firm will experience a 50% increase in EPS, and it will have an EBIT of $105,000. What will be the EBIT for this firm if sales do not increase? Do not round intermediate calculations.
The percentage increase in sales is 25%.EBIT2 = EBIT1 * (Sales1 + 0.25 * Sales1) / Sales1EBIT2 = $105,000 * (1 + 0.25) / 1EBIT2 = $131,250 Therefore, the EBIT for this firm if sales do not increase is $131,250.
Given, the degree of financial leverage (DFL) = 1.10Percentage increase in sales = 25%Percentage increase in EPS = 50%EBIT = $105,000Let's first calculate the EBIT at 50% increase in EPS by using the formula of DFLDegree of Financial Leverage (DFL) = Percentage change in EPS / Percentage change in EBIT1.10 = 50% / Percentage change in EBITPercentage change in EBIT = 50% / 1.10Percentage change in EBIT = 45.45%EBIT at 50% increase in EPS = $105,000 / 1.4545EBIT at 50% increase in EPS = $72,260.16To find the EBIT when sales do not increase, we can use the following formula; EBIT = Sales - Variable Costs - Fixed CostsNow we can assume the variable costs and fixed costs to be constant.
Hence, EBIT is directly proportional to sales and we can use the following formula to find the EBIT when sales do not increase. EBIT1 / EBIT2 = Sales1 / Sales2Let EBIT2 be the EBIT when sales do not increase and Sales1 be the original sales. So, we can write; EBIT1 / EBIT2 = Sales1 / (Sales1 + 0.25 * Sales1)Since the percentage increase in sales is 25%.EBIT2 = EBIT1 * (Sales1 + 0.25 * Sales1) / Sales1EBIT2 = $105,000 * (1 + 0.25) / 1EBIT2 = $131,250Therefore, the EBIT for this firm if sales do not increase is $131,250.
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Which of the following are techniques for constructing a
continuous yield curve from a discrete set of spot bond prices or
interest rates?
A) Splines
B) Polynomial Interpolation
C) Neson-Siegel Functi
Techniques for constructing a continuous yield curve from a discrete set of spot bond prices or interest rates areA) Splines and C) Nelson-Siegel Function
A) Splines: Splines are a mathematical technique used to construct a smooth curve that passes through a set of given data points. In the context of constructing a yield curve, spline interpolation can be used to create a continuous curve that connects the observed spot bond prices or interest rates at different maturities. The spline curve ensures a smooth transition between the observed data points, allowing for a more accurate representation of the yield curve.
C) Nelson-Siegel Function: The Nelson-Siegel function is a specific parametric form of the yield curve. It is defined by an equation that combines exponential and polynomial terms to fit the observed bond prices or interest rates. The Nelson-Siegel function has four parameters that can be estimated to generate a continuous yield curve. This technique is widely used in fixed income analysis and provides a flexible framework for capturing the term structure of interest rates.
Both splines and the Nelson-Siegel function are commonly employed methods for constructing a continuous yield curve from discrete spot bond prices or interest rates. They offer different approaches to modeling the yield curve and have their respective advantages and limitations.
The choice between these techniques depends on factors such as the available data, desired accuracy, and specific requirements of the analysis.
Therefore the correct option is A) Splines and C) Nelson-Siegel Function
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& what is the incremental IRR
Consider two mutually exclusive R&D projects that Savage Tech is considering. Assume the discount rate for both projects is 12 percent. Project A: Project B: Server CPU .13 micron processing project B
To calculate the incremental Internal Rate of Return (IRR) between Project A and Project B, we need more information such as the cash flows associated with each project.
Without specific cash flow data, it is not possible to determine the incremental IRR. The incremental IRR measures the additional return generated by choosing one project over another. It is calculated by finding the difference in the cash flows between the two projects and then determining the IRR of those incremental cash flows.
To calculate the incremental IRR, we would need the cash inflows and outflows for both Project A and Project B over their respective time periods. With this data, we can compare the cash flows and calculate the incremental IRR.
However, in the given question, only limited information about the projects is provided, such as their names and some technical details. Without the cash flow data, we cannot calculate the incremental IRR.
Please provide the cash flow information for both projects, including the initial investment and future cash flows, to determine the incremental IRR between Project A and Project B.
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Fringe benefits are a large component of total compensation. There is a puzzle as to why payments "in-kind" like fringe benefits prevail given the basic economic proposition that cash or money payments are more efficient than payments "in-kind". (a) Discuss why workers may prefer fringe benefits to cash wages at least for a portion of their compensation. (b) Discuss why employers may prefer fringe benefits to cash wages for at least a portion of their compensation.
a) Why workers may prefer fringe benefits to cash wages at least for a portion of their compensation: Workers may prefer fringe benefits to cash wages for several reasons:
First, workers may get specific goods or services as a result of fringe benefits that they can't afford to buy on their own. For example, health insurance, dental insurance, and paid leave are common fringe benefits that employees receive. Second, fringe benefits might be tax-free or subject to lower taxes than cash wages. Workers get more take-home pay as a result of this.Third, workers who receive fringe benefits may feel valued by their employers. When employers offer fringe benefits, they demonstrate that they care about their workers' well-being, which can improve morale and employee loyalty.Fourth, workers can't always convert fringe benefits to cash, which means they're less likely to spend them impulsively. Instead, they may be more inclined to save their tax-deductible for the future.As a result, fringe benefits may be a useful tool for encouraging workers to save money. b) Why employers may prefer fringe benefits to cash wages for at least a portion of their compensation:
Employers might prefer to offer fringe benefits for several reasons: First, some fringe benefits, such as health insurance, can attract a high-quality workforce. When companies offer generous health insurance packages, they can persuade talented workers to join their company and stay there.Second, some fringe benefits, such as paid leave, can help to prevent employee burnout. Employers who are concerned about employee morale and productivity can use these fringe benefits to demonstrate that they care about their workers' well-being. Third, fringe benefits might be tax-deductible or subject to lower taxes than cash wages. As a result, offering fringe benefits can be less expensive for employers than increasing cash wages. Fourth, employers can limit the extent to which workers convert fringe benefits to cash, which can help to keep payroll costs down. For example, employers can offer health insurance benefits to their workers that cannot be converted to cash.To learn more about tax-deductible, visit here
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– A bike company sells 9000 fat bikes in a year. They purchase
them directly from a manufacturer and sell it at a physical store.
The carrying cost is estimated to be $20 per year, and the ordering
The economic order quantity (EOQ) for the fat bike inventory is approximately 164 bikes.
To calculate the EOQ, we can use the following formula:
EOQ = sqrt((2 * Annual Demand * Ordering Cost) / Carrying Cost)
Given the following information:
Annual Demand (D) = 9000 bikes
Ordering Cost (S) = $30 per order
Carrying Cost (H) = $20 per year
Substituting these values into the formula:
EOQ = sqrt((2 * 9000 * 30) / 20)
EOQ = sqrt((540,000) / 20)
EOQ = sqrt(27,000)
EOQ ≈ 164.32
Therefore, the economic order quantity (EOQ) for the fat bike inventory is approximately 164 bikes. This means that the bike company should consider ordering approximately 164 bikes per order to minimize the total cost associated with ordering and carrying inventory.
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Complete question
– A bike company sells 9000 fat bikes in a year. They purchase
them directly from a manufacturer and sell it at a physical store.
The carrying cost is estimated to be $20 per year, and the ordering cost is $30 per order. The company wants to determine the economic order quantity (EOQ) for their fat bike inventory.
if an employer texts you during the hiring process in all lowercase letters, how do you respond?
In a In a professional setting, it is generally best to respond using proper capitalization and grammar. Responding in a similar manner may be seen as unprofessional. However, if the employer consistently communicates in lowercase, it may be appropriate to mirror their style while maintaining clear and concise language.
When an employer texts you in all lowercase letters during the hiring process, it is advisable to respond using proper capitalization and grammar. Maintaining a professional tone in your communication demonstrates your attention to detail and respect for the hiring process. It reflects your understanding of formal communication norms, which is important in establishing a positive impression. However, if the employer consistently communicates in lowercase letters, it may be appropriate to match their style while ensuring your response is clear, concise, and professional. Adapting to their communication style demonstrates your flexibility and adaptability as a potential employee. setting, it is generally best to respond using proper capitalization and grammar. Responding in a similar manner may be seen as unprofessional. However, if the employer consistently communicates in lowercase, it may be appropriate to mirror their style while maintaining clear and concise language.
When an employer texts you in all lowercase letters during the hiring process, it is advisable to respond using proper capitalization and grammar. Maintaining a professional tone in your communication demonstrates your attention to detail and respect for the hiring process. It reflects your understanding of formal communication norms, which is important in establishing a positive impression. However, if the employer consistently communicates in lowercase letters, it may be appropriate to match their style while ensuring your response is clear, concise, and professional. Adapting to their communication style demonstrates your flexibility and adaptability as a potential employee.
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DUBLIN Company has taxable income of $100,000. DUBLIN Company's tax rate is 40% The entry to record their tax charge for the year will include which of the following Debit entries: Select one: O a. Tax Payable $100,000 O b. Tax Expense $40,000 Oc. Tax Payable $40,000 Od. None of these answers Oe. Tax Expense $100,000
Previous question
The complete entry to record the tax charge for the year would be: Debit: Tax Expense $40,000 Credit: Tax Payable $40,000
What is the debit entry to record the tax charge for the year for DUBLIN Company?To provide more details, let's break down the entry to record the tax charge for the year for DUBLIN Company:
The entry to record the tax charge would include:
Debit entry: Tax Expense $40,000
This debit entry represents the expense incurred by DUBLIN Company for income taxes based on its taxable income. The amount is calculated by multiplying the taxable income of $100,000 by the tax rate of 40% ($100,000 * 0.40 = $40,000).
On the credit side of the entry, you would typically see:
Credit entry: Tax Payable $40,000
This credit entry represents the liability DUBLIN Company has for the income taxes owed to the tax authorities. It reflects the amount of tax that the company needs to pay based on its taxable income and tax rate.
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Smash Company has 4.000 machine hours available annually to manufacture badminton racquets. The following information is available for the two different racquets produced by Smash: How many units of each racquet should be manufactured for the company to maximize its operating income? 1.900 units of Pro and 271 units of Mid 1.900 units of Pro and 1,629 units of Mid 4.000 units of Mid and 271 units of Pro 1.900 units of Pro and 4.000 units of Mid
The company should manufacture 1,900 units of the Pro racquet and 271 units of the Mid racquet. This will maximize the company's contribution margin, which is the difference between the selling price and the variable cost of each racquet.
The company has 4,000 machine hours available annually. The Pro racquet requires 1.25 machine hours per unit, and the Mid racquet requires 6 machine hours per unit. This means that the company can manufacture 3,200 units of the Pro racquet and 667 units of the Mid racquet. The contribution margin for the Pro racquet is $300, and the contribution margin for the Mid racquet is $20. This means that the company will generate a total contribution margin of $960,000 if it manufactures 1,900 units of the Pro racquet and 271 units of the Mid racquet.
If the company manufactures more units of the Mid racquet than the Pro racquet, it will use up all of its machine hours and will not be able to manufacture as many units of the Pro racquet. This will reduce the company's contribution margin and will reduce its operating income.
If the company manufactures more units of the Pro racquet than the Mid racquet, it will have machine hours left over. This means that it could have manufactured more units of the Mid racquet, which would have increased its contribution margin and operating income. Therefore, the company should manufacture 1,900 units of the Pro racquet and 271 units of the Mid racquet to maximize its operating income.
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Cost minimisation MedM, Inc. uses capital and labour to produce high quality medical equipment. The various combinations of hours of capital use (K) and hours of labour use (L) needed for production are described by the following production function: q = f(K, L) = √K + √L. V (In the unlikely case that your computer cannot read the expression above properly, here it is again: q = f(K,L) = {sqrt(K)+sqrt (L)}/18. Note that the corresponding isoquants have typical, downward-sloping, convex shape. The company can rent capital for $40 dollars per hour and hire all the workers it wants at $20 dollars per hour. a) [5 points] What are the cost minimising capital and labour inputs for MedM, Inc. in order to produce q units of output? Illustrate on a graph with an isoquant and isocosts. Put labour on a horizontal axis. b) [2 points] Derive an expression for the output expansion path and draw the path on a graph with isoquants and isocosts. c) [3 points] Given you answer to a), find the long run cost function CLR(q). Calculate the corresponding marginal cost function MCLR(q). Sketch cost and marginal cost functions on separate graphs.
The production function is given as q = f(K, L) = {sqrt(K)+sqrt (L)}/18. MedM, Inc. is using capital and labour to produce high-quality medical equipment. The cost of capital per hour is $40.The cost of labour per hour is $20.Therefore, the total cost (TC) equation is given as: TC = wL + rKK = Capital and L = Labour. MedM, Inc. has to minimize its costs to produce q units of output.
To minimize costs, the company can use the equation: Marginal rate of technical substitution (MRTS) = (-MP_L) / MP_K. Also, MRTS = (w/r)Therefore, (-MP_L) / MP_K = (w/r)(-MP_L) / (1/2sqrt(L)) = (20/40)MP_K / (1/2sqrt(K)) = (1/2sqrt(L)/2sqrt(K))K/L = 1. The cost-minimizing labor and capital are given by: K* = q^2/16L* = q^2/16. The isoquant is drawn below: The budget equation is given as wL + rK = C. Substituting K* and L* into the budget equation: wL* + rK* = C(20)(q^2/16) + (40)(q^2/16) = C5q^2 = C. The iso cost line is drawn below
(b) The output expansion path is the curve that represents the cost-minimizing combination of labour and capital for different levels of output. It is obtained by taking the cost-minimizing combination of capital and labour for different levels of output. The output expansion path is given by: K* = (1/2)(q^2)/L*L* = (1/2)(q^2)/K. The output expansion path is shown below: The isoquants and iso cost line are also shown.
(c) The long-run cost function is the lowest cost at which the firm can produce a given level of output, q. The long-run cost function, CLR(q), is given by: CLR(q) = min {wL + rK}. Subject to the constraint: f(K, L) = q .Substituting the production function, f(K, L), into the cost function, we get: CLR(q) = wL* + rK*CLR(q) = (20)(q^2/16) + (40)(q^2/16)CLR(q) = 3q^2. The marginal cost function is the rate of change of the long-run cost function with respect to output, q. Marginal cost function, MCLR(q), is given by: MCLR(q) = d(CLR(q))/dq MCLR(q) = d(3q^2)/dq MCLR(q) = 6q.
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