Market researchers often report discretionary income. Discretionary income is your disposable income minus your fixed expenses. Your disposable income is $2,920. After you pay fixed expenses of rent, utilities, groceries, and a car payment, you have $900. What percentage of your disposable income is discretionary?.

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Answer 1

Market researchers often report discretionary income. Discretionary income is your disposable income minus your fixed expenses. Your disposable income is $2,920. After you pay fixed expenses of rent, utilities, groceries, and a car payment, you have $900. 18% of your disposable income is discretionary.

Market  A mechanism whereby commodities and services are exchanged as a result of buyers and sellers coming into contact with one another, either directly or through institutions or agents that operate as middlemen.

Markets are location where goods are bought and sold in the strictest sense. However, in the current industrial system, the market is no longer a physical location; rather, it has grown to encompass the entire geographic area in which vendors compete with one another for customers. For a long time, English-speaking economists looked to Alfred Marshall, whose Principles of Economics (first published in 1890), for guidance. Marshall based his definition of the market on that of the French economist A.

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Related Questions

Identify three types of business where location is less important.

Answers

Answer:

Renting a boat business, Repair vehicle business, Apple Picking business.

Foot locker has mastered online and mobile efforts that link seamlessly with store​ operations, offering options such as​ buy online, ship from​ store and​ buy online, reserve in​ store for pickup. This is an example of​ ________.

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Foot locker has mastered online and mobile efforts that link seamlessly with store​ operations, offering options such as​ buy online, ship from​ store and​ buy online, reserve in​ store for pickup. This is an example of omni-channel retailing.

What is Omnichannel Retailing?

The term "omnichannel retailing" refers to a retailer's efforts to offer a unified, coordinated consumer experience through all relevant customer channels while utilizing standardized, global data. Omnichannel retailing refers to the strategies used by these businesses to integrate and make the most of these many channels in order to strengthen their relationships with customers, carry out more efficient marketing campaigns, and boost share of wallet.

Similar to multi-channel selling, omnichannel retailing typically involves a wider view of the opportunity. Omnichannel retailing prioritizes data and infrastructure preparedness to give a comprehensive view of the customer relationship on any channel at any time, in contrast to multi-channel retailing, which concentrates on expanding the number of supported channels.

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jacob opened a money-market account. in the first month, he made an initial deposit of $500. he plans to contribute $75 a month after his initial deposit. the account does not pay any interest. after how many months will he have a total of $1,475?

Answers

After 13 months Jacob  will have a total of $1475 .

Money market account :

A money market account is an interest- applying account that you can open at banks and credit combinations. They're veritably analogous to savings accounts, but they offer some checking account features as easily. Money market accounts are different from money market collective finances.

Simplifying the calculation :

Let us assume it takes 'x' months .

Now the initial deposit = 500 dollar

The monthly deposit = $75

Therefore , we have

                500 + ( 75 × X) = 1475

                    75x = 1475 - 500

                     75x = 975

                       x = 975 ÷ 75

                     x = 13

Hence after 13 months Jacob will be having total of $1475.

Initial deposit :

A minimum deposit or original deposit is the minimum quantity of money needed to open an account with a fiscal institution, similar as a bank or brokerage establishment.

What's a money market account good for?

Money market accounts are analogous to savings accounts in that they're initially designed for storing redundant money down while earning interest. still, they also come with some checking account features, comprehending the capability to write checks.

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a set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer is called . multiple choice question.

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Supply Chain refers to a group of at least three businesses that are directly connected by at least one of the upstream and downstream flows of goods, services, money, and information from a source to a client.

The term "goods" in economics refers to things that fulfill human needs and offer utility, such as to a customer buying a fulfilling product. The terms "transferable commodities" and "transferable services" are frequently used interchangeably. A good is said to be "economic" if it is helpful to people but is also difficult to come by given the demand for it. In contrast, free goods—like air—are always available and don't require any deliberate effort to obtain.

Private goods are items that people own and use regularly, such as televisions, couches, wallets, cell phones, and nearly anything else that isn't a food item.

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. advocates of trade barriers suggest that barriers to trade are needed for national security, job creation, and to: question 2 options: a) protect producers who are just starting out so that they can become more established. d) increase tariff revenue for government. b) eliminate the need for governments to become involved in the trade discussions. c) enhance the comparative advantage nature of trade.

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Advocates of trade barriers suggest that barriers to trade are needed to protect producers who are just starting out so that they can become more established.

A barrier to trade could be a government-imposed restraint on the flow of international merchandise or services. Those restraints are generally obvious, however, are most frequently delicate and non-obvious.

The most direct barrier to trade is an embargo– a blockade or political agreement that limits a remote country’s ability to export or import. Embargoes still exist, but they're troublesome to enforce and don't seem to be common except in things of war.

The most typical barrier to trade is a tariff–a tax on imports. Tariffs raise the worth of foreign goods relative to domestic goods . Another common barrier to trade is a government subsidy to a specific domestic industry. Subsidies build those merchandise cheaper to provide than in foreign markets. This ends up in a lower domestic price. each tariff associated with a degree subsidy raises the worth of foreign goods relative to domestic goods, which reduces imports.

Barriers to trade are usually known as “protection” as a result of their declared purpose is to defend or advance particular industries or segments of an economy.

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why can't the fed automatically maintain full employment and low inflation?

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The Federal Reserve (fed) cannot maintain full employment and low inflation, as it wants to maintain the balance between economic activity and employment.

What is inflation?

Inflation is defined as a scenario in which the market price of a commodity rises. It leads to an increase in demand for products and services, as well as a scarcity of marketable surplus.

To preserve the balance between economic activity and employment, the Federal Reserve cannot sustain full employment and low inflation. Thus, it can be concluded that Federal Reserve is responsible for the decisions regarding the economic activity.

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the Fed must walk a narrow path between providing support to economic activity and employment,

Alex purchases a computer from dell to be delivered via fed ex. Dell delivers the computer to fed ex to be shipped to alex. During the delivery, the fed ex driver is having a bad day and just throws the boxes out the window of the delivery truck rather than setting the box by the front door as is standard practice. While throwing the computer it is damaged. Would dell be responsible for the damage to the computer?.

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Alex purchases a computer from Dell, and it is delivered by Fed Ex.  When thrown, the PC suffers damage. No, because ownership of the object passes to the buyer the moment a common carrier gets it.

A private or public organisation that moves people or products from one location to another for a fee is referred to as a common carrier under U.S. law. Public utilities and telecommunications services are also referred to using this phrase.

A company or organisation that provides transportation services for people, commodities, or communications to the general public

the act of moving people or things from one location to another using a variety of ways is called transportation. An indicator of civilization and particularly of technical advancement is the increase in the capacity—and the requirement—to move vast amounts of cargo or big populations over great distances at high speeds in safety and comfort.

Numerous articles discuss transportation. See energy conversion to learn about the main forms of propulsion utilised in contemporary modes of transportation. See military technology for details on vehicles used in combat.

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the executives of anaplan inc., a large conglomerate, are making decisions on the stages of the industry value chain the firm must participate in, the range of products and services it should offer, and the global markets it should compete in. what are the executives primarily determining?

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The range of products and services it should offer, and the global markets it should compete in. The boundaries of the firm are the executives primarily determining.

Global marketing is described as "marketing on a global scale harmonizing or taking global operational differences, similarities and opportunities to achieve global objectives." Marketing goods, services, and solutions to clients locally, nationally, and worldwide falls under the umbrella of global marketing, a subfield of general business management.

When a company operates worldwide or across international borders, they are using marketing principles internationally. A company can enter the market by exporting its goods to other countries, entering the market through a joint venture with another company domestically, or by attracting foreign direct investment. The growth of the Global marketing mix is dependent on international marketing.

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if a check correctly written and paid by the bank for $512 is incorrectly recorded in the company's books for $443, how should this error be treated on the bank reconciliation?

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This error is treated on the bank reconciliation by subtracting $69 from the book balance.

In secretary, a bank conciliation is a process by which the bank account balance in a reality’s books of account is conformed to the balance reported by the financial institution in the most recent bank statement. Any difference between the two numbers needs to be examined and, if applicable, remedied. Bank Reconciliation is an important process in accounts in which associations match their bank statements with the deals that are recorded in their general tally. Preparing a bank conciliation statement helps businesses to exclude possible crimes in deals or bookkeeping.

There are five primary types of account conciliation bank conciliation, seller conciliation, business-specific conciliation, intercompany conciliation, and client conciliation.

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in a typical inventory status record which of the following would you not expect to see? a. order quantity b. scrap allowance c. gross requirements d. planned-order releases e. lost items

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In regular inventory status records, what you don't want to see are lost items.

Inventory is a list of goods owned by a particular company or group. In inventory also known as office inventory and inventory of goods. Office inventory is a complete list of all items owned by the office, such as office stationery, computers, telephones, photocopiers, and so on. Meanwhile, inventory is a list of all goods owned by a company or institution.

Inventory recording is usually done using an inventory book. Inventory book is a book that contains all records related to company inventory. The inventory book contains data that includes location, type, quantity, size, price, year of purchase, origin of goods, to item numbers.

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neema has an hour of free time she can spend doing one of three activities. spending the hour reading would give her a utility of 4, playing video games would give her a utility of 2, and jogging would give her a utility of 6. based on this information, economists could predict that neema will:

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According to the information, economists could predict that jogging would provide her utility.

Utility is a concept used in economics to represent worth or value. Its application has drastically changed over time. Philosophers of morality like Jeremy Bentham and John Stuart Mill first used the phrase to describe a measure of pleasure or happiness as part of their utilitarianism thesis. Within neoclassical economics, which dominates contemporary economic theory, the phrase has been modified and repurposed to refer to a utility function that expresses a single consumer's choice ordering over a set of options but is not comparable across individuals. This concept of utility is more precisely defined than the original definition but is less helpful for making ethical decisions because it is personal and relies on choice rather than on pleasure experienced.

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fitzgerald oil and gas incurred costs of $9.24 million for the acquisition and development of a natural gas deposit. the company expects to extract 4.00 million cubic feet of natural gas during a four-year period. natural gas extracted during years 1 and 2 were 800,000 and 900,000 cubic feet, respectively. what was the depletion for year 1 and year 2?

Answers

$1804000 is the depletion in Year 1.

$2024000 is the depletion in Year 2.

Depletion expenses per cubic feet=Cost incurred/No. of cubic feet extracted

Depletion expenses per cubic feet        

9240000/4200000 =  2.2

Year 1 Depletion        

820000*2.2 = $1804000    

Yer 2 Depletion            

920000*2.2 = $2024000

The depletion rate is a price against income for the usage of natural sources.

The depletion concept is most commonly used in the mining, wooden, and oil and gasoline industries, where exploration and development prices are capitalized, and depletion is wanted as a logical system for charging these charges to fees.

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a toaster oven company is trying to project future market trends for its industry. in order to see industry-wide information, data, and projected trends, what is the best type of secondary research vehicle this company should use?

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Industry associations and professional journals are the best type of secondary research vehicle this company should use.

A sort of study called "secondary research" refers to information that has already been obtained, arranged, and published by someone else. Reports and studies from governmental organizations, professional associations, and other companies operating in your sector are included. So for approaching Industry-wide information the toaster oven company can depend upon associations and journals which is the best secondary research method.

Books, personal sources, journals, newspapers, websites, government documents, and other sources are examples of secondary data sources. There are several locations where you can get secondary data for free. These include both internal and external sources, including business sales and analytics data, sector-or government-specific publications, and publicly available market research polls.

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you want to buy a parcel of land in an area of town in the direction of future development. the lot costs $55,000. the monthly payments on a loan to buy the lot would be $805.76. if the bank is charging you 9% interest per year, how years will it be before you own the land, free and clear?

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If the bank charges you 9% interest per year for the monthly payments on a loan to acquire the lot, it will take you 4 years until you own the land free and clear. The monthly payment would be $805.76.

The fee paid for the right to borrow money is called interest. In contrast to how the interest rate used to compute interest is normally expressed, which is as an annual percentage rate, interest expense or revenue is frequently expressed as a dollar figure (APR). Interest is the payment a lender or financial organization makes in exchange for extending credit. A stockholder's ownership stake in a corporation, which is typically expressed as a percentage, is another definition of interest.

The idea of interest is to reward one party for taking a risk and giving up the chance to utilize money, while penalizing another for using someone else's payments. The individual who temporarily parted payments with their money has a right to recompense, and the person who temporarily used those assets is frequently obligated to provide this compensation.

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if the marginal cost curve is rising, which of the following must be true? group of answer choices the average total cost curve must be rising. the average total cost curve must be below the marginal cost curve. the average total cost curve must be above the marginal cost curve. total costs must be rising.

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The correct option is: Total cost must be rising.

Marginal cost is the increase in total cost associated with a one-unit increase in production. As long as MC is positive, the total costs is rising.

Average total cost can be decreasing and can be either above or below the marginal cost curve when the marginal cost curve is upward-sloping.

What is marginal cost curve?

The marginal cost (MC) curve is defined as the change in total cost divided by the change in the output of energy.

What is total cost?

Total cost is the sum of all costs incurred by a firm in producing a certain level of output.

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HELP ASAP

Match each of Maslow's Hierarchy Tiers to examples of needs in that tier.

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The needs are physiological (food and clothes), safety (work security), love and belonging needs (friendship), esteem, and self-actualization going up the hierarchy in order. Prior to addressing needs higher up the hierarchy, people must attention to those lower down.

1. Physiological needs, such as air, food, water, shelter, clothes, warmth, sex, and sleep, are biological necessities for human survival.

The human body cannot function at its best if these demands are not met. Maslow regarded physiological needs as being more significant than all other wants because, unless these needs are addressed, all other needs become secondary.

2. Demands for safety - after a person's physiological desires are met, their needs for safety and security become apparent. The family and society can meet these needs (e.g. police, schools, business, and medical care).

3. Love and belongingness requirements - Following the satisfaction of physiological and safety needs, the third level of human needs is social and entails a sense of belonging. A human being's emotional need for interpersonal connections, affiliation, connectedness, and group membership is known as belongingness. Friendship, closeness, trust, acceptance, receiving and giving affection, and love are a few examples of belongingness demands.

4. The Maslow hierarchy's fourth level, esteem needs, includes respect, self-worth, and achievement. Maslow divided esteem requirements into two categories: the need for respect or repute from others, and the need for regard for oneself (dignity, achievement, mastery, independence) (e.g., status, prestige).

5. self-actualization- Maslow's hierarchy of needs places fulfillment of one's potential, the pursuit of personal improvement, and awe-inspiring experiences at its highest level. This level, according to Maslow (1943), is the drive to achieve one's full potential and maximize one's potential. One person might, for instance, have a tremendous desire to become the perfect parent. In another, the urge might manifest itself in the arts, sciences, or sports.

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bristol retail group begins the year with inventory of $63,000 and ends the year with inventory of $53,000. during the year, the company has four purchases for the following amounts.

Answers

Cost of products sold: is $948000 for the given values that is mentioned in question

Explanation:

The initial year's inventory was $63,000.

Inventory at year's end equals $53,000

Cost of goods sold is calculated as follows: Beginning inventory - ending inventory

Cost of goods sold equals $63000 + 21700 +131700 + 161700+411700 -$53000.

Cost of goods sold: $948,000

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which of these is not a best practice for developing a paid social strategy? a. commit to contributing resources. b. monitor conversations about competitive brands. c. integrate organic and paid social. d. use research for smm plans. e. keep track of influencer roi.

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B. Monitoring conversations about competitive brands is not a best practice for developing a paid social strategy.

A social strategy advertising method is a precis of everything you intend to do and hope to attain on social media. It guides your moves and lets you understand whether or not you're succeeding or failing. The extra unique your plan is, the greater powerful it is going to be.

A social first approach considers social media for the duration of the ideation and brainstorming phase of planning and takes social media into account all factors of marketing campaign making plans – now not simply after the content has been created.

Social marketers sell social, environmental, and monetary troubles. They improve starvation, poverty, sustainability, training, public health, and international warming problems. Thru social advertising activities, groups try to impact people's behavior, evoke focus, and produce alternatives.

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gdp is the: multiple choice market value of an economy's production of final goods and services in a one year period. sum of coins, bills, and demand deposits circulating in an economy one year period. total expenditures of the federal government over the period of one year. market value of an economy's production of all goods and services in a one year period.

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The total value of all finished products and services produced in an economy during a specific time period—typically a year—is measured as GDP.

GDP is calculated as the sum of government spending, investment spending, and net exports.Intermediate goods are not included in the GDP.Therefore, it is not the market value of all commodities and services produced by an economy over the course of a year.Federal government’s overall spending Government spending is what is done over the course of a year.

The entire market value of all the FINAL goods and services produced in a nation over a given time period, often a year, is known as the gross domestic product (GDP).The inclusion of the word “FINAL” in this context is crucial since OVERSTATING would result from counting intermediate items.For instance, if Toyota purchases iron from Parrain Mining to produce automobiles, the cost of the car itself—rather than the cost of the iron from Parrain—will be used to compute GDP.

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investigating a multitude of what-if possibilities involving simultaneous changes in fixed cost, variable cost, and volume is called blank​ analysis.

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Sensitivity analysis can be described as the investigating a multitude of what-if possibilities involving simultaneous changes in fixed cost, variable cost, and volume.

Sensitivity analysis can be determined as the study of how the uncertainty in the output of a mathematical model or system can be divided and allocated to different sources of uncertainty in its inputs. The different values of an independent variable affect a particular dependent variable under a given set of assumptions is can be determined using sensitivity analysis. Sensitivity analysis can be defined into two types, such as:

Local Sensitivity AnalysisGlobal Sensitivity Analysis.

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15 POINTS!! HELP NEEDED ASAP!!!


Type the correct answer in the box. Spell all words correctly.
What account does a trading business use to track its inflow of goods?
A trading business will use the account _________ to track its inflow of goods.

Current?

Answers

Answer: Merchandise for Plato users, hope it helps :)

a trade association is a type of – because only businesses, not individuals, can constitute the membership. the sierra club is an example of a – due to its more than two million individual members.

Answers

Trade associations fall under the category of peak associations since only corporations, not individuals, may join. The Sierra Club, that has more than 2 million individual members, is just a sample of a mass association.

Peak associations refer to specific organisational kinds since they effectively represent the largest groups in a nation for that organization's field of interest. They are typically created to provide standards and procedures, or to represent all representatives when lobbying government officials or advancing the interests of the members.

Mass association is refers to a group or assembly of individuals and not organizations, each individual speaks for himself and not on behalf of an organization.

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in 2022, yvette pays $3,000 in qualifying educational expenses in her first year at state college. her modified adjusted gross income (magi) during the year is $27,000. assuming she meets all other criteria, yvette’s american opportunity tax credit (aotc) is equal to what amount?

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Yvette's American opportunity tax credit (AOTC) will be 100% of 3000 = 3000 + 25% of 27000 = 6750, amounting to $9750

For eligible education costs incurred throughout the first four years of a student's postsecondary education, there is a tax credit known as the  American opportunity tax credit (AOTC). Each eligible student may receive up to $2,500 in credit each year. The AOTC can be claimed on a tax return by the student, a person listing the student as a dependant, or a spouse paying postsecondary education payments.

The costs associated with attending the student's school, such as tuition, fees, and course materials, do not count as qualified educational expenses, nor do they cover housing and board, healthcare costs, insurance, or travel.

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adam plans to invest $1500 today in a mutual fund. if he earns 12 percent interest compounded monthly, to what amount will his investment grow in 20 years?

Answers

The value of investment will grow to $16,339 after 20 years.

We are given the following:

Present value=$1500

Interest rate=12%

Number of years=20

Now, calculate the future value of the investment as follows:

Future value=Present value *(1+ Interest rate )^number of years

=$1,500*(1+(12%/12))^(12*20)

=$1,500*(1+1%)^(240)

=$16,338.83

Therefore, the future value is $16,339

Hence, value of investment after 20 year will be $16,339

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Identify the sentence type:
Although the team was meeting, the team members were feeling overwhelmed and exhausted.
Select an answer:
complex
compound
compound/complex
simple

Answers

The sentence has compound sentence.

A compound sentence is one that joins two independent clauses with a conjunction, most frequently and or but. They work best when integrating two or more independent, connected sentences into one.Compound sentences speed up your writing and join related concepts together, but they also contain a few more restrictions that must be followed. This fast lesson explains how to employ them effectively to offer your writing a competitive advantage.Compound sentences, as we said in our article on how to build better sentences, combine two or more independent clauses. Independent clauses, or clauses that can stand alone as separate sentences, are the key in this situation. A compound sentence essentially combines several separate, connected sentences into one.

Thus the correct answer is B.

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the market value of which of the items would be considered double (or multiple) counting in the calculation of gdp? please place items into the appropriate category.

Answers

The final goods will be those that are taken into account for calculating GDP (gross domestic product), while intermediate goods and used goods will not be.

The following items won't be counted twice and therefore won't be included in GDP:

1. the skateboard wheels that will be produced and sold new

2. a secondhand copy of the video game Tony Hawk

3. a second-hand skateboard you purchase for your brother

4. an old skateboard for collectors

5. an X Games ticket purchased from a stranger on a street corner.

The following items will be accounted for in the GDP:

1. a fresh skateboard that you purchase for your niece

2. the commission given to the vendor of an old collectors item

3. Tony Hawk Industries' new headquarters

Gross domestic product, or GDP, is the market worth of all commodities and services generated inside an economy's borders within a given financial year. The calculation of economic growth is based on the calculation of GDP. Only final commodities are taken into account when determining the GDP value; intermediate and used goods are excluded.

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The question was incomplete. Check below the full question.

The market value of which of the items would be considered DOUBLE (or MULTIPLE) COUNTING in the calculation of GDP?

Please place items into the appropriate category.

A. a used skateboard you buy for your brother

B. the commission paid to the seller of a previously owned collectors skateboard

C. a new building for tony hawk industries

D. used copy of the tony hawk video game

E. previously owned collectors skateboard

F. ticket for the X games bought from a person on a street corner

G. new skateboard you buy for your niece

H. Wheels used to produce a skateboard that will be sold new

suppose the price ratio of two goods is 3/4 and jason has a budget of $100. if the price of good x increases from 6 to 12, what is the new price ratio? *

Answers

The new price ratio when the price of good X increases from $6 to $12, will be 3/2 or 1.5.

Given,

Let the two goods be X and Y

Price of good X = Px

Price of good Y = Py

Price ratio of two goods = 3/4

budget = $100

Initial price of good x (Px) = 6

Price ratio = Px/Py

3/4 = 6/Py

Py = 8

6X +8Y = 100

The initial price of good Y is = 8

Increase in price of good X to 12

The new price ratio = Px/Py = 12/8 =3/2 =1.5

The new price ratio =3/2 =1.5

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you are working as a case manager at a local agency. during your meeting with a client, you monitor services, address questions about who will provide each service discussed, and evaluate the plan that has been implemented. what phase of case management are you in when you conduct these activities?

Answers

Using communication and the resources at hand, case management is a collaborative process that involves assessment, planning, facilitation, care coordination, evaluation, and advocacy for options and services to meet the comprehensive health needs of an individual and their family. Its goals include promoting patient safety, high standards of care, and outcomes that are both efficient and affordable.

What is Case management ?

Everybody benefits when a person achieves the highest degree of wellness and functional capability, including the people being treated, their support networks, the health care delivery systems, and the many reimbursement sources. This is the fundamental tenet of case management.

Activities of case management:A thorough case management strategy can assist centralize case-related data, improve organizational productivity, and more.Determining whether a particular case actually needs to be included in your company's case management strategy is the most important step in developing a case management strategy.Risk levels are typically different for different cases. This can help case management by ensuring that cases are handled correctly.Managers can use this information to prioritize higher-risk situations and decide how much involvement might be necessary in a certain situation.Case managers must then decide on an appropriate course of action for the current case after assessing the risk.To execute a thorough and comprehensive plan, case managers must combine resources and business specialists.

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18) which of the following represents total saving for an economy? a) the sum of private saving and fixed investment b) the sum of private saving and consumption c) the sum of taxes and government spending d) the excess of taxes over government spending e) none of the above

Answers

Which of the following represents total saving for an economy: e) none of the above.

What is an economy?

An economy can be defined as a function of how the various means of production, money, including scarce resources and raw materials are carefully allocated and used to facilitate the demand and supply of goods and services in a country, so as to meet the unending needs or requirements of consumers.

What is total saving?

In Economics, total saving can be defined as a sum total of the periodic contributions that are to be made by individuals under a given savings contract, as well as the bonuses that are payable to all qualified beneficiaries.

In conclusion, the total saving for an economy can be calculated by dividing the excess of national income by both consumption and taxes.

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ome metals has credit sales of $144,000 yearly with credit terms of net 120 days, which is also the average collection period. a. assume the firm offers a 5 percent discount for payment in 10 days and every customer takes advantage of the discount. also assume the firm uses the cash generated from its reduced receivables to reduce its bank loans which cost 10 percent. what will the net gain or loss be to the firm if this discount is offered?

Answers

Accordingly, if dome metals has credit sales of $144,000 annually with credit terms of net 120 days, the net change in income if the new credit terms are adopted is a net gain of $2,880.

If the new credit terms are used, there will be a net change in income of $2,880.

The business should offer a discount since the 5% discount will result in a $2,880 net gain.

a. If Dome earns 25% on sales before discounts, what will the net change in income be if the revised credit terms are adopted?

$144,000 in previous sales

New Sales = Old Sales * 100% + % Sales Growth, or $144,000 * 100% + 20%, to equal $172,800.

Sales Growth is New Sales - Old Sales, or $172,800 - $144,000, or $28,800.

Profit Margin * Sales Growth = 25% * $28,800 = $7,200 for an increase in profit from new sales.

Average Accounts Receivable, net of discounts, credit equals Average Collection Period * Average Daily Sales, or 120 * ($144,000 / 360) = $48,000.

Average Accounts Receivable plus Discount = Average Collection Period * Average Daily Sales = 10 * ($172,800/360) = $4,800

Average accounts receivable without discount minus average accounts receivable with discount equals $48,000 minus $4,800, or $43,200.

Reduced accounts receivable as a result of the loan sum.

Interest Saving is equal to Interest Rate x Loan Reduction, which equals 10% * $43,200, or $4,320.

Net Gain (Loss) = Increase in credit Profit from New Sales + Interest Saving - Cost of Discount = $7,200 + $4,320 - $8,640 = $2,880 Cost of Discount = Discount Rate * New Sales = 5% * $172,800 = $8,640

The net change in income if the new credit terms are adopted is a net gain of $2,880.

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The complete question is

Dome Metals has credit sales of $144,000 yearly with credit terms of net 120 days, which is also the average collection period. Assume the firm adopts new credit terms of 5/10, net 120 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 10 percent. The new credit terms will increase sales by 20% because the 5% discount will make the firm's price competitive.

Required:

a. If Dome earns 25 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted?

b. Should the firm offer a discount?

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