a) The optimal output of the public good is given by;x* = (2y)¹/²
b) Person 1 bears the entire cost of providing public good and Person 2 gets the benefit of public good without contributing towards its provision.
c)It also violates the Pareto efficiency condition as the Pareto optimal solution would require that Person 2 should also contribute towards the provision of public good.
a. Optimal output of the public good:To find the optimal output of the public good, Samuelson condition will be applied. The condition states that the optimal output of public good is achieved when the marginal benefit of public good to the last consumer is equal to the marginal cost of providing it. When Person 1 contributes towards public good, the cost to him is equal to the opportunity cost of his private good foregone, which is 1/2 unit of y. When Person 2 contributes, his cost is also equal to 1/2 unit of y.
Therefore, total cost of providing 1 unit of public good is 1 unit of y.
The marginal benefit to Person 1 from 1 unit of public good is given as;MUB1 = MUx /Px = 1/xWhere x is the output of the public good and Px is the price of private good.
From person 1's utility function, the marginal benefit of public good is;MUB1 = ∂U1/∂x1 = 1/x¹/²
Therefore, marginal benefit to Person 2 from 1 unit of public good is;MUB2 = MUx /Px = 1/xWhere x is the output of the public good and Px is the price of private good.
From person 2's utility function, the marginal benefit of public good is;MUB2 = ∂U2/∂x2 = 1/2x¹/²
Hence, the Samuelson condition will be;MUB1 + MUB2 = MC1/x + 1/x = 1/x¹/² + 1/2x¹/² = 1/x² = MCx1/2y = 1
Therefore, the optimal output of the public good is given by;x* = (2y)¹/²
b. Person 2 rides free:Person 2's contribution to public good is zero, therefore, he rides free.
Person 1 bears the entire cost of providing public good and Person 2 gets the benefit of public good without contributing towards its provision.
c. Efficiency of private good provision mechanism: The private good provision mechanism is not efficient since Person 2 is riding free and not contributing towards the provision of public good. It also violates the Pareto efficiency condition as the Pareto optimal solution would require that Person 2 should also contribute towards the provision of public good.
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Based on macroeconomic perspective, how can we compare major federal banks (US-Federal Reserve, the Bank of Canada, the ECB, and the bank of England) with respect to their structure and functions? What do they do for their function and how do they do it? Also in regards to regulate monetary policy, how do they conducted and their roles as regulators?
In the macroeconomic perspective, Federal Reserve Bank of the United States (US), Bank of Canada, the European Central Bank (ECB), and Bank of England are the major federal banks. Each bank has its own structure and function.
Let's compare the functions of these banks based on macroeconomic perspective:
Federal Reserve Bank of the United States (US)The Fed serves as the central bank for the United States and has a dual mandate to promote maximum employment and price stability.
The Fed has three main tools to achieve these goals: open market operations, discount rate policy, and reserve requirement ratios. These tools are used to influence the money supply, which in turn impacts interest rates and the overall economy.
Bank of Canada:The Bank of Canada operates as Canada's central bank and its primary function is to regulate monetary policy. The bank controls the supply of money in the economy, and it sets interest rates to achieve its mandate of low and stable inflation.
European Central Bank (ECB):The ECB operates as the central bank for the eurozone, which consists of 19 European Union (EU) member states that have adopted the euro as their currency.
The ECB's primary goal is to maintain price stability in the eurozone. It does this by controlling the money supply, setting interest rates, and managing foreign exchange reserves
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general motors engages in partnerships with its suppliers, component part makers, unions, transport companies, and dealerships—collectively known as its
General Motors engages in partnerships with its suppliers, component part makers, unions, transport companies, and dealerships, collectively known as its "supply chain" or "business ecosystem."
These partnerships are crucial for General Motors to ensure the efficient and effective flow of materials, components, and services required for its manufacturing operations and to maintain strong relationships with stakeholders involved in the production, distribution, and sales of its vehicles. The collaborative efforts with these entities help General Motors enhance its overall competitiveness, streamline operations, manage costs, and deliver high-quality products to its customers.
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General Motors' network of suppliers, component part makers, unions, transport companies, and dealerships are collectively known as its supply chain. These entities contribute to the production and delivery of vehicles, from raw materials to the final customer.
Explanation:General Motors engages in partnerships with various entities such as suppliers, component part makers, unions, transport companies, and dealerships. Collectively, these entities are referred to as its Supply Chain. The supply chain is a network of companies or individuals that contribute to the production and delivery of a product, in this case, vehicles, from start (raw materials) to finish (the customer). For instance, suppliers provide the materials, component part makers fabricate parts, unions represent worker's interests, transport companies arrange for transportation, and dealerships sell the end products to customers. General Motors coordinates these entities to ensure consistent and efficient production.
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The production frontier for public good G and private good Q is G+Q-320,000. The economy has 100 identical household with utility function U-XG where Q - ΣX₁. Determine the efficient levels of G and Q. If the markets for both goods are perfectly competitive, determine the levels produced.
The levels produced are Q=160,000 and G=160,000 is the answer.
Efficient levels of G and Q- The production frontier for public good G and private good Q is given by G+Q-320,000. Also, the economy has 100 identical households with a utility function U=XQ, where Q=ΣX₁. First, we need to determine the efficient levels of G and Q. Since the economy has 100 identical households, the total utility function of the economy is U=100XQ.
To maximize utility, we need to allocate resources to public good G and private good Q such that the marginal utility of each good is equal.
We can derive the marginal utility of public good G as follows: MUᵢ(G) = ∂U/∂Gi = 100∂(XQ)/∂Gi = 100X₁ where i = 1, 2, ..., 100 and X₁ is the consumption of private good Q by household i.
Similarly, we can derive the marginal utility of private good Q as follows: MUᵢ(Q) = ∂U/∂Qi = 100∂(XQ)/∂Qi = 100 - 100i where i = 1, 2, ..., 100.
The efficient level of public good G is the sum of the marginal utility of public good G for all households. Therefore, G = ΣMUᵢ(G) = 100ΣX₁.
The efficient level of private good Q is the sum of the marginal utility of private good Q for all households.
Therefore,ΣMUᵢ(Q) = Σ(100 - 100i) = 100Σ(1 - i) = 100(1 + 2 + ... + 100) - 100² = 5,050.Q = ΣX₁ = Σ(100 - MUᵢ(Q)) = Σ(100 - (100 - 100i)) = Σ100i = 5,050.
Therefore, the efficient levels of G and Q are G=100ΣX₁ and Q=ΣX₁.
The efficient level of G is G=100ΣX₁ and the efficient level of Q is Q=ΣX₁.
If the markets for both goods are perfectly competitive, the levels produced are determined by the market demand and supply.
Since the production frontier is G+Q-320,000, we can derive the market demand and supply for each good as follows: D(Q) = 320,000 - G - QS(Q) = Q
Equating demand and supply, we get:320,000 - G - Q = Q
Solving for Q, we get: Q = 320,000 - G
Substituting Q into the supply equation, we get: G = 320,000 - Q
Solving the two equations simultaneously, we get: Q = 160,000G = 160,000
Therefore, the levels produced are Q=160,000 and G=160,000.
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Draw a labour supply curve and a labour demand curve. Label them LS, and LD Draw a point the equilibrium quantity of labour and the equilibrium real wage rate. Label e 1 Draw and label a curve that shows the effect of an increase in labour productivity Draw a point at the new equilibrium quantity of labour and the equilibrium real wage rate. Label it 2. An increase in labour productivity increases potential GDP because_ Real wage rate (2007 dollars per hour) 80 70- 60- 50- A. there is a movement along the existing production function 40- O B. ° C. production becomes more labour intensive and less capital intensive employment increases and a given amount of employment produces more real GDP employment increases due to an increase in the supply of labor 30- 20- D. 10- 100 200 300 400 500 600 Labour (billions of hours per year) >>Draw only the objects specified in the question
Labor Supply Curve (LS): The labor supply curve represents the relationship between the quantity of labor supplied by individuals and the real wage rate. It slopes upward, indicating that as the real wage rate increases, individuals are more willing and able to supply labor.
Labor Demand Curve (LD): The labor demand curve represents the relationship between the quantity of labor demanded by firms and the real wage rate. It slopes downward, indicating that as the real wage rate increases, firms are less willing and able to hire additional workers.
Equilibrium Point (e1): The equilibrium quantity of labor and the equilibrium real wage rate occur at the intersection of the labor supply curve (LS) and the labor demand curve (LD). This point represents the market equilibrium, where the quantity of labor demanded by firms matches the quantity of labor supplied by individuals.
Effect of an Increase in Labor Productivity: An increase in labor productivity shifts the labor demand curve (LD) to the right. This shift occurs because firms can produce more output with the same amount of labor input. As a result, the equilibrium quantity of labor increases, and the equilibrium real wage rate increases as well.
New Equilibrium Point (2): The new equilibrium quantity of labor and the equilibrium real wage rate occur at the intersection of the shifted labor demand curve (LD) and the labor supply curve (LS). This point represents the new market equilibrium after the increase in labor productivity.
Increase in Potential GDP: An increase in labor productivity leads to an increase in potential GDP. This occurs because firms can produce more output with the same amount of labor input. As a result, the economy's productive capacity expands, and potential GDP increases.
I hope this description helps you visualize the labor market dynamics and understand the effects of an increase in labor productivity.
About Labor SupplyIn mainstream economic theory, the labor of supply is the number of hours workers are willing to work at a given real wage level.
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Why would you want to use a check register
BECAUSE YOU NEED TO REGISTER ALL CHECKS FAST AND EASY
SUB TO MR BEAST
Planner Corporation's comparative balance sheets are presented below.
PLANNER CORPORATION Comparative Balance Sheets December 31
Cash 2017 $ 21,570 2016 $ 10,700
A/R 2017 18,200 2016 23,400
Land 2017 18,000 2016 26,000
Building 2017 70,000 2016 70,000
Accumulated depreciation2017 (15,000) 2016 (10,000)
Total 2017 $112,770 2016 $120,100
Accounts payable 2017 $ 12,370 2016 $31,100
Common stock 2017 75,000 2016 69,000
Retained earnings 2017 25,400 2016 20,000
Total 2017 $112,770 2016 $120,100
Additional information: 1. Net income was $27,900. Dividends declared and paid were $22,500. 2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $5,900.
Instruction (a) Prepare a statement of cash flows for 2017 using the indirect method. (b) Compute free cash flow.
(a) The statement of cash flows would show operating, investing, and financing activities based on the provided information. (b) Free cash flow cannot be calculated without additional details on capital expenditures and cash flow from operations.
The statement of cash flows for 2017 using the indirect method would show the cash flows from operating activities, investing activities, and financing activities. The net income of $27,900 would be adjusted for non-cash items such as depreciation and changes in working capital.
The cash flows from investing activities would include the proceeds from the sale of land and any other investments made during the year. The cash flows from financing activities would include the dividends paid and any changes in long-term debt or equity.
Free cash flow is calculated by subtracting capital expenditures from cash flow from operations. Capital expenditures represent the investments made in property, plant, and equipment during the year. Cash flow from operations is the net cash provided by operating activities.
By subtracting capital expenditures from cash flow from operations, we can determine the amount of cash available for other purposes such as debt repayment or distribution to shareholders.
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Use your knowledge of contemporary situational feadership theories to select the word or phrase that best describes the situation. According to Hersey and Blanchard, if you use this leadership style you give your followers a lot of autonomy and independence. Delegating style Telling style Participating style Selling style
According to Hersey and Blanchard, if you use a leadership style that gives your followers a lot of autonomy and independence, the term that describes this situation is the Delegating style of leadership.
The Delegating style of leadership focuses on delegating tasks to the followers who can handle them without direct supervision. Leaders who use the delegating style of leadership often trust their followers’ ability to work on their own. They also provide the followers with all the resources they need to complete the task. The leaders provide guidance only when needed. This style is most effective when the followers are highly skilled and knowledgeable in their area of work.
The style allows the followers to have a sense of ownership of the task, which, in turn, increases their level of motivation and satisfaction. The leader, on the other hand, has time to focus on other important tasks that require their attention. A leader who uses this style should, however, keep an eye on the progress of the task to ensure that it is completed on time and meets the required standards.In conclusion, the Delegating style of leadership is an effective leadership style that can be used to give the followers a lot of autonomy and independence.
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(a) In the context of the Barro-Gordon model, derive the discretionary rate of inflation.
Provide a diagram to support your answer.
(b) Is delegating monetary policy to a conservative central banker a good idea when there are supply-side shocks?
(a) The Barro-Gordon model is a new classical model that explains the relationship between monetary policy and the actual level of inflation in an economy. The model proposes that the rate of inflation is determined by both the expected inflation rate and the level of unemployment in the economy. When inflation is greater than anticipated, the model assumes that individuals will adjust their expectations of future inflation upward and thereby drive the actual rate of inflation higher as well.
The discretionary rate of inflation can be derived as follows:When unemployment is higher than its natural rate, there is a negative output gap in the economy. In order to close this output gap, policymakers will increase aggregate demand. This leads to an increase in the rate of inflation. Similarly, when unemployment is lower than its natural rate, there is a positive output gap in the economy. Policymakers will decrease aggregate demand to reduce inflation. The discretionary rate of inflation is the rate of inflation that results from the difference between the actual rate of inflation and the expected rate of inflation in the economy.
If policy makers choose to use expansionary monetary policy, this will lead to a higher rate of inflation in the short run but will not impact the natural rate of unemployment in the long run.(b) Supply-side shocks are sudden changes in the production function, and they can cause inflation and unemployment to rise simultaneously. In such situations, it may be beneficial to delegate monetary policy to a conservative central banker because they are more likely to be committed to low inflation and can resist the temptation to use expansionary monetary policy to reduce unemployment.
They are less likely to accommodate supply-side shocks with an increase in aggregate demand, which would be inflationary in nature. However, it is important to note that delegation can only be successful if the central banker has credibility in the eyes of the public and the government. If the central banker is not seen as credible, their policies may be ignored or reversed by the government, and the benefits of delegation will not be realized. Thus, delegating monetary policy to a conservative central banker can be a good idea when there are supply-side shocks if the central banker has credibility.
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Blossom Company has the following year-end account balances on November 30, 2021: Service Revenue $37,000; Insurance Expense $2,700; Rent Expense $8,100; Supplies Expense $1,250; L. Wilfrid, Capital $40,000; and L. Wilfrid, Drawings $30,000.
Blossom Company had a service revenue of $37,000, an insurance expense of $2,700, a rent expense of $8,100, a supplies expense of $1,250, L. Wilfrid, Capital of $40,000, and L.
Wilfrid, Drawings of $30,000 on November 30, 2021. Blossom Company's year-end account balances on November 30, 2021, include service revenue, insurance expense, rent expense, supplies expense, L. Wilfrid, Capital, and L. Wilfrid, Drawings.Service revenue is the amount of money received by a company from providing services to its clients. Insurance expense is the amount of money paid by the company for insurance coverage. Rent expense is the amount of money paid by the company for renting a building or space.
Supplies expense is the amount of money paid by the company for purchasing office or business supplies. L. Wilfrid, Capital is the owner's investment or contribution to the company, and L. Wilfrid, Drawings is the owner's withdrawal from the company's profits.
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QUESTION B1 risk assessment - going concern - materiality Under the regulatory frameworks in the audit, auditors are mandatorily required to carry out risk assessments, to be able to provide reasonable basis for identifying and assessing the risks of material misstatement. These risk of material misstatements can arise from external factors and also internal perspectives. Hence it is important for auditors to do prior planning in terms of risk assessments, to ensure major risk areas are covered in their audit. REQUIRED: a) Discuss business risk and financial statement risk. Explain the types of assessments auditors can do during planning stage to manage these risks
Under the regulatory frameworks in the audit, auditors are mandatorily required to carry out risk assessments, to be able to provide reasonable basis for identifying and assessing the risks of material misstatement.
These risk of material misstatements can arise from external factors and also internal perspectives. Hence it is important for auditors to do prior planning in terms of risk assessments, to ensure major risk areas are covered in their audit.
Business risk refers to risks that arise from the organization's environment, which includes competition, economic changes, and technological changes.
Financial statement risk, on the other hand, refers to the risks that arise due to errors and omissions in the financial statements. Auditors can do the following types of assessments during the planning stage to manage these risks: Understanding the entity: This is an assessment of the industry, business operations, and the organization's financial position.
The objective of this assessment is to identify and evaluate any potential risks. Assessing the control environment: This is an assessment of the entity's internal control systems and processes. The objective is to identify any control deficiencies that may result in material misstatements in the financial statements.
Performing analytical procedures: This is an assessment of the relationships and trends in financial and non-financial data. The objective is to identify any unusual transactions or balances that may result in material misstatements in the financial statements.
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General Electric borrowed $300,000,000 to buy equipment with the principal and interest to be repaid as a balloon note at the end of 5 years. How much will General Electric pay to liquidate the principal of the note at the maturity date if interest is 8% compounded quarterly?
a. $331,200,000
b. $657,300,000
c. $444,000,000
d. $445,800,000
General Electric will pay approximately $445,783,800 to liquidate the principal of the note at the maturity date. So, the correct option is d.
To calculate the amount General Electric will pay to liquidate the principal of the note at the maturity date, we need to consider the compound interest formula. The formula for compound interest is given by:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the loan (amount to be paid at maturity)
P = principal amount (initial loan amount)
r = annual interest rate (8% in this case)
n = number of times interest is compounded per year (quarterly compounding, so n = 4)
t = number of years (5 years in this case)
Plugging in the values into the formula:
A = 300,000,000(1 + 0.08/4)^(4*5)
A = 300,000,000(1 + 0.02)^20
A = 300,000,000(1.02)^20
A ≈ 300,000,000(1.485946)
Calculating this expression, we find:
A ≈ 445,783,800
Therefore, General Electric will pay approximately $445,783,800 to liquidate the principal of the note at the maturity date.
Since none of the provided answer options match exactly, the closest option is d. $445,800,000.
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Question 1: Your firm is the auditor of beautiful company, a small precision enginee company which makes parts for car engines. The company maintains a general ledger, together with trade receivables and trade payables. It also maintains a non-current assets register. You have been assigned to the audit of the company's financial statements for the year ended 30 November 2020 and are aware that:
(1) In May 2020, the company disposed of a large lathe machine for $30,000 and replaced it by purchasing two small but costly machines.
(2) The company's trade receivables ledger included several customers, with large credit balances on their accounts as of 30 November 2020.
(3) Throughout the year the company's cashier has been responsible for bank payments, the receipt and banking of trade receivables monies and the recording of all bank transactions in the company's accounting records. As the cashier is a very trusted employee the company's directors expect your firm to restrict its audit procedures in this area.
(4) Your firm's audit procedures will include checking a sample of beautiful year-end supplier statement balances. Required:
(a) Describe THREE audit tests (with transactions related audit objectives) your firm should conduct regarding the disposal of the lathe machine
(b) Describe THREE audit tests (with balance related audit objectives) that should be conducted regarding the balance of receivables and other existing non-current assets.
(c) Explain the extent of the substantive procedures your firm should conduct in the bank area of Beautiful Company.
Audit of the company's financial statements for the year ended 30 November 2020 are:
(a) Audit tests for disposal of the lathe machine: Review supporting documentation, verify disposal proceeds, and assess reasonableness of replacement machine costs.
(b) Audit tests for receivables and non-current assets: Confirm receivables with customers, reconcile receivables ledger to general ledger, and inspect documentation for non-current assets.
(c) Substantive procedures in the bank area: Review bank reconciliations, test bank transfers, and analyze bank activities.
Audit Of The Company's Financial Statements For The Year Ended 30 November 2020(a) Audit tests related to the disposal of the lathe machine:
1. Review supporting documentation: Obtain and review the sales agreement, invoice, and any other relevant documentation to ensure the disposal transaction is properly authorized, documented, and recorded. Audit objective: Completeness and occurrence.
2. Verify disposal proceeds: Trace the receipt of $30,000 from the lathe machine disposal to the bank statement and reconcile it with the recorded proceeds. Audit objective: Completeness and accuracy.
3. Assess reasonableness of replacement machine costs: Compare the cost of the two small machines purchased to replace the lathe machine with market prices or obtain expert opinion to determine if they are reasonable. Audit objective: Valuation and accuracy.
(b) Audit tests related to the balance of receivables and non-current assets:
1. Confirm receivables with customers: Select a sample of customers with large credit balances and send confirmation requests to verify the balances and terms. Audit objective: Existence and completeness.
2. Reconcile receivables ledger to general ledger: Perform a detailed reconciliation of the receivables ledger to the general ledger, ensuring all transactions are accurately recorded and balances are properly summarized. Audit objective: Completeness and accuracy.
3. Inspect documentation for non-current assets: Examine supporting documentation, such as purchase invoices, contracts, and title deeds, for existing non-current assets to verify their existence, ownership, and valuation. Audit objective: Existence and valuation.
(c) Substantive procedures in the bank area:
1. Bank reconciliations: Obtain and review bank reconciliations prepared by the company's cashier to ensure that all recorded bank transactions are properly reconciled to the bank statements. Investigate and resolve any differences or discrepancies. Audit objective: Completeness and accuracy.
2. Test bank transfers: Select a sample of bank transfers recorded by the cashier and independently verify the accuracy and authorization of the transactions by reviewing supporting documentation and approvals. Audit objective: Accuracy and occurrence.
3. Analyze bank activities: Analyze bank activities, such as large cash deposits or withdrawals, to identify any unusual or unexpected transactions. Investigate and evaluate the business rationale for these transactions. Audit objective: Detection of potential fraud or irregularities.
The extent of substantive procedures in the bank area should be sufficient to obtain reasonable assurance regarding the accuracy, completeness, and validity of the company's cash transactions.
The level of reliance on the cashier's activities should be based on the assessment of control risk and the results of other audit procedures. If control risk is assessed as low, substantive procedures can be reduced but not eliminated entirely.
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Song Company, a calendar year taxpayer, purchased a total of $2,054,400 tangible personalty in 2017. How much of this cost can Song elect to expense under Section 179? $510,000 -0- $2,054,400 $485,600
The cost can Song elect to expense under Section 179 is $510,000. Thus, option A is correct.
Section 179 is related to business and this states that it allows deduction in expenses for certain qualifying property which also includes the tangible and personal property. It is for selected sources of income for a certain year and depreciating it over time.
The maximum Section 179 deduction for the year 2017 is $510,000. Even if the Song company purchases the tangible property, then only it can able to expense up to a limit of $510,000. So, the selected amount to expense under section 179 is $510,000
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not-for-profit organizations use social media to: group of answer choices connect with the general public, the business community, and each other. learn about new goods and services. lobby for political gains. learn about new methods of production.
Not-for-profit organizations use social media to connect with the general public, the business community, and each other.
Not-for-profit organizations use social media primarily to connect with the general public, the business community, and each other. Social media platforms provide a means for these organizations to engage with their target audience, share updates, promote their mission, and build relationships with stakeholders. While they may indirectly learn about new goods and services or new methods of production through their social media interactions, their main focus is on building relationships, disseminating information, and engaging with their target audiences rather than lobbying for political gains.In conclusion, not-for-profit organizations utilize social media platforms to connect with various stakeholders, including the general public, the business community, and other organizations within their sector.
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Which of the following is an
example of a wellness perk?
Answer:
I think it's letter
"A"
COBRA
Why is it important for a business to set up internal control measures
over fixed assets?
Answer:
Effective internal control reduces the risk of asset loss, and helps ensure that plan information is complete and accurate, financial statements are reliable, and the plan's operations are conducted in accordance with the provisions of applicable laws and regulations. ... Why internal control is important to your plan.
The company that manufactures Molson beer launched the Arctic brand in Ontario and the Tornade brand in Quebec, with the intention of gaining a share of the rapidly expanding alcoholic lemonade segment of the beverage industry. The separate launch strategies for the products are due to different market conditions in the two Canadian provinces. What strategy did Molson use to reach existing markets with its new product?
Molson used a differentiated marketing strategy to reach existing markets with its new product.
Differentiated marketing strategy refers to the process of designing specific product campaigns to attract different customer segments. Molson beer company launched two different brands, Arctic brand in Ontario and Tornade brand in Quebec, with the intention of gaining a share of the rapidly expanding alcoholic lemonade segment of the beverage industry. The separate launch strategies for the products are due to different market conditions in the two Canadian provinces.
The differentiated marketing strategy is effective because it focuses on developing and delivering products that meet the needs of specific groups of customers.The Molson beer company used the differentiated marketing strategy to reach existing markets with its new product. The Arctic brand was launched in Ontario while the Tornade brand was launched in Quebec. Both provinces had different market conditions, hence the different launch strategies.
The company used different promotional and advertising campaigns for each brand, which made it possible to reach different customers. As a result, Molson managed to gain a share of the rapidly expanding alcoholic lemonade segment of the beverage industry.
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true/false. a scientist develops a new machine that lowers the cost of producing tires graph
The given statement "A scientist develops a new machine that lowers the cost of producing tires" is true because graphically, it can be demonstrated that the introduction of a new machine that reduces the cost of producing tires will cause a leftward shift of the supply curve.
When the cost of producing a good decreases, the producer will be willing to supply more goods at any given price, increasing supply. As a result, the supply curve shifts to the right.However, the question asked is a true/false question. So, the correct answer is:True.
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In 2019 Country A's adult population was 220 million, the labor force was 132 million, and the number of people employed was 127 million. According to these numbers, Country A's labor-force participat
Labor force participation rate refers to the proportion of a country's working-age population (16 years or older) that is either employed or actively seeking employment. In 2019, Country A had an adult population of 220 million, a labor force of 132 million, and 127 million people employed.
To calculate the labor force participation rate, divide the labor force by the adult population and multiply the result by 100.Labor force participation rate = (labor force / adult population) x 100Labor force participation rate = (132 million / 220 million) x 100Labor force participation rate = 60%Therefore, Country A's labor force participation rate in 2019 was 60%.This means that out of the total adult population, 60% of them either had a job or were actively looking for one.
It is important to note that this rate does not take into account those who are not in the labor force, such as students, retirees, and those who are not able to work.
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Define Ricardian Equivalence theorem. Also explain:
a) Impact of tax cut on economy and household consumption under Ricardian Equivalence
b) Does it matter if governments finance spending through debt or taxation? Justify using graphical illustration.
c) Enlist problems associated with Ricardian Equivalence.
Ricardian Equivalence theorem is an economic theory that states that individuals are forward-looking and rational in their decision-making processes. The theory argues that when governments issue debt to finance spending, individuals view this debt as a future tax liability and will adjust their current consumption accordingly. Therefore, Ricardian Equivalence theory implies that changes in government spending financed by borrowing (debt) have no impact on total spending.
a) Under Ricardian Equivalence, a tax cut would not stimulate household consumption because people recognize that the tax cut will likely be offset by future tax increases. As a result, households will save the extra money that they receive from the tax cut, rather than spending it.
b) According to the Ricardian Equivalence theory, whether the government finances its spending through taxation or debt is irrelevant. In either case, individuals view the government's spending as a future tax liability and will adjust their current consumption accordingly. The Ricardian Equivalence theorem can be represented graphically by a straight-line budget constraint, which shows that changes in government borrowing do not affect the budget constraint's slope.
c) The Ricardian Equivalence theory has several limitations. First, it assumes that people are rational and forward-looking, which may not be true in practice. Second, the theory ignores the possibility of credit constraints and liquidity constraints, which could limit individuals' ability to adjust their consumption patterns in response to tax changes. Third, the theory assumes that taxes and government spending have equivalent effects on households, which may not be true if government spending is targeted towards specific groups or if taxes are targeted towards high-income earners. Finally, the Ricardian Equivalence theory assumes that government debt is issued to finance current spending, but this may not be the case if the government issues debt to finance long-term investments.
There are three industrial firms in Happy Valley.
Firm Initial Pollution Level Cost of Reducing Pollution by 1 Unit
A 30 $20
B 40 $30
C 20 $10
The government wants to reduce pollution to 60 units, so it gives each firm 20 tradable
pollution permits.
a) Who sells permits and how many do they sell? Who buys permits and how many do they buy? Briefly explain why the sellers and buyers are each willing to do so. What is the total cost of pollution reduction in this situation?
b) How much higher would the costs of pollution reduction be if the permits could not be traded?
Firm A and Firm B sell 10 permits each, Firm C buys 20 permits. The total cost of pollution reduction is $200.
Who sells permits and how many do they sell? Who buys permits and how many do they buy? What is the total cost of pollution reduction?a) In this scenario, Firm A and Firm B sell pollution permits, while Firm C buys pollution permits. Firm A sells 10 permits, and Firm B sells 10 permits. Firm C buys 20 permits.
The sellers are willing to sell the permits because the cost of reducing pollution by 1 unit is lower than the price they receive for selling the permits.
In other words, it is more cost-effective for them to sell permits rather than invest in pollution reduction themselves. Firm C, on the other hand, is willing to buy permits because the cost of reducing pollution internally is higher than the price they pay for purchasing permits.
The total cost of pollution reduction in this situation is the sum of the costs incurred by the buyers, which is (10 * $20) + (10 * $30) = $200.
b) If the permits could not be traded, the costs of pollution reduction would be higher. Each firm would have to bear the entire cost of reducing pollution within their own operations.
In this case, Firm A would need to spend $200 to reduce pollution by 10 units, Firm B would need to spend $300 to reduce pollution by 10 units, and Firm C would need to spend $100 to reduce pollution by 20 units. Therefore, the total cost of pollution reduction without trading permits would be $200 + $300 + $100 = $600.
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You are saving for your child's college education. Your child will start college in 16 years, and college tuition is due at the beginning of the year (i.e., the first tuition payment will occur at t=16). Average college tuition at a private school this year is $38,500 per year. Scenario 1: Optimistic - tuition charges grow at the general inflation rate of 2.4266% per year. a) Create a timeline that shows each of the four years' worth of tuition b) Calculate the present value, at t=16, of these payments if you assume that your opportunity cost of funds is 0.5% per month which compounds to 6.1678% per year. c) Calculate the single payment you must make into the child's college account to pay for the entire college experience, if you make the payment now. d) Calculate the monthly payment you must make into your child's college account to pay for four years of college; you may assume that the first payment into the college account comes in one month's time and the last payment will come one month prior to the first college tuition payment. Scenario 2: Pessimistic - tuition charges grow at the recent education inflation rate of 6.5911% per year. Repeat the steps above with the pessimistic rate. If you have set up your approach well you can use your previous work (sometimes easiest to copy the entire tab you worked on) to just change the one assumption.
Monthly Payment for Four Years of College would be $377.63
Let's go through each step for both the optimistic and pessimistic scenarios.
Scenario 1: Optimistic - Tuition charges grow at the general inflation rate of 2.4266% per year.
a) Timeline of Tuition Payments:
We will assume the first tuition payment is due at t=16 and continue for four years.
Year 1: $38,500
Year 2: $38,500 x (1 + 2.4266%) = $39,499.15
Year 3: $38,500 x (1 + 2.4266%)² = $40,519.96
Year 4: $38,500 x (1 + 2.4266%)³ = $41,562.70
b) Present Value of Tuition Payments at t=16:
To calculate the present value, we will discount each tuition payment back to t=16 using the opportunity cost of funds rate of 6.1678% per year.
Present Value = Tuition Payment / (1 + Opportunity Cost of Funds Rate) raised to the power (Years from t=16)
Year 1: $38,500 / (1 + 6.1678%)¹⁶ = $19,573.40
Year 2: $39,499.15 / (1 + 6.1678%)¹⁵ = $18,551.65
Year 3: $40,519.96 / (1 + 6.1678%)¹⁴ = $17,582.27
Year 4: $41,562.70 / (1 + 6.1678%)¹³ = $16,661.80
c) Single Payment to Pay for the Entire College Experience:
To calculate the single payment needed to cover all four years of college, we sum up the present values of the tuition payments.
Total Present Value = $19,573.40 + $18,551.65 + $17,582.27 + $16,661.80 = $72,369.12
d) Monthly Payment for Four Years of College:
We will calculate the monthly payment needed to cover the four years of college using the present value and the remaining months until t=16.
Remaining months = 16 x 12 = 192 months
Monthly Payment = Total Present Value / Remaining months = $72,369.12 / 192 = $377.63
Scenario 2: Pessimistic - Tuition charges grow at the recent education inflation rate of 6.5911% per year.
a) Timeline of Tuition Payments:
We will assume the same tuition payments as in the optimistic scenario, but the tuition growth rate will be 6.5911% per year.
b) Present Value of Tuition Payments at t=16:
We will use the same opportunity cost of funds rate of 6.1678% per year to discount the tuition payments.
Present Value of each tuition payment remains the same as in the optimistic scenario.
c) Single Payment to Pay for the Entire College Experience:
The total present value remains the same as in the optimistic scenario.
Total Present Value = $72,369.12
d) Monthly Payment for Four Years of College:
The monthly payment calculation also remains the same as in the optimistic scenario.
Monthly Payment = $377.63
Note: In Scenario 2, the tuition growth rate will result in higher future tuition costs, but the discounting effect of the higher opportunity cost of funds rate balances out the calculations, leading to the same present value and monthly payment as in Scenario 1.
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Krespy Corp. has a cash balance of $7,500 before the following transactions occur:
A. received customer payments of$965
B. supplies purchased on account $435
C. services worth$850 performed, 25% is paid in cash the rest will be billed
D. corporation pays $275 for an ad in the newspaper
E. bill is received for electricity used$235.
F. dividends of $2,500 are distributed
What is the balance in cash after these transactions are journalized and posted?
After journalizing and posting all the transactions, the final cash balance for Krespy Corp. is $5,477.50.
To determine the balance in cash after the transactions are journalized and posted, let's go through each transaction step by step:
A. Received customer payments of $965: This increases the cash balance. Therefore, we add $965 to the initial cash balance of $7,500.
New cash balance = $7,500 + $965 = $8,465
B. Supplies purchased on account $435: This transaction does not involve cash. Therefore, it does not affect the cash balance.
New cash balance = $8,465
C. Services worth $850 performed, 25% is paid in cash, and the rest will be billed: Since 25% of the services are paid in cash, we subtract 25% of $850 from the cash balance.
25% of $850 = $212.50
New cash balance = $8,465 - $212.50 = $8,252.50
D. Corporation pays $275 for an ad in the newspaper: This transaction reduces the cash balance. Therefore, we subtract $275 from the cash balance.
New cash balance = $8,252.50 - $275 = $7,977.50
E. Bill is received for electricity used $235: This transaction does not involve an immediate cash outflow. Therefore, it does not affect the cash balance.
New cash balance = $7,977.50
F. Dividends of $2,500 are distributed: This transaction reduces the cash balance. Therefore, we subtract $2,500 from the cash balance.
New cash balance = $7,977.50 - $2,500 = $5,477.50
After journalizing and posting all the transactions, the final cash balance for Krespy Corp. is $5,477.50.
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On chapter 17 you learned that home equity (buying a house) is the single greatest financial asset for many middle-class Americans. Nonetheless, in 2008 we had a big recession that was triggered by the housing market. Explain the link between the housing bubble and the financial crisis that hit America and then the world. How the housing market contributed to the financial crisis?
The collapse of the housing market was caused by the burst of the housing bubble that was created when the real estate market became overpriced, leading to high demand for houses and a large number of subprime mortgages being issued.
The housing bubble was fueled by easy credit and low interest rates. In the years leading up to the housing market collapse, banks were lending money to anyone who could sign their name, regardless of whether they could afford the mortgage or not. Subprime mortgages were mortgages issued to people with poor credit scores who would not typically qualify for a mortgage.In the early 2000s, mortgage lenders began issuing adjustable-rate mortgages with teaser rates.
These were loans with very low-interest rates for the first few years, which then increased significantly after that. As a result, people could buy homes they couldn't afford with low initial payments, only to be hit with huge payments when their interest rates rose. When they couldn't afford these payments, they defaulted on their loans. This triggered a domino effect, with the number of foreclosures rising, which led to a decrease in housing prices.
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State the effect of the following transactions on the current ratio. Use increase, decrease, or no effect for your answer.
a. Payment of Long-Term
b. Notes with cash
c. Increase
d. Decrease No Effect
An increase in current assets would have a positive impact on the current ratio since it raises the numerator of the ratio. Similarly, a decrease in current liabilities would have a positive impact on the ratio since it reduces the denominator. Option C) is correct
The current ratio is a liquidity metric that shows a company's ability to pay its short-term liabilities with its current assets. As a result, the ratio is frequently utilised by investors and creditors to determine whether a company is financially stable or not. It's critical to evaluate how different transactions impact the current ratio to properly examine the financial condition of a firm. The following is a description of how the following transactions impact the current ratio:
a. Payment of Long-Term: When a company pays off its long-term debt, its current assets and current liabilities both decrease, with no effect on the current ratio.
Since the long-term liability is being repaid with cash, the firm's current assets are reduced, while the current liabilities decrease since the long-term liability is reclassified as a short-term obligation.
b.Notes with Cash:When a company repays its notes payable using cash, it affects the current ratio. The notes payable are a short-term obligation, and their payment reduces current liabilities, increasing the current ratio.At the same time, the firm's cash decreases, lowering the current assets, but the effect on the current ratio is positive since the current ratio is based on the ratio of current assets to current liabilities.
c. Increased, Decrease, or No Effect:
An increase in current assets would have a positive impact on the current ratio since it raises the numerator of the ratio. Similarly, a decrease in current liabilities would have a positive impact on the ratio since it reduces the denominator.
Conversely, a decrease in current assets or an increase in current liabilities would have a negative effect on the current ratio since it reduces the numerator or increases the denominator, respectively. Some transactions, such as the payment of dividends, have no impact on the current ratio. Dividends have no effect on current assets or liabilities since they are a distribution of earnings, not an expense. Therefore option C) is correct.
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From the view of Keynesian, what measures should we take to deal with the economic impact of the COVID-19 epidemic?
According to Keynesians, the COVID-19 pandemic has had a significant impact on the global economy, and as such, governments should take measures to stimulate demand and protect workers from job losses.
To deal with the economic impact of the COVID-19 epidemic, Keynesians suggest the following measures:
1. Fiscal policy measures: Governments should increase public spending to stimulate demand in the economy. They should also provide support for businesses that have been negatively affected by the pandemic. For example, they can offer tax breaks or low-interest loans to businesses that are struggling to stay afloat.
2. Monetary policy measures: Central banks should reduce interest rates to encourage borrowing and investment in the economy. This will help to boost demand and stimulate economic growth.
3. Job protection measures: Governments should provide support for workers who have lost their jobs as a result of the pandemic. They can do this by offering unemployment benefits or job training programs.
4. Infrastructure spending: Governments should invest in infrastructure projects such as roads, bridges, and public transport. This will create jobs and stimulate demand in the economy.
5. Support for small businesses: Provide financial support, loans, and grants to small businesses affected by the pandemic. This would help them retain employees, cover expenses, and ensure their survival during the crisis.
Keynesians believe that by implementing these measures, governments can help to mitigate the economic impact of the COVID-19 pandemic and encourage economic growth.
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An agricultural equipment company estimates its annual carrying cost at 15% of the per unit price of $4. The ordering cost per order is $9. The annual demand for a product they sell is 48000 units per year. The company has 360 working days in a year.
a) What is the most economical number of units to order?
b) How many orders should be placed in a year?
c)How many days is the cycle time or time difference between two orders?
d)If the lead time is 3 days, what is the re-order-point?
Economic Order Quantity where
D = annual demand
= 48000 units per year
O = ordering cost per order = $9C = carrying cost per unit.
Number of orders per year = (D/Q)Number of orders per year
= (48000/1200)
= 40 orders per year
c) Cycle
Time Cycle Time = (Q/D) x 360 days
Cycle Time = (1200/48000) x 360= 9 days
Reorder Point = Lead Time Demand+ Safety Stock Lead
Time Demand = Lead Time x Daily Demand Lead Time
Demand = 3 x 48000/360= 400Safety Stock = (Z x σ x √L) / C.
Where
Z = Z value (1.65, as per normal distribution)
σ = Standard deviation of demand
L = Lead time in days
C = Cost per unit Reorder Point = 400 + [(1.65 x 60 x √3) / 4]
Reorder Point = 400 + 22.05
Reorder Point = 422.05 Therefore, the re-order-point is 422.05.
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Larry age 36 is a Master welder who works for Oklahoma welding Company, his wife Kay also 36 yrs old has a job with the local oil company.
Larry's Salary: $40,000
Kay's Salary: $20,000
Larry's 401K deferral: $4000
Kay's 401K deferral: $2000
Both have a student loan interest of $290
They both file "Married filed jointly" and so take a standard deduction of $24,400
With the above information, calculate the Adjusted gross income of Larry family:
a. $53,710
b. $54,000
c. $29,310
d. $60,000
From the information above about Larry's family, the adjusted gross income would be: C. $29,310.
How to calculate the AGIThe adjusted gross income is obtained by subtracting the adjustments to income from the gross income. So, the gross income are as follows:
40,000 + 20000 = $60,000
The adjustments to the gross income include the expenses such as:
the 401k deferral:
4000 + 2000 + 290 + 24,400 = 30,690
60,000 - 30690 = $29310
So, the adjusted gross income of the family would be $29,310.
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Which of the following would constitute a MAJOR systematic risk to Jamaica?
I. NWC disconnecting water supply for three consecutive days in the Kingston Metropolitan area.
II. JPS power outage in Kingston
III. Venezuela locks down their oil production for a week
IV. An outbreak of Ebola in the United States Select one:
a. Ill only
b. I, II, III & IV
c. I & II, III only
d. II & IV only
e. II, III & IV only
The systematic risk that would have a MAJOR impact on Jamaica is Venezuela locks down their oil production for a week. Jamaica is a small island country and hence, its economy is heavily dependent on imports, including oil. A major systematic risk to Jamaica would be the lack of oil imports. The correct option is a.
If Venezuela locks down their oil production for a week, it would cause a major disruption in the global oil market, which would affect Jamaica's economy in several ways. Jamaica relies heavily on oil imports, which are used in the transportation sector, power generation, and manufacturing. Any disruption in the oil supply could lead to an increase in prices of goods and services. Additionally, if Venezuela, which is Jamaica's largest supplier of oil, is unable to provide oil, Jamaica may have to look for alternate sources of oil, which may be more expensive, and this would lead to a further increase in prices.
Thus, Venezuela locks down their oil production for a week would constitute a MAJOR systematic risk to Jamaica. NWC disconnecting water supply for three consecutive days in the Kingston Metropolitan area, JPS power outage in Kingston, and An outbreak of Ebola in the United States would have a lesser impact on Jamaica's economy as compared to Venezuela locks down their oil production for a week. The correct option is a.
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Please show work. 1) In order to increase the responsiveness (volatility) of following forecast models, what can you do? a) Simple moving average method - describe in terms of "averaging periods" (num
To increase the responsiveness (volatility) of forecast models using the simple moving average method and exponential smoothing method, you can adjust the parameters as follows.
1. Simple Moving Average Method:
The simple moving average method calculates the average of a specified number of data points to forecast future values. To increase responsiveness, you can reduce the averaging periods, which means using fewer data points in the calculation.
For example, if you were using a 3-period simple moving average, the forecast for a particular period would be the average of the three most recent data points. To increase responsiveness, you could switch to a 2-period simple moving average, which would only consider the two most recent data points. This would lead to a more volatile forecast that reacts more quickly to changes in the data.
2. Exponential Smoothing Method:
The exponential smoothing method assigns weights to past observations, with the most recent data points receiving higher weights. To increase responsiveness, you can adjust the smoothing constant, also known as the alpha value, which determines the weight given to the most recent observation.
A higher alpha value assigns more weight to the most recent data point, making the forecast more responsive to recent changes. Conversely, a lower alpha value gives more weight to past observations and reduces the impact of recent changes on the forecast.
For example, if you were using an alpha value of 0.2, each new observation would be weighted at 20% and the forecast would gradually adjust to changes. To increase responsiveness, you could increase the alpha value to 0.5, giving more weight to the most recent observation and making the forecast more volatile and responsive to recent changes.
It's important to note that increasing responsiveness may also increase the level of noise and volatility in the forecast. It's essential to find the right balance based on the specific needs and characteristics of the forecasting task.
The correct question is:
In order to increase the responsiveness (volatility) of following forecast models, what can you do?
Simple moving average method- describe in terms of “averaging periods” (number of data points to use):
Exponential Smoothing method – describe in terms of “alpha value” (smoothing constant):
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