First National Bank of America has more than 75% of its assets in first residential fixed-rate mortgages that mature in more than 5 years. Suppose that a 12-month Gap Analysis predicts a decrease in 2021 interest income of $3 million if there is a sudden 1% drop in market interest rates. From your knowledge of the practical flaws in gap analysis, a realistic simulation analysis would predict that:_______.
1. Interest income will drop by more than $3 million for a sudden 1% drop in market interest rates
2. Interest income will drop by less than $3 million for a sudden 1% drop in market interest rates

Answers

Answer 1

Answer:

2. Interest income will drop by less than $3 million for a sudden 1% drop in market interest rates

Explanation:

Since in the question it is mentioned that there is decrease in 2021 interest income of $3 million in the case when there is a sudden decline of 1% in the rate of interest of the market this is due to the convexity of the curve as the GAP analysis and assume straight line

So the option 2 is correct


Related Questions

Contextual Perspectives On OB (Connect) Choose The Correct Term For Each Of The Missing Labels In This Diagram. Feedback

Answers

Contextual Views of the OB System The Appropriate Name For Each Of The Diagram's Missing Labels.

The OB system is made up of inputs, processes, outputs, and feedback mechanisms. Additionally, it interacts with the external environmental influences. Independent variables are also referred to as inputs. OB is the study of learning to predict human behavior and then applying it in a useful way to boost an organization's effectiveness. By supporting in the effective use of the employees, it ensures the success of the company. Perception, motivation, personality, aptitude, and attitude are examples of concepts at the personal level. At the group level, social psychology is utilized to shed sociological light on interpersonal relationships and group dynamics. Summary. The study of organizational behavior (OB) incorporates concepts from anthropology, sociology, and psychology.

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Contextual Views of the OB System The Appropriate Name For Each Of The Diagram's Missing Labels.

The OB system is made up of inputs, processes, outputs, and feedback mechanisms. Additionally, it interacts with the external environmental influences. Independent variables are also referred to as inputs. OB is the study of learning to predict human behavior and then applying it in a useful way to boost an organization's effectiveness. By supporting in the effective use of the employees, it ensures the success of the company. Perception, motivation, personality, aptitude, and attitude are examples of concepts at the personal level. At the group level, social psychology is utilized to shed sociological light on interpersonal relationships and group dynamics. Summary. The study of organizational behavior (OB) incorporates concepts from anthropology, sociology, and psychology.

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Which of the following options should a Tax Professional select to determine the most beneficial education credit or deduction to calculate when a taxpayer, or dependent, has completed less than four years of postsecondary school and qualifies?
O 1â "Optimize â AOC, Lifetime".
O 2â "Force AOC".
O 3â "Force Lifetime".
O 4â "No AOC Eligible".

Answers

"Optimize â AOC, Lifetime" should a Tax Professional select to determine the most beneficial education credit or deduction to calculate when a taxpayer, or dependent, has completed less than four years of postsecondary school and qualifies.

A taxpayer is any individual or business entity who owes taxes to the federal, state, or local governments. Individual and business taxes are the primary source of revenue for governments. Returns must be filed and deduction taxes must be paid on time. On tax returns, provide accurate information. Substantiate refund claims. After closing a business, pay all taxes on time and request that the tax account be cancelled. Customers are being treated as taxpayers.

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1. under behavior using the overview report, which of these page titles has the most pageviews? help accessories drinkware online store bags

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Even if ecommerce tracking is enabled, conversion rates are not displayed in all analytics reports for pages.

The percentage of visitors to a website that carry out the desired activity, such as buying something, filling out a form, or signing up for a newsletter, is known as the conversion rate. There might be certain web pages that don't explicitly encourage conversions or don't offer users a clear call to action. Monitoring conversion rates on certain pages may not be useful in these instances. The primary focus may instead be on other metrics like visitors, time spent on the page, or interaction.

It's likely that some website pages won't provide conversion rates. Conversely, the pages intended to increase conversions, like product pages or landing.

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Usually, during the _ stage of the product life cycle, the typical consumers would be early adopters, and there would be increases in the number of competitors.

Answers

A production cycle is the quality of time spent on an introduction to the customers in the market until selves get empty. Marketing professionals and management use this cycle.

They use this cycle by deciding appropriate factors such as reduction in price, changes in packaging, expansion of new markets, and many more. This process is also a strategy that has continuous support and maintenance given to the product which is also called the product life cycle of management.

It consists of mainly four stages which are Introduction, growth, decline, and growth. It includes the development of a product at some point where the product is not brought to customers.

During the product life cycle, growth is the stage in which increase in the number of competitors.  

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_____ take(s) the view that capitalist and socialist economic systems, in adopting features of one another, will create a mixed economic system.

Answers

Convergence theory take(s) the view that capitalist and socialist economic systems, in adopting features of one another, will create a mixed economic system.

What distinguishes socialist economic systems from capitalist ones?

Socialism is based on government planning and restricts private resource control, whereas capitalism relies on individual initiative and values market mechanisms over government intervention. When left to their own devices, economies typically incorporate aspects of both systems.

What characteristics does a mixed economic system possess?

A system that combines elements of socialism and capitalism is called a mixed economic system. Private property is safeguarded and capital can be used freely in a mixed economic system, which also allows governments to intervene in economic activity for social good.

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dorothy watched news reports about a devastating tornado in a neighboring state and in response she decides to quadruple the amount of home insurance that she currently has. Dorothy's decision is the result of

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Dorothy decides to increase the amount of home insurance she presently has after seeing a television broadcast about a terrible tornado in a neighboring state. The Dorothy decision was made due to bias against availability.

What exactly is a bias against business availability?

The tendency for people to give more weight to recent information or events without taking their long-term objective probabilities into account is known as recency bias, also known as availability bias in behavioral economics.

What contributes to availability bias?

Because people have a natural tendency to rely too heavily on the information that is most readily available, this phenomenon is known as the availability bias. It can also occur when algorithms used in healthcare give more weight to information that is more readily available but does not adequately reflect the target demographic.

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a broker-dealer has a marketing agreement with a local bank and has located offices in each of the bank's branches. if a bank customer makes an inquiry about mutual funds offered by the broker-dealer in the branch, which of the following statements are true?

Answers

Oral and written disclosure of NOT -NOT -MAY and also attempt to get a signature from the client that they received the disclosure, no need to have the client sign arbitration agreement since it is a "firm thing".

In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and derivatives trading process.

Although many broker-dealers are "independent" firms solely involved in broker-dealer services, many others are business units or subsidiaries of commercial banks, investment banks or investment companies.

When executing trade orders on behalf of a customer, the institution is said to be acting as a broker. When executing trades for its own account, the institution is said to be acting as a dealer. Securities bought from clients or other firms in the capacity of dealer may be sold to clients or other firms acting again in the capacity of dealer, or they may become a part of the firm's holdings.

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TRUE/FALSE. intellectual property rights are valuable assets that can be licensed to a foreign licensee as a means to penetrate a foreign market rather than establish a wholly owned subsidiary

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This assertion is accurate. Instead of creating a completely owned subsidiary, businesses can enter overseas markets by licensing their intellectual property rights to foreign licensees.

The intellectual property whose owner?

The owner of the copyright to an idea, a piece of creative work, or a ground-breaking breakthrough is typically thought to be the person who came up with it. On the other hand, if a work was created in accordance with an employer-employee contract or a work-made-for-hire arrangement, the employer is the rightful owner of the copyright.

Is licensing an effective means of expanding into international markets?

Licensing is frequently chosen due to its low risk, low susceptibility to economic and political conditions, strong return on investment, and preference by some municipal governments. Coca-Cola is one prominent multinational that has used licensing as their entry strategy with success in international markets.

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a. explain how economic challenges and ideological beliefs influenced prior conceptions about the relationship between the individual and the state.

Answers

Total war and political unrest throughout the first part of the 20th century gave place to a split state order during the Cold War, and eventually, attempts at a transnational union.

Describe the changes in the relationship between the individual and the state.

The experiences of daily life were affected by demographic shifts, economic growth, total war, disruptions of established social norms, and conflicting notions of justice and freedom. Despite widespread misery brought on by war and genocide, the 20th century was also marked by enormous advances in living standards. Fascism, extreme nationalism, racism, and the failure of appeasement during the interwar period posed a serious threat to European civilization.

Conflicts within European states were sparked by the stresses of total war and economic collapse. Different intellectual and cultural movements questioned the reality of objective knowledge, the capacity of reason to reach the truth, and the function of religion in establishing moral norms. Despite their enormous destructive potential and difficulties in the pursuit of objective knowledge, science and technology have produced significant tangible rewards.

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The Biggs Department Store chain has hired an advertising firm to determine the types and amount of advertising it should invest in for its stores. The three types of advertising available are television and radio commercials and newspaper ads. The retail chain desires to know the number of each type of advertisement it should purchase in order to maximize exposure. It is estimated that each ad or commercial will reach the following potential audience and cost the following amount:
Exposure Cost (US$)
(people/ad or commercial)
TV commercial 40,000 16,000
Radio commercial 28,000 14,000
Newspaper ad 29,000 8,000
The company must consider the following resource constraints:
The budget limit for advertising is $200,000.
The television station has time available for 6 commercials.
The radio station has time available for 12 commercials.
The newspaper has space available for 5 ads.
The advertising agency has time and staff available for producing no more than a total of 20 commercials and/or ads.
If this problem is formulated as an integer and also a linear programming problem (separately), the maximization ("Z", the optimal solution) of the exposure would be, respectively:
a) Integer Programming: 497,000 ;
Linear Programming: 513,000 ;
b) Integer Programming: 457,000 ;
Linear Programming: 497,000 ;
c) Integer Programming: 513,000 ;
Linear Programming: 457,000 ;
d) Integer Programming: 497,000 ;
Linear Programming: 457,000 ;
e) None of the above

Answers

The combination of commercials and advertisements that would maximise exposure if the issue were presented as both a linear programming problem and an integer problem (separately) would be: x1=8, x2=1, and x3=6 in integer programming Using linear programming, x1=1, x2=1.71, and x3=6.

The business must take into account the following resource limitations:

1. A maximum of $200,000 may be spent on advertising.

2. Eight advertisements can run on the television station.

3. There are 15 advertisement slots available on the radio station.

4. There is room for six advertisements in the newspaper.

5. The advertising agency has enough time and personnel to create no more than 25 commercials and/or advertisements.

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Sure Tea Company has issued 9% annual coupon bonds that are now selling at a yield to maturity of 10%. If the bond price is $923.94, what is the remaining maturity of these bonds?
Note: Do not round intermediate calculations. Round your answer to the nearest whole number. AND SOLVE WITH EXCEL! Thank you!

Answers

The remaining maturity of these bonds of Sure Tea company is 15 years.

Now, According to the question:

Annual coupon bonds = 9%

Yield maturity = 10% = 0.10

Bond price = $923.94

923.94 = [tex]90[/tex] × [tex][\frac{1}{0.10} - \frac{1}{(0.10)(1.10)^t} ]+\frac{1000}{(1.10)^t}[/tex]

When solving we get the :

t = 15 years .

Yield to maturity (YTM) is the overall rate of return a bond will have earned once it has paid all interest and repaid the principal.YTM is basically the internal rate of return (IRR) on a bond if held to maturity.The yield to maturity calculation can be challenging because it makes the assumption that all interest or coupon payments can be reinvested at the bond's rate of return.A good place to start when trying to comprehend some of the more intricate problems with coupon bonds is the YTM of a discount bond that doesn't pay a coupon.

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the conventional wisdom that the more practice a person has, the better his or her performance will be in some future situation is

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The conventional wisdom that the more practice a person has, the better his or her performance will be in some future situation.

Wisdom, sapience, or sagacity is to ponder and act the usage of knowledge, experience, understanding, not unusual place sense, and insight. Wisdom is related to attributes including independent judgment, compassion, experiential self-knowledge, self-transcendence, and non-attachment, and virtues including ethics and benevolence.

Wisdom has been described in lots of one of a kind ways, which includes numerous awesome strategies to evaluate the traits attributed to know-how. The historical Greeks taken into consideration know-how to be an essential virtue, personified via way of means of the goddesses Metis and Athena. The Oxford English Dictionary defines know-how as the "Capacity of judging rightly in subjects referring to lifestyles and conduct.

The above question is incomplete, the complete question is-

Conventional wisdom seems to be that the _______ practice a person has, the better his or her performance will be in some future situation.

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A society is productive inefficient when O a. it produces at a point on its PPF. O b. it does not produce the maximum amount of output with its given resources and technology O c. it can produce more of one good only by giving up some of another good. O d. it produces at a point beyond its PPF

Answers

a. it produces at a point inside (below) its PPF, b. it does not produce the maximum output with its given resources and technology, c. it can produce more of one good without giving up some of another good.

A limited supply of a scarce resource is referred to as such. A person's mind creates intellectual property resources. It measured the monetary worth of individuals' thoughts, innovations, designs, or creative juices. We do not view intellectual property as a scarce resource because everyone can produce these things without restriction. A point on the production possibilities frontier (PPF) of the economy becomes a position below the PPF. Considering that the PPF has not changed, this might be because of the transition from point A to point B involves leaving a useful, efficient location.

A society is productive inefficient when

Select one:

a. it produces at a point inside (below) its PPF.

b. it does not produce the maximum output with its given resources and technology.

c. it can produce more of one good without giving up some of another good.

d. both a and b

e. all of the above

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in b2b marketing, in which of the following buying situations is the decision making most complex and elaborate?a. modified rebuyb. strayght rebuyc. new buyd. with the RFH Process

Answers

Answer:

Explanation:

In B2B marketing, the decision-making process is typically most complex and elaborate in the case of a new buy. This is because the buyer is typically making a decision about a product or service that they have not previously purchased, and therefore must research and evaluate a range of options before making a decision. The process may involve multiple stakeholders, including decision makers, influencers, and users, and may require a thorough analysis of the costs and benefits of different options.

In contrast, a straight rebuy refers to a situation in which a company is simply purchasing the same product or service that it has purchased in the past, with no major changes or modifications. This type of decision is typically less complex and elaborate, as the company has already familiarized itself with the product or service and is simply repeating a previous purchase.

A modified rebuy refers to a situation in which a company is considering purchasing a similar product or service to one that it has purchased in the past, but with some modifications or changes. This type of decision may be more complex and elaborate than a straight rebuy, but less so than a new buy.

don is from an individualistic culture and juan is from a collectivist culture. according to a study by suh and colleagues

Answers

Because Juan comes from a collectivist culture and Don from an individualistic one, Don is happier when he experiences more positive effects than Juan is.

What Is Individualistic Culture?

An individualistic culture is one that puts the individual above the larger group, according to cross-cultural psychology. Individualistic societies place a strong emphasis on traits like individuality, privacy, independence, self-reliance, and self-sufficiency. Individualistic societies are defined by their emphasis on the individual over the community as a whole. People are motivated by their own preferences and points of view in individualistic civilizations.

Why is individualistic culture important?

Individualist cultures associate social status rewards with personal accomplishments and hence offer both monetary and social status rewards as incentives for creativity, resulting in higher rates of both innovation and economic growth. Independence, competition, and personal accomplishment are values that are frequently valued by people who live in individualist cultures. The majority of sociologists concur that individualistic societies encourage self-actualization, personal freedom, and individual choice.

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The complete question is:

Don is from an individualistic culture, and Juan is from a collectivistic culture. According to a study by Suh and colleagues on the relationship between life satisfaction and positive affect, which of the following scenarios regarding subjective well-being is to be expected?

When you include the purchase price and the interest, how much does the TV cost you in total?

Answers

The amount that the television would cost in total, given the interest and the purchase price, is $ 75.

How to find the total cost ?

The total cost of the television can be found by adding up the various costs involved in acquiring the television. This includes the interest, the purchase price, and the cost of the television.

The interest is stated to be the sum of $ 10.

The purchase price is stated to be the some of $ 25.

The initial cost is stated to be $ 40.

The total cost of the television would therefore be :

= Total interest + Purchase price + Initial cost

= 10 + 25 + 40

= 35 + 40

= $ 75

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Full question is:

When you include the purchase price and the interest, how much does the TV cost you in total? Initially the cost was $40, interest is $ 10, and purchase price is $25.

After 10 years, the
principal on this
mortgage is $87,557.
How much of the next
payment will go
towards interest?

Answers

Answer:

Explanation:

The correct answer is B

The amount interest is calculated on amount outstanding according to the interest rate applicable. following is the detailed explanation of the answer.

Principal (P)=$87557

Rate of interest (r)=3%

So, the formula says = (P*r)/12

it has been divided by 12 because the payment is going on monthly basis

(87557*3%)/12

or

(87557*0.03)/12

= 2626.71/12

=$218.89

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is the capital asset pricing model (capm) a special case of the arbitrage pricing theory (apt) with one systematic factor

Answers

The securities market line provides a single-factor model of the asset price in the CAPM, which is a "special case" of the APT since beta is exposed to fluctuations in market value.

The CAPM calculates the expected return on an investment based on the investment risk, risk-free rate of return, projected market return, and beta of an asset or portfolio. Federal funds rate or yield on 10-year government bonds are frquently used as the risk-free rate of return.

E(ri) = rf + I * (E(rM) - rf) is the formula used in CAPM, where rf is the risk-free rate of return, I is the asset's or portfolio's beta in comparison to a benchmark index, E(rM) is the expected returns of the benchmark index over a given period, and E(ri) is the theoretically appropriate rate that an asset should return given the inputs.

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--------------- The correct question format is given below -------------------

( Que ). _________ is the capital asset pricing model (capm) a special case of the arbitrage pricing theory (apt) with one systematic factor.  (Answere is Securities market)

Spencer Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery merchandise inventory, and $12 for miscellaneous expenses. The fund has a balance of $18. The journal entry to record th account includes a:
Multiple Choice O Debit to Petty Cash for $200. O Debit to Cash Over and Short for $18 O Credit to Cash for $182

Answers

Based on the journal entry the expenses of credit to crash for $182.

What is journal entry?

Petty cash expenses are recorded when the fund is replenished.

Delivery and miscellaneous expenses should be debited when recorded because they are normal operating expenses.

Merchandise inventory is an asset, and assets should be debited when they increase.

Cash is an asset that should be credited when it decreases.

The journal entry for the given expenses in the petty cash fund will be as follows:

                                                                                 Debit               Credit

Office expenses                                                        $182

(43+127+12)

Petty Cash                                                                                         $182

Dr. Delivery expenses total $43.

Miscellaneous expenses for Dr. $12

$127 for Dr. Merchandise inventory

$182 in the Credit Cash account

Because the Spencer Co petty fund already has a balance of $18, another $182 debit in the fund equals $200 in the petty cash fund.

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How much total interest will Molly pay using this plan?

Answers

Answer:

1: I am sure that this is a mathematics question, not a law question.

2: How are people supposed provide an answer without even knowing what the plan Molly is using?

Explanation:

TRUE OR FALSE a system is always at some stage of sdlc because every request for structural changes requires retracing the steps of the systems development life cycle (sdlc).

Answers

This statement is True Because any request for structural modifications necessitates retracing the phases of the Systems Development Life Cycle, a system is always in some level of the SDLC .

What is System Development Life Cycle explain?

A project management system called the life cycle for system development outlines the steps needed to take a project from conception to completion. For instance, software development teams use many models of the systems development life cycle, such as the waterfall, spiral, and agile methods.

What makes the SDLC procedure crucial?

The SDLC allows developers to review the requirements. It helps reduce expensive, unproductive development expenses. During the early stages, developers can spot costly mistakes and estimate costs. It enables programmers to produce top-notch software applications.

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Preparing and living with a personal budget is O often more trouble than the benefits justify. O similar to activities needed to handle the finances of a small business. O not necessary if you have sufficient income. O an excellent technique to prepare for a career in accounting.

Answers

The tasks required to manage the finances of the a small business are comparable to those involved in creating and adhering to a personal budget.

The right response is B.

What is the 50/20/30 guideline for the budget?

The simple majority rule is one of the most popular percentage-based budgets. Spending 50% of your money on requirements, 30percentage points on wants, plus 20percent on savings is the general principle. Find out more about the simple majority budgeting rule and decide if it applies to you.

What exactly does "personal budget" mean?

Definition of BUDGET 2021: It is the "amount of funds that can be used for, necessary for, or designated to the a particular purpose." A budget is essentially a spending plan that depicts the relationship between income and expenses.

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what does fifo require food handlers

Answers

Answer: FIFO is “first in first out” and simply means you need to label your food with the dates you store them, and put the older foods in front or on top so that you use them firs

butler-mcdonald, an indianapolis firm, recycles outdated computers to reclaim reusable materials such as plastics, copper, zinc, silver, and gold. butler-mcdonald is implementing

Answers

Butler-Mcdonald, an Indianapolis firm, is implementing salvage marketing.

What is marketing?

Marketing is the process of identifying, developing, and delivering value to satisfy a target market's needs for products and services. It may also involve choosing a target audience, choosing specific qualities or themes to emphasize in advertising, running advertising campaigns, participating in trade shows and public events, designing products and packaging that appeal to consumers, and defining the terms of the sale, such as the purchase price, discounts, warranties, and return policies. It is one of the fundamental elements of commerce and company management. Marketers have a choice between targeting consumers directly or other businesses. Several aspects, including the marketers' perspective, are relevant regardless of the target audience. They establish how marketers approach the marketing planning stage and are referred to as market orientations.

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TRUE/FALSE. one advantage of a small business is multiple choice the ability to quickly adapt to customer needs. friends can barter for goods and services the business needs. colleges are more amenable to helping small businesses because they prefer working and writing about them rather than their larger counterparts. small businesses are more likely to employ part-time workers and use telecommuting.

Answers

One advantage of a small business is the ability to quickly adapt to customer needs is true.

What qualifies as an enterprise?

A company or entrepreneurial entity that engages in business, industrial, or professional activity is referred to as a business. Both for-profit and nonprofit organizations can operate as businesses. Limited liability firms, corporations, partnerships, and sole proprietorships are all examples of different business structures.

Why is business such a big deal?

Our lives depend on business in many ways. To begin with, they provide products and services to meet our needs and desires. Then, they employ homes as workers and pay them for their services with wages, salaries, and benefits. As a result, it turns into a source of revenue that they may utilize to support their way of life.

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the labor supply curve is fundamentally a representation of the trade-off people face between which of the following? question 13 options: work and wages work and leisure wages and productivity technology and wages

Answers

The labour supply curve illustrates how adjustments to actual wage rates may impact the number of hours that employees put in.

By wage, what do you mean?

A sum of money given in return for labor or services, usually on an hourly, daily, or piecework basis and in accordance with a contract. Frequently used in plural. The portion of the national product that can be attributed to labor as a factor in production is known as wages, plural.

What distinguishes a salary from a wage?

Salary is often expressed as an annual sum that has a predetermined trajectory of increases over a set length of time. An individual's earnings will vary depending on their work hours and are fixed on an hourly basis.

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_____ planning involves implementing the activities specified by strategic plans. Group of answer choices Incident Exigency Contingency Tactical

Answers

Implementing the tasks outlined in strategic plans is considered tactical planning.

What is the name of a tactical plan?

The ability to create thorough business plans, implement them, and then evaluate their effectiveness in light of a company's overarching long-term goals or aspirations is known as strategic planning.

A tactical plan is a written outline of the specific actions you'll take to address a problem or reach a goal. You could list both the tasks you'll perform on your own and those you'll assign to staff members.

As part of tactical planning, a long-term strategic plan is broken down into multiple more detailed, smaller short-term plans. This is typically used by businesses or teams when they have goals that will take more than two or three years.

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the percent complete estimate for a work package is subjective and requires an underestimated guess compared to the scope of the work package.

Answers

A work package's estimated percent complete is an estimate that must be made on the basis of an understated guess given the work package's scope. It's false.

A work package (WP) is a subset of a project in project management that can be delegated to a particular section for execution. Work packages are sometimes mistaken for projects due to their resemblance.

It is generally acknowledged and accepted that dividing work into manageable units (work packages) is a procedure that varies depending on the project.

Work packages should not be confused with project Work Breakdown Structures (WBS), which are hierarchical representations of entire projects or programs that are primarily utilized in account control and project controls.

Despite the fact that work packages' hierarchy and types affect their hierarchy and content differently, the majority of work packages include the following components: a brief statement of the activity's description, its resources for skill and expertise, its estimates of effort and duration, its schedule, its risks, and its budget. An appropriate Work Authorization or Control Account is given to each Work Package.

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economic efficiency requires multiple choice economic transactions to be equal to each party. economic transactions to be fair to each party. that the free market not be regulated by government. that the output of goods and services is the highest possible given the amount of input used to produce them. the economy to be organized around large firms.

Answers

Economic efficiency requires that the output of goods and services is the highest possible given the amount of input used to produce them.

What is economic efficiency?

Economic efficiency refers to the use of resources in the most effective and efficient way possible to achieve a given goal. Economic efficiency can be achieved when resources are allocated in a way that maximizes the production of goods and services, while minimizing the cost of production. Economic efficiency is often used as a measure of the overall efficiency of an economy or a particular market.

How is economic efficiency measured?

Production efficiency: Production efficiency refers to the use of resources in the most efficient way to produce a given quantity of goods or services.

Allocative efficiency: Allocative efficiency refers to the allocation of resources in a way that maximizes the total welfare or utility of society.

Dynamic efficiency: Dynamic efficiency refers to the ability of an economy or market to adapt to changing conditions and to continuously improve over time.

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Chrysler exports vans to Europe in competition with the Japanese. Similarly, Compaq exports computers to Europe. However, its biggest competitors are all American companies--IBM, Hewlett-Packard, and Tandem. Assuming all else is equal, which of these companies--Chrysler or Compaq--is likely to benefit more from a weak dollar? Explain.

Answers

The likely to benefit more from a weak dollar is Chrysler.

First, we assume the exchange rate is $1/EUR and Yen 100/ EUR. In this exchange rate, both company have same profit.

Next, we assume the weaker dollar, so the exchange rate is $2/EUR and Yen 100/EUR.

In this exchange rate, the Chrysler will have profit twice than before. Since the Chrysler competitor is Japanese company, the competitor profit is still same.

The Compaq also have profit twice than before, but the Compaq competitors also have profit twice before. In basic competition strategies, the Compaq and they competitor will reduce the price of their product to gain more customers. But it will decrease their profit.

Thus, Chrysler is likely to benefit more from a weaker dollar.

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