Katie's utility will rise by 15 if she receives an extra dollar to spend on paintbrushes and straw hats.
In order to solve Katie's utility-maximization problem using a Lagrangian, the following steps should be followed:
Step 1: The problem's utility function is
U(P, S) = 3PS + 6P.
Katie has $50 to spend on paint brushes and straw hats, and the price of a paintbrush is $1 and a straw hat is $5.
Step 2: The utility function, subject to the budget constraint, will be optimized.
3PS + 6P is the utility function, and the budget constraint is
P + 5S = 50 or P = 50 - 5S.
Step 3: In this stage, the Lagrangian formula is used to solve the issue.
L = 3PS + 6P - λ(P + 5S - 50).
Taking the derivative of the equation with respect to P, we get:
3S - λ = 0 or λ = 3S.
Taking the derivative of the equation with respect to S, we get:
3P - λ5 = 0 or λ = 15P/3.
We will equate the two expressions for λ and solve for S.
3S = 15P/3S = 5P, and
S = 5P/3.
Katie's budget constraint equation,
P + 5S = 50, is used to solve for P.
P + 5(5P/3) = 50 or
P = 10.
Therefore, S = 50/3.
Step 4: Katie's utility function will be calculated using these values.
U(10, 50/3) = 3(10)(50/3) + 6(10) = 220.
Step 5: The partial derivative of the Lagrangian function
L = 3PS + 6P - λ(P + 5S - 50) with respect to λ is as follows:
P + 5S - 50 = 0.
The marginal utility of an additional dollar is the value of the derivative: λ, which is 15 (because λ = 3S, and S = 50/3).
To know more about utility visit :
brainly.com/question/32296953
#SPJ11
A company purchased 80 units for $20 each on January 31. It purchased 170 units for $35 each on February 28. It sold 170 units for $60 each from March 1 through December 31. If the company uses the first - in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.)
The amount of Cost of Goods Sold on the income statement for the year ending December 31, using the FIFO inventory costing method, would be $4,750.
First, let's determine the cost of the units sold. Since the FIFO method assumes that the units sold are the ones purchased first, we need to allocate the cost of the units accordingly.
The first 80 units sold will be from the January 31 purchase. The cost of these units is $20 each.
Cost of units sold from January 31 purchase = 80 units * $20 = $1,600
The remaining 90 units sold will be from the February 28 purchase. The cost of these units is $35 each.
Cost of units sold from February 28 purchase = 90 units * $35 = $3,150
Now, we can calculate the total Cost of Goods Sold:
Total Cost of Goods Sold = Cost of units sold from January 31 purchase + Cost of units sold from February 28 purchase
Total Cost of Goods Sold = $1,600 + $3,150
Total Cost of Goods Sold = $4,750
Learn more about inventory costing here:
https://brainly.com/question/29105779
#SPJ11
how can lucid and black box improve their supply chain relationship?
Lucid and Black Box can improve their supply chain relationship by implementing several strategies.
How is this so?First, they can enhance communication and collaboration by sharing real-time information on inventory, demand, and production forecasts. Second, they can establish mutually beneficial goals and performance metrics to drive alignment and accountability.
Third, they can invest in technology solutions, such as supply chain visibility tools, to improve transparency and streamline operations.
Lastly, regular meetings and feedback sessions can foster trust and facilitate continuous improvement in their supply chain partnership.
Learn more about supply chain at:
https://brainly.com/question/25160870
#SPJ1
Back to Assignment Attempts Keep the Highest/1 2. Problem 11.10 (Capital Budgeting Criteria: Mutually Exclusive Projects) eBook A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 + 1 Project 1 - $500 $40 $40 $40 $175 $175 Project 2 -$500 $350 $350 $115 $115 $115 Which project would you recommend? Select the correct answer. a. Neither Project 1 nor 2, since each project's NPV < 0. b. Both Projects 1 and 2, since both projects have NPV's > 0. c. Both Projects 1 and 2, since both projects have IRR's > 0. d. Project 2, since the NPV2 > NPV1. e. Project 1, since the NPV1 > NPV2. >
Mutually exclusive projects are those projects which are interchangeable and can be accepted or declined at the same time. It means that the firm can choose either of the projects, but they cannot choose both of the projects.
For mutually exclusive projects, NPV (Net present value) is an important capital budgeting technique. The project with the highest NPV is selected. NPV is the difference between the present value of cash inflows and the present value of cash outflows. If the NPV is positive, the project is profitable and should be accepted, and if the NPV is negative, the project should be rejected.
Net present value for project 1 = [tex]-$500 + $40/(1+0.10) + 40/(1+0.10)² + 40/(1+0.10)³ + $175/(1+0.10)⁴ + $175/(1+0.10)⁵ = -500 + 36.36 + 33.06 + 30.05 + 104.67 + $86.62= 90.76.[/tex]
NPV for project 2 = [tex]-$500 + $350/(1+0.10) + $350/(1+0.10)² + $115/(1+0.10)³ + $115/(1+0.10)⁴ + $115/(1+0.10)⁵= -$500 + $318.18 + $289.26 + $85.42 + $78.83 + $72.12= $343.81[/tex]. Now we can compare the NPVs of both projects. The project with a higher NPV is selected. Since NPV2 > NPV1, the recommended project is Project 2.Answer: d. Project 2, since the NPV2 > NPV1.
To learn more about net present value, visit here
https://brainly.com/question/32720837
#SPJ11
Following your successful submission of the Business Plan (Position Paper) that the President had requested from you for purposes of actualising the formation of the ZBI and your possible appointment to the same as CEO, the President was glad to receive your meticulously prepared work. To this end, he has decided to formally dissolve both the Anti corruption commission and the Drug enforcement commission and he has since created the ZBI (Zambia bureau of investigations. The president has further appointed you as the CEO of ZBI. As part of your work requirement for your confirmation in your new appointed position of CEO for ZBI, the President has directed you to prepare the following:
a) Vision, Mission, Values and strategic goals for ZBI;
b) Conduct a SWOT analysis for ZBI and identify strategic options suitable for the efficient and effective operationalisation of ZBI. Justify the selection of strategic options that you would to operationalise ZBI.
ZBI will collaborate with other international criminal investigative agencies to share intelligence and enhance its effectiveness in combating organized crime and other transnational crimes.
The vision, mission, values and strategic goals for ZBIThe Vision Statement for Zambia Bureau of Investigations (ZBI)To become a world-class criminal investigative agency that upholds professionalism, promotes public trust and effectively combats crime through the application of innovative technologies and cutting-edge methodologies.
The Mission Statement of Zambia Bureau of Investigations (ZBI)To provide effective, efficient and independent investigations, through the application of modern techniques and technologies, in order to safeguard the people of Zambia from crime.The Values of Zambia Bureau of Investigations
To know more about criminal investigative visit:-
https://brainly.com/question/30927515
#SPJ11
Describe the major differences between change control and problem management
Change control and problem management are two distinct processes within the field of IT service management. Here are the major differences between them:
Change Control:
1. Purpose: Change control focuses on managing and implementing changes to the IT infrastructure, systems, or services to minimize disruptions and ensure that changes are planned, tested, and approved.
2. Scope: Change control encompasses all types of changes, including software updates, hardware installations, configuration modifications, and process improvements.
3. Process: Change control involves a structured process that includes submitting change requests, assessing the impact and risks, obtaining approvals, scheduling and implementing the changes, and conducting post-implementation reviews.
4. Objective: The main objective of change control is to maintain the stability, reliability, and integrity of the IT environment while introducing necessary changes and minimizing potential adverse effects.
5. Focus: Change control focuses on the management of change requests, documentation, communication, and coordination among stakeholders involved in the change process.
6. Control Mechanisms: Change control often employs change advisory boards (CABs) or change management teams to review and approve changes based on their potential impact and risks.
Problem Management:
1. Purpose: Problem management focuses on identifying, analyzing, and resolving the root causes of incidents and problems to prevent them from recurring and minimize their impact on services.
2. Scope: Problem management deals with identifying and addressing underlying issues that contribute to incidents, errors, and disruptions in the IT environment.
3. Process: Problem management involves a systematic process that includes problem identification, investigation, diagnosis, workaround or resolution implementation, error control, and proactive measures to prevent future problems.
4. Objective: The main objective of problem management is to minimize the adverse impact of incidents and problems on services, improve service quality, and enhance overall system stability.
5. Focus: Problem management focuses on the analysis of incidents and problems, identifying patterns or trends, performing root cause analysis, documenting known errors and workarounds, and driving problem resolution and prevention.
6. Control Mechanisms: Problem management typically involves problem management teams or specialists who investigate, analyze, and collaborate with other IT teams to resolve problems and implement preventive measures.
In summary, change control is concerned with managing planned changes to the IT environment, while problem management focuses on identifying and resolving the root causes of incidents and problems. Change control ensures that changes are implemented smoothly, while problem management aims to prevent incidents and recurring problems and improve overall service quality.
To know more about management visit-
brainly.com/question/32343965
#SPJ11
Help me please.. there is no option on here for Human Resources principals, so I jus clicked business as the subject..
Answer:
it should be vision B because the vision contains the reason why the company was formed
Write 'T' if the statement is true and 'F' if the statement is false in the respective boxes below. Question No 1 (T or F)
1. When a country faces a recession, the economy will most likely experiences falling employment and falling income.
2. If the economy is going into a recession, an appropriate fiscal policy is to decrease government spending.
3. An expansionary fiscal policy increases aggregate demand and increases real GDP.
4. A monetary policy is a policy that deals with government's income and expenditure.
5. Saudi Arabia Monetary Agency (SAMA) can conduct an expansionary monetary policy by lowering the reserve requirement.
6. Automatic stabilizers are a type of monetary policy that happen automatically and tend to offset fluctuations in economic activity without direct intervention from policymakers.
7. Government budget deficit occurs when government expenditure is more than government revenue.
8. Crowing-out effect refers to the additional shifts in aggregate demand curve that result when fiscal policy increases income and thereby decreases consumer spending.
9. Government intervention to increase the value of the Saudi Riyal is called revaluation.
10. Both closed economies and open economies interact freely with other economies around the world.
1. True
2. False
3. True
4. False
5. True
6. True
7. True
8. False
9. True
10. False
Explanation:1. True: When a country faces a recession, the economy will most likely experience falling employment and falling income.
2. False: If the economy is going into a recession, an appropriate fiscal policy is to increase government spending, not to decrease it.
3. True: An expansionary fiscal policy increases aggregate demand and increases real GDP.
4. False: A monetary policy is a policy that deals with the money supply and interest rates, not government's income and expenditure.
5. True: Saudi Arabia Monetary Agency (SAMA) can conduct an expansionary monetary policy by lowering the reserve requirement.
6. True: Automatic stabilizers are a type of fiscal policy that happen automatically and tend to offset fluctuations in economic activity without direct intervention from policymakers.
7. True: Government budget deficit occurs when government expenditure is more than government revenue.
8. False: Crowding-out effect refers to the additional shifts in aggregate demand curve that result when government spending increases and thereby decreases private spending.
9. True: Government intervention to increase the value of the Saudi Riyal is called revaluation.
10. False: Closed economies do not interact freely with other economies around the world. Open economies do.
To know more about policymakers visit:
https://brainly.com/question/2673409
#SPJ11
Suppose the (inverse) demand for a firm's product is given by P= 16-Q and the cost function is C(Q)= 4Q. What price should the firm charge if the firm exercises (i) First-degree price discrimination,
First-degree price discrimination is where a company charges the maximum possible price for each unit. A company with a differentiated product, such as a car or a television, will charge each consumer their maximum willingness to pay.
It is also known as perfect price discrimination. In first-degree price discrimination, the firm has complete information on the customer's willingness to pay, allowing them to charge the maximum amount the consumer is willing to pay. The formula for marginal revenue (MR) is MR = 16 minus 2Q.In this situation, the firm must decide how much to sell at a given price in order to maximize profits.
To achieve this, we should set MR = MC.MR = MC4 = 16 - 2Q4 = 16 - Q Q = 12Thus, when the firm exercises first-degree price discrimination, it should sell 12 units at a price of $4 per unit (since C(Q) = 4Q).
To know more about marginal revenue refer to:
https://brainly.com/question/13444663
#SPJ11
Chapter 20 Homework Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as
1. Gross Profit - Total Expenses = $1,858,000 - $853,000 = $1,005,000
2. The expected contribution margin ratio for Belmain Co. in 20Y7 is approximately 69.65%.
1. Estimated Income Statement for Belmain Co., Year Ended December 31, 20Y7:
Revenue:
Sales (12,000 units * $240/unit) = $2,880,000
Cost of Goods Sold:
Direct materials: $50.00 * 12,000 units = $600,000
Direct labor: $6.00 * 12,000 units = $72,000
Factory overhead: $350,000
Total cost of goods sold = $1,022,000
Gross Profit:
Revenue - Cost of Goods Sold = $2,880,000 - $1,022,000 = $1,858,000
Expenses:
Selling expenses:
Sales salaries and commissions: $340,000
Travel: $116,000
Miscellaneous selling expense: $1.00 * 12,000 units = $12,000
Total selling expenses = $468,000
Administrative expenses:
Office and officers salaries: $325,000
Supplies: $4.00 * 12,000 units = $48,000
Miscellaneous administrative expense: $1.00 * 12,000 units = $12,000
Total administrative expenses = $385,000
Total Expenses = $468,000 + $385,000 = $853,000
Income from Operations:
Gross Profit - Total Expenses = $1,858,000 - $853,000 = $1,005,000
2. The expected contribution margin ratio is calculated by dividing the contribution margin by the revenue. The contribution margin is the difference between revenue and variable costs. In this case, the variable costs are the direct materials, direct labor, and variable selling and administrative expenses.
Contribution Margin:
Revenue - Variable Costs
= $2,880,000 - ($600,000 + $72,000 + $12,000 + $116,000 + $12,000 + $48,000 + $12,000)
= $2,880,000 - $872,000
= $2,008,000
Contribution Margin Ratio:
Contribution Margin / Revenue
= $2,008,000 / $2,880,000
≈ 0.6965 or 69.65%
for more such question on Gross Profit visit
https://brainly.com/question/942181
#SPJ8
Note the complete questions is:
Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co, expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various departmem heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Varlable Cost Flxed Cost (per unit sold) Production costs Direct materials Direct labor Factory overhead $50.00 $350,000 6.00 Selling expenses: Sales salaries and commissions 340,000 116,000 Travel Miscellaneous selling expense 1.00 Administrative expenses Office and officers salaries Supplies Miscellaneous administrative expense 325,000 4.00 1.00 $96.00 $1,152,000 It is expected that 12,000 units will be sold at a price of $240 a unit. Maximum sales within the relevant range are 18,000 units. Required: 1. Prepare an estimated income statement for 20Y7 Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 1. Prepare an estimated income statement for 20Y7 Belmain Co. For the Year Ended December 31, 20Y7 Cost of goods sold: Total cost of goods sold Gross profit Expenses: Selling expenses: Total selling expenses Total expenses Income from operations 2. What is the expected contribution margin ratio?
9. A business has experienced the following labour costs: Output Cost (S) (units) 7,000 86,000 12,000 141,000 9,000 102,000 Fixed costs increase by $15,000 for output in excess of 10,000 units. Using
The labor costs and fixed costs for each output level are as follows:
Output (S) (units) Variable Labor Cost Fixed Costs
7,000 $12.29 per unit $0
12,000 $11.75 per unit $15,000
9,000 $11.33 per unit $0
To analyze the labor costs and fixed costs for the given output levels, we need to break down the information provided.
Output (S) (units) Cost
7,000 $86,000
12,000 $141,000
9,000 $102,000
First, let's calculate the variable labor cost per unit:
Variable Labor Cost per Unit = Total Variable Labor Cost / Total Output
For the output of 7,000 units, the variable labor cost is $86,000.
Variable Labor Cost per Unit = $86,000 / 7,000 = $12.29 per unit
For the output of 12,000 units, the variable labor cost is $141,000.
Variable Labor Cost per Unit = $141,000 / 12,000 = $11.75 per unit
For the output of 9,000 units, the variable labor cost is $102,000.
Variable Labor Cost per Unit = $102,000 / 9,000 = $11.33 per unit
Next, let's analyze the fixed costs. We know that for output in excess of 10,000 units, fixed costs increase by $15,000. However, we need to determine the specific fixed costs for each output level.
For the output of 7,000 units, we assume no increase in fixed costs because it does not exceed 10,000 units.
For the output of 12,000 units, fixed costs increase by $15,000 as it exceeds 10,000 units.
Fixed Costs = $15,000
For the output of 9,000 units, we assume no increase in fixed costs because it does not exceed 10,000 units.
For more such questions on labor costs visit;
https://brainly.com/question/26527325
#SPJ11
You invest $100 in a risky asset with an expected rate of return of 0.27 and a standard deviation of 0.36 and a T-bill with a rate of return of 0.05. The slope of the capital allocation line formed with the risky asset and the risk-free asset is equal to
a. 0.05
b. 1.3333
c. 0.6111
d. 0.7500
Investment in risky asset= $100
Expected Rate of Return on risky asset= 0.27
Standard Deviation of Risky asset= 0.36
Rate of Return on T-bill (Risk-Free Asset)= 0.05
To calculate: Slope of the Capital allocation line formed with the risky asset and the risk-free asset.
Formula: Slope of Capital Allocation
Line = [E(R_p) - R_f] / σ_p²
Where,
E(R_p) = Expected Return of Portfolio
R_f = Risk-Free Rate of Returnσ_
p² = Variance of Portfolio
Slope of Capital Allocation Line = [E(R_p) - R_f] / σ_p²Substituting the given values:σ_p² = 0.36²= 0.1296E(R_p) = 0.27R_f = 0.05∴ Slope of Capital Allocation Line = [0.27 - 0.05] / 0.1296= 1.6667Hence, Slope of the Capital allocation line formed with the risky asset and the risk-free asset is 1.6667.
Capital allocation line is used to find the optimal portfolio by investors in order to balance between risk and reward. It is a line that goes through the Risk-Free asset and the optimal risky portfolio. Slope of capital allocation line helps in determining the combination of risk-free and risky assets that can result in highest Sharpe ratio. The slope of the capital allocation line can be calculated by using the formula: Slope of Capital Allocation Line = [E(R_p) - R_f] / σ_p²Where, E(R_p) = Expected Return of Portfolio, R_f = Risk-Free Rate of Return, σ_p² = Variance of Portfolio Investment in risky asset= $100Expected Rate of Return on risky asset= 0.27Standard Deviation of Risky asset= 0.36Rate of Return on T-bill (Risk-Free Asset)= 0.05Substituting the given values in the formula: Slope of Capital Allocation Line = [0.27 - 0.05] / 0.1296= 1.6667Therefore, the slope of the capital allocation line formed with the risky asset and the risk-free asset is 1.6667.
To know more about asset visit:
https://brainly.com/question/14826727
#SPJ11
a) Define the term externalities and give two examples of positive externalities and two examples of negative externalities.
b) Describe the characteristics Public Goods and Private Goods and suggest two examples of each good.
c) With your knowledge of market failure, briefly explain the two types of economic efficiencies that should be achieved.
a) The examples of positive externalities is; Education, Vaccination, and Negative Externalities is; Pollution, Noise Pollution. b) Characteristics of Public Goods; Non-excludability, Non-rivalry, and Characteristics of Private Goods; Excludability, Rivalry. c) Economic efficiencies are; Allocative, Productive.
Externalities refer to the spillover effects of economic activities on parties not directly involved in the activity, resulting in costs or benefits that are not reflected in market prices. Externalities can be positive or negative.
Positive Externalities;
Education: When an individual receives education, it not only benefits them directly but also has positive spillover effects on society by increasing overall knowledge, productivity, and innovation.
Vaccinations: When individuals get vaccinated, it not only protects them from diseases but also provides a positive externality by reducing the spread of diseases to others in the community.
Negative Externalities;
Pollution: Industrial activities that release pollutants into the air or water can have negative externalities by causing harm to the environment and human health.
Noise Pollution: Excessive noise from construction sites, traffic, or loud events can have negative externalities by causing annoyance, stress, and health issues for individuals in the surrounding area.
Characteristics of Public Goods;
Non-excludability: Once provided, it is difficult to exclude individuals from enjoying the benefits of a public good.
Non-rivalry: Consumption of the good by one individual does not diminish its availability or consumption by others.
Examples of Public Goods;
Street Lighting: Street lighting provides illumination for everyone in the vicinity and is difficult to exclude individuals from benefiting from it.
National Defense: Defense systems and military protection benefit the entire population and cannot be limited to only those who pay for it.
Characteristics of Private Goods;
Excludability: Producers can exclude individuals from consuming the good if they do not pay for it.
Rivalry: Consumption of the good by one individual reduces its availability or consumption by others.
Examples of Private Goods;
Food: Food products can be purchased and consumed by individuals, and one person's consumption reduces the available quantity for others.
Cars: Cars are privately owned and can be used exclusively by their owners, with one person's use preventing others from using the same car.
Economic efficiencies that should be achieved are;
Allocative Efficiency: This occurs when resources are allocated in a way that maximizes societal welfare. It means that resources are distributed to produce the combination of goods and services that best satisfies people's preferences and needs. Allocative efficiency is achieved when the marginal benefit of consuming a good equals its marginal cost.
Productive Efficiency: This refers to producing goods and services at the lowest possible cost while utilizing resources efficiently. It means achieving the maximum output from given inputs or resources. Productive efficiency is achieved when goods and services are produced at the lowest possible average cost, minimizing waste and inefficiency.
To know more about Economic efficiencies here
https://brainly.com/question/30436511
#SPJ4
company's cash-basis net income for the year ended december 31 was $75,000. the following information is from the company's accounting records: january 1 december 31 accounts receivable $15,000 $20,000 prepaid expenses 7,000 4,000 accrued liabilities 2,500 2,000 what is the accrual-basis net income?
The Accrual-Basis Net Income is $74,500.
Net income refers to the profit of a company, calculated after subtracting all its expenses from total revenue. In accounting, accrual-basis accounting is a method of recording financial transactions when the transaction occurs, irrespective of the cash transactions that will occur in the future.
With this information, the following formula is used to calculate the Accrual-Basis Net Income:
Net Income = Cash-Basis Net Income + (Ending Accruals - Beginning Accruals)
Where;
Beginning Accruals = Accruals at the beginning of the period
Ending Accruals = Accruals at the end of the period
Using the information provided above, the accrual-basis net income is calculated as follows:
Beginning Accruals = Accrued Liabilities at the beginning of the period
= $2,500
Ending Accruals = Accrued Liabilities at the end of the period
= $2,000
Net Income = Cash-Basis Net Income + (Ending Accruals - Beginning Accruals)
= $75,000 + ($2,000 - $2,500)
= $74,500
Learn more about Net Income -
brainly.com/question/28390284
#SPJ11
briefly describe an organization with which you are familiar. describe a situation when a manager in that organization could use cost behavior information and how the manager could use the information.
One organization that I'm familiar with is a manufacturing company. In this organization, cost behavior information can be useful to the manager when they are making decisions on pricing and production levels.
In order to make informed decisions on the best pricing strategy, the manager needs to understand how changes in production levels will impact the cost of goods sold. By analyzing the behavior of costs, the manager can estimate how much it costs to produce one unit of a product, and thus set a price that will cover all the costs while still making a profit.The manager can also use cost behavior information to determine the optimal production levels.
For instance, if the company produces a certain product that has a fixed cost component, such as rent and salaries, and a variable cost component, such as raw materials and labor, the manager can use the knowledge of cost behavior to determine the number of units that should be produced to minimize costs per unit.
By doing so, the company can increase profitability by reducing the cost of production.Besides, cost behavior information can be useful in budgeting and forecasting as well. The manager can use past data on cost behavior to make informed decisions on the allocation of resources, predict future costs, and develop strategies for cost reduction.
For more such questions on manufacturing
https://brainly.com/question/15243255
#SPJ11
Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $6,800 Account payable $8,900
Account receivable $30,300 Unearned revenue $3,640
Supplies $1,490 Note payable (long term) $47,600
Equipment $9,700 Common stock $196
Land $7,500 Retained earnings $14,150
Building $26,600 Additional paid-in capital $784
a. Rebuilt and delivered five pianos in January to customers who paid $19,100 in cash.
b. Received a S530 deposit from a customer who wanted her piano rebuilt.
c. Rented a part of the building to a bicycle repair shop; received $910 for rent in January.
d. Received $7,200 from customers as payment on their accounts.
e. Received an electric and gas utility bill for $520 to be paid in February.
f. Ordered $920 in supplies.
g. Paid $2,040 on account in January.
h. Received from the home of Stacey Eddy, the major shareholder, a $980 tool (equipment) to use in the business in exchange for 120 shares of $1 par value stock.
i. Paid $14,700 in wages to employees who worked in January.
j. Declared and paid a $1,600 dividend (reduce Retained Earnings and Cash).
k. Received and paid cash for the supplies in (f).
Required:
Prepare an income statement for January 31.
Income Statement (January 31): Stacey's Piano Rebuilding Company reported a net income of $10,250, derived from revenues of $26,300 and expenses of $16,050.
How much was Stacey's Piano Rebuilding Company's net income in January?To prepare the net income statement for Stacey's Piano Rebuilding Company as of January 31, we need to consider the revenues and expenses incurred during the month. Let's calculate the figures based on the given information:
Revenues:
Cash received from customers for rebuilt pianos: $19,100
Cash received from customers as payment on accounts: $7,200
Total Revenues: $19,100 + $7,200 = $26,300
Expenses:
Rent expense: $910
Utility expense: $520
Wages expense: $14,700
Supplies expense: $920
Total Expenses: $910 + $520 + $14,700 + $920 = $16,050
Now, we can prepare the income statement:
Stacey's Piano Rebuilding Company
Income Statement
For the Month Ended January 31
Revenues:
Cash received from customers for rebuilt pianos $19,100
Cash received from customers as payment on accounts $7,200
Total Revenues $26,300
Expenses:
Rent expense $910
Utility expense $520
Wages expense $14,700
Supplies expense $920
Total Expenses $16,050
Net Income (Revenues - Expenses) $26,300 - $16,050 = $10,250
Therefore, the income statement for Stacey's Piano Rebuilding Company as of January 31 shows a net income of $10,250.
Learn more about: net income
brainly.com/question/32614743
#SPJ11
A firm has a cash conversion cycle of 60 days and average payment period of 40 days. The firm's operating cycle is _____ days. OA) 50 OB B) 30 C) 20 D) 100
The firm's operating cycle is 100 days. The Option D.
What is the firm's operating cycle?An operating cycle refers to the time it takes a company to buy goods, sell them and receive cash from the sale of said goods.
The operating cycle can be calculated by adding the average payment period to the cash conversion cycle:
Operating Cycle = Cash Conversion Cycle + Average Payment Period
Operating Cycle = 60 days + 40 days
Operating Cycle = 100 days.
Read more about operating cycle
brainly.com/question/26482515
#SPJ4
managerial accounting
5 The Alpine House, Incorporated, is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales $ 1,040,000 Selling price per pair of
The traditional income statement and contribution format income statement for the quarter ended March 31 have been prepared. The contribution margin per unit for this quarter is $338.
Traditional Income Statement for the Quarter Ended March 31:
Sales: $1,040,000
Cost of Goods Sold:
Beginning Merchandise Inventory: $80,000
Add: Merchandise Purchases: $280,000
Less: Ending Merchandise Inventory:
Cost of Goods Sold: (80,000 + 280,000 - Ending Inventory)
Gross Profit: (Sales - Cost of Goods Sold)
Operating Expenses:
Variable Selling Expense: ($46 x Number of Skis Sold)
Variable Administrative Expense: ($16 x Number of Skis Sold)
Fixed Selling Expense: $150,000
Fixed Administrative Expense: $125,000
Total Operating Expenses: (Variable Selling Expense + Variable Administrative Expense + Fixed Selling Expense + Fixed Administrative Expense)
Net Income: (Gross Profit - Total Operating Expenses)
Contribution Format Income Statement for the Quarter Ended March 31:
Sales: $1,040,000
Variable Expenses:
Variable Selling Expense: ($46 x Number of Skis Sold)
Variable Administrative Expense: ($16 x Number of Skis Sold)
Contribution Margin: (Sales - Variable Expenses)
Fixed Expenses:
Fixed Selling Expense: $150,000
Fixed Administrative Expense: $125,000
Net Income: (Contribution Margin - Fixed Expenses)
Contribution Margin per Unit:
The contribution margin per unit can be calculated by subtracting the variable expenses per unit from the selling price per unit. In this case:
Contribution Margin per Unit = Selling Price per Pair of Skis - Variable Selling Expense per Pair of Skis - Variable Administrative Expense per Pair of Skis
Contribution Margin per Unit = $400 - $46 - $16
Contribution Margin per Unit = $338
Therefore, the contribution margin per unit for this quarter is $338.
To learn more about contribution margin
https://brainly.com/question/24881206
#SPJ11
Complete question:
The Alpine House, Incorporated, is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Amount Sales $ 1,040,000 Selling price per pair of skis $ 400 Variable selling expense per pair of skis $ 46 $16 Variable administrative expense per pair of skis Total fixed selling expense $ 150,000 Total fixed administrative expense $ 125,000 Beginning merchandise inventory $ 80,000 Ending merchandise inventory Merchandise purchases $ 120,000 $ 280,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit?
The balance sheet of Toronto Exports Inc. at December 31, 2019, presented the following shareholders' equity: (Click the icon to view the shareholders' equity section on the balance sheet.) During 202
The shareholders' equity section of the balance sheet of Toronto Exports Inc. on December 31, 2019, was reported as follows: Common shares: 450,000 shares outstanding, having a par value of $5 per share and selling at $25 per share. The company received $4,500,000 in cash for issuing the shares.
Preferred shares: 20,000 shares outstanding, having a par value of $50 per share and selling at $60 per share. The company received $1,200,000 in cash for issuing the shares.
Retained earnings: $3,725,000 in accumulated profits since the company was formed.Additional paid-in capital: $575,000 in amounts received for the issuance of shares above their par value. Treasury shares: The company purchased 10,000 common shares at $27 per share, for a total cost of $270,000. The shares are held in the company's treasury and are not considered outstanding.
Understanding Shareholders' Equity Shareholders' equity represents the residual interest in the assets of an entity after deducting its liabilities. It is the amount of capital that has been contributed by shareholders plus any accumulated earnings or losses. Shareholders' equity is presented on the balance sheet of a company under the category of equity or owner's equity.
The balance sheet reflects the financial position of a company at a specific point in time. It provides a snapshot of the company's assets, liabilities, and equity at the reporting date. The shareholders' equity section of the balance sheet includes the following components:
Common stock: This represents the amount of capital that has been contributed by shareholders in exchange for common shares. Preferred stock: This represents the amount of capital that has been contributed by shareholders in exchange for preferred shares.
Retained earnings: This represents the amount of accumulated profits or losses since the company was formed.
Additional paid-in capital: This represents the amount of capital that has been contributed by shareholders in excess of the par value of the shares. Treasury stock: This represents the shares of the company that have been repurchased by the company and are held in treasury. These shares are not considered outstanding and do not have voting rights.
For more such questions on shareholders
https://brainly.com/question/28452798
#SPJ11
Xenbe manufactures plastic bottles . The have four operating machines in the factory that operate at 80% capacity. One machine can produce 10 000 plastic bottles per month at full capacity. There are four weeks in a month and all bottles are sold in the month of manufacture. Bottles are sold at R5 each.
The following costs are incurred on a monthly basis in the manufacturing of plastic bottles.
Plastic purchased per week. R8 000.
Wages of machine operators R2 000 per week. There are four operators on duty at any time.
Monthly salary of factory supervisor R20 000.
Depreciation of machines R6 000 per machine per annum.
Water and electricity of R12 000 per month. Must be apportioned according to floor space. (Factory takes up 80% of total floor space).
a) Calculate the variable cost per unit manufactured and the fixed cost per month.
The variable cost per unit manufactured is R2 per bottle, and the fixed cost per month is R31,600.
To calculate the variable cost per unit manufactured, we need to consider the costs that vary with the level of production. In this case, the variable costs include the cost of plastic purchased per week and the wages of machine operators.
Plastic purchased per week is given as R8,000. Since there are four weeks in a month, the total cost of plastic purchased per month is 4 * R8,000 = R32,000.
The wages of machine operators are R2,000 per week, and there are four operators on duty at any time. Therefore, the total weekly wages are 4 * R2,000 = R8,000. As there are four weeks in a month, the total monthly wages for machine operators amount to 4 * R8,000 = R32,000.
To calculate the total variable cost per unit manufactured, we need to determine the number of units produced. Since each machine can produce 10,000 bottles per month at full capacity, and there are four machines operating at 80% capacity, the total number of bottles produced per month is 4 * 10,000 * 0.8 = 32,000 bottles.
Hence, the variable cost per unit manufactured is (R32,000 + R32,000) / 32,000 bottles = R2 per bottle.
Moving on to fixed costs, these are costs that do not change with the level of production. The fixed costs in this case include the monthly salary of the factory supervisor, depreciation of machines, and water and electricity expenses.
The monthly salary of the factory supervisor is given as R20,000.
The depreciation of machines is R6,000 per machine per annum. Since there are four machines, the total monthly depreciation cost is R6,000 * 4 / 12 = R2,000.
The water and electricity expenses are R12,000 per month, and since the factory takes up 80% of the total floor space, we can apportion 80% of this cost to the factory. Therefore, the monthly cost for water and electricity allocated to the factory is R12,000 * 0.8 = R9,600.
Adding up the fixed costs, we have R20,000 + R2,000 + R9,600 = R31,600 per month.
To learn more about variable cost
https://brainly.com/question/13896920
#SPJ11
Two of the key advantages of marketable pollution permits in controlling pollution are:_____________
decrease in cost for alternative method of command and control
creation of "hot spot" for the polluters
decrease in cost for alternativen-method of command and control plus giving incentive for innovating of alternative pollution free technology.
creation of incentive for innovation for alternative pollution free technology
Marketable pollution permits are permits that allow companies or organizations to emit a certain amount of pollutants into the environment. These permits can be bought and sold on the open market, which makes them a valuable commodity. There are several advantages to using marketable pollution permits in controlling pollution.First, marketable pollution permits can help to decrease the cost of implementing alternative methods of command and control.
Marketable pollution permits are permits that allow companies or organizations to emit a certain amount of pollutants into the environment. These permits can be bought and sold on the open market, which makes them a valuable commodity. There are several advantages to using marketable pollution permits in controlling pollution.First, marketable pollution permits can help to decrease the cost of implementing alternative methods of command and control. This is because companies that are required to reduce their emissions can choose to purchase permits from other companies that have a surplus of permits. This allows them to avoid the cost of implementing costly technologies or practices that would reduce their emissions.Second, marketable pollution permits can create an incentive for companies to innovate and develop alternative pollution-free technologies. By allowing companies to buy and sell permits, the market for these permits can encourage companies to find ways to reduce their emissions in order to sell their surplus permits. This can lead to the development of new technologies and practices that can help to reduce pollution levels. Overall, marketable pollution permits can be an effective way to control pollution while also providing economic incentives for companies to reduce their emissions.
To know more about organizations visit:
https://brainly.com/question/12825206
#SPJ11
Which of the following are integral parts of the five step managerial process of crafting and executing a strategy? Setting objectives, crafting a strategy, and implementing and executing the chosen strategy Setting objectives, developing a proven business model, and choosing what business approaches and operating practices to employ Deciding on the company's strategic intent, crafting a strategy, and making corrective adjustments as needed Developing a proven business model, deciding on the company's strategic intent, and crafting a strategy Developing the vision/mission/core values, setting objectives, crafting a strategy, executing the chosen strategy, and revising it as necessary to sustain competitive advantage
The following are integral parts of the five-step managerial process of crafting and executing a strategy: Setting objectives, crafting a strategy, and implementing and executing the chosen strategy.
The five-step managerial process of crafting and executing a strategy include the following integral parts: Setting objectives: Crafting a strategy, Implementing and executing the chosen strategy. Evaluating performance and making corrective adjustments Setting objectives: Setting objectives is the first and foremost step in the strategic management process. The company's strengths, weaknesses, opportunities, and threats are assessed to create a comprehensive strategy that aligns with the company's objectives. Implementing and executing the chosen strategy: The third step is the implementation and execution of the chosen strategy. This includes allocating resources, organizing and staffing the organization, and creating policies and procedures to achieve the goals and objectives of the strategy. Evaluating performance and making corrective adjustments: The final step is to evaluate performance to ensure that the strategy is successful in achieving the organization's objectives. If the strategy is not working, corrective adjustments can be made to improve performance.
To know more about resources visit:
https://brainly.com/question/14289367
#SPJ11
Problem Consider the following open economy (Home economy). The real exchange rate is fixed and equal to one. Saving, investment, government spending, taxes, imports and exports are given by: S-80+0.1
The country is borrowing $40 from other countries to finance its expenditure is the answer.
Given a fixed and equal real exchange rate of one and the following values for saving, investment, government spending, taxes, imports, and exports: S = -80 + 0.1Y, I = 50, G = 120, T = 100, IM = 0.2Y, and EX = 0.2Y.
The value of Y is determined by the aggregate demand and supply of goods and services in an economy. Therefore, we have to find the value of Y for the Home economy. Then we can compute the equilibrium level of savings and investment, trade balance, and the current account balance. We use the national income identity to solve for the equilibrium value of Y. Thus, Y = C + I + G + EX - IM where C = Y - T - S
Substituting the values given, we have Y = Y - T - (-80 + 0.1Y) + 50 + 120 + 0.2Y - 0.2YY = 1,000Therefore, Y = 1,000
The equilibrium savings is S = Y - T - C = 1,000 - 100 - (1,000 - 100 - (-80 + 0.1(1,000))) = -40
The equilibrium investment is I = 50
The trade balance is TB = EX - IM = 0.2(1,000) - 0.2(1,000) = 0
The current account balance is CA = S + TB = -40 + 0 = -40
In conclusion, the Home economy is facing a current account deficit of $40.
The country is borrowing $40 from other countries to finance its expenditure.
know more about national income identity
https://brainly.com/question/17009340
#SPJ11
compared to a perfect competitor, a monopolist will charge a ________ price and produce a ________ quantity. a. higher; smaller b. lower; larger c. lower; smaller d. higher; larger
a. higher; smaller. Compared to a perfect competitor, a monopolist will charge a higher price and produce a smaller quantity.
A perfect competitor operates in a market where there are many buyers and sellers, and no single entity has control over the market. In this scenario, the market is characterized by price-taking behavior, where each firm faces a perfectly elastic demand curve. This means that the firm can sell as much as it wants at the prevailing market price.
On the other hand, a monopolist operates in a market where it is the sole seller of a particular product or service, giving it significant control over pricing and quantity produced. A monopolist faces a downward-sloping demand curve, which means that it must lower the price if it wants to sell more quantity and raise the price if it wants to sell less.
To maximize profits, a monopolist will typically set a higher price compared to a perfect competitor. This is because a monopolist has market power and can restrict supply to drive up prices. Additionally, a monopolist will produce a smaller quantity because it faces less competitive pressure to meet consumer demand.
In summary, a monopolist will charge a higher price and produce a smaller quantity compared to a perfect competitor. The monopolist's ability to control prices and limit competition allows it to operate in a different manner, maximizing profits by setting higher prices and producing less quantity.
To know more about monopolist , visit;
https://brainly.com/question/32611254
#SPJ11
1. When there are adaptive expectations, it implies that there is persistence (inertia) in inflation:
2. It implies neutrality of money in the short term:
3. It can be derived from the upward sloping aggregate supply curve:
4. Changes in inflation expectations imply a movement on the curve:
5. Inflation would be 4% if the unemployment rate is 1 percentage point above its natural level; 3= 0.5; and expectations are 4%:
6. If the sensitivity of inflation to cyclical unemployment is 0.5, to reduce inflation by 1 percentage point, 0.5 percentage points of unemployment must be sacrificed:
True: When there are adaptive expectations, it means that individuals base their expectations of future inflation on past inflation.
True: When there are adaptive expectations, it means that individuals base their expectations of future inflation on past inflation. This implies that if there is persistence or inertia in inflation, where past inflation rates influence current and future inflation rates, it is consistent with the concept of adaptive expectations.False: The neutrality of money in the short term refers to the idea that changes in the money supply do not have an immediate impact on real variables such as output and employment. It suggests that in the short run, changes in the money supply primarily affect nominal variables, such as prices and inflation, rather than real economic activity.True: The upward sloping aggregate supply curve suggests that as output increases, firms need to hire more inputs, leading to higher costs and potentially higher prices. This positive relationship between output and prices supports the notion that changes in aggregate supply can affect inflation.False: Changes in inflation expectations do not necessarily imply a movement on the curve. Inflation expectations can influence economic behavior and decisions, including wage-setting and price-setting decisions, which can, in turn, affect the aggregate supply or demand. Changes in inflation expectations can lead to shifts in the aggregate supply or demand curves, rather than movements along the curves.False: The relationship between inflation and the unemployment rate is described by the Phillips curve. The specific values given in the statement do not align with the standard Phillips curve relationship. The Phillips curve suggests a negative relationship between unemployment and inflation, meaning that lower unemployment is associated with higher inflation, and vice versa.False: The sensitivity of inflation to cyclical unemployment, also known as the Phillips curve slope, indicates the responsiveness of inflation to changes in cyclical unemployment. However, reducing inflation by 1 percentage point does not necessarily mean sacrificing 0.5 percentage points of unemployment. The trade-off between inflation and unemployment, as described by the Phillips curve, is not always linear, and the specific relationship between changes in inflation and unemployment depends on various factors and economic conditions.The correct question is:
Please mark true or false for the following statements.
1. When there are adaptive expectations, it implies that there is persistence (inertia) in inflation:
2. It implies neutrality of money in the short term:
3. It can be derived from the upward sloping aggregate supply curve:
4. Changes in inflation expectations imply a movement on the curve:
5. Inflation would be 4% if the unemployment rate is 1 percentage point above its natural level; 3= 0.5; and expectations are 4%:
6. If the sensitivity of inflation to cyclical unemployment is 0.5, to reduce inflation by 1 percentage point, 0.5 percentage points of unemployment must be sacrificed.
To know more about inflation follow the link:
https://brainly.com/question/28255167
#SPJ4
When someone stops mowing his own lawn and hires a teenager for cash that is unreported, what happens to GDP?
a)It falls because production by non-citizens is counted in their home country, not in the United States.
b)It rises because GDP includes the value of the additional leisure time that dad gets by hiring the teenager.
c)It probably does not change. Production has shifted from non- market to the underground economy and neither is counted.
d)It rises because a non-market activity is now a legal market activity.
when someone stops moving his own lawn and hires a teenager for cash that is unreported, it can be said that GDP does not change. Production has shifted from non-market to the underground economy, and neither is counted. The correct option is C.
What is GDP?
Gross domestic product (GDP) is a measurement of the economic value of all goods and services produced within a given territory or country over a set period. A rise in GDP usually implies that the economy is improving, while a decrease implies that it is worsening.GDP, on the other hand, has its limitations and does not represent the entire economy. For instance, a rise in GDP does not necessarily translate to an improvement in living standards for the populace, and it also disregards the quality of life, externalities, and economic inequality.
In this case, when someone stops moving his own lawn and hires a teenager for cash that is unreported, it can be said that GDP does not change. Production has shifted from non-market to the underground economy, and neither is counted.
To know more about Gross domestic product, refer to; https://brainly.com/question/32169010
#SPJ11
You plan to invest $5,000 per year in an account that pays you the highest interest rate. Bank A has a plan that guarantees $30,000 balance for you after 5 years, and Bank B guarantees a $37,800 balance after 6 years. Create a spreadsheet that would help you compute the interest rates offered by the two banks (to 2 places of decimal) and state which bank you'll select based on the highest interest rate only. Copy and paste the spreadsheet below and state the Excel function you used to help you calculate the interest rates. Provide an explanation.
The interest rate offered by Bank A is 14.87%.
The interest rate offered by Bank B is 10.99%.
I will select Bank A as it offers higher interest rate.
What are the interest rates offered by Bank A and Bank B?To know interest rates offered by the two banks, we will use the formula for compound interest: [tex]A = P(1 + r/n)^{nt}[/tex]
For Bank A:
A = $30,000
P = $5,000/year
n = 1 (compounded annually)
t = 5 years
$30,000 = $5,000(1 + r/1)^(1*5)
6 = (1 + r)^5
(1 + r) = 6^(1/5)
1 + r ≈ 1.1487
r = 0.1487.
For Bank B:
A = $37,800
P = $5,000/year
n = 1 (compounded annually)
t = 6 years
$37,800 = $5,000(1 + r/1)^(1*6)
7.56 = (1 + r)^6
(1 + r) = 7.56^(1/6)
1 + r ≈ 1.1099
r = 0.1099.
Read more about interest rates
brainly.com/question/25793394
#SPJ4
. In the market for karate lessons, the instructors know more about the quality of their instruction than their students do. This situation may set up a:
Select one:
A.
sensei equilibrium.
B.
dojo fruition.
C.
subgame outcome.
D.
lemons problem.
The correct answer is D. lemon's problem. In the market for karate lessons, the instructors know more about the quality of their instruction than their students do.
This situation may set up a lemon's problem. George Akerlof introduced the concept of lemon's problem in his 1970 article "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism." He used this concept to explain why markets for certain goods and services might not be efficient.
In the karate lesson market, the problem arises because students can't tell good instructors from bad ones. They can't tell if they'll get their money's worth or if they'll be wasting their time. Instructors, on the other hand, have a better understanding of their own abilities and can offer a more accurate assessment of the quality of their lessons. This discrepancy in knowledge creates a problem for the market. It can lead to a situation where only bad instructors remain in business because students can't differentiate them from good ones.
know more about The Market for 'Lemons'
https://brainly.com/question/30733381
#SPJ11
printed pencils cost $0.3313 each for an order of 18,000 pencils. on monday, bdd company placed an order for 18,000 pencils. what is the exact cost of the pencils for bdd company? be sure to use the fractional equivalent in your calculation.
The exact cost of the pencils for bdd company is $5963.40.
Given that the cost of each printed pencil is $0.3313.
Then the cost of 18,000 pencils can be calculated as follows:
Cost of 1 pencil = $0.3313
Cost of 18,000 pencils = 18,000 × $0.3313 =$5963.4 dollars
Therefore, the cost of the pencils for BDD company is $5963.4.
The fractional equivalent of the cost is $5963 2/5.
The exact cost of the pencils for BDD company is $5963.40 or $5963 2/5 approximately.
We can convert 0.4 to 2/5 by multiplying both numerator and denominator by 10, we get 4/10 which is equivalent to 2/5.
Learn more about cost -
brainly.com/question/28147009
#SPJ11
Seoul Specialty Hospital (SSH) has just purchased a five-year membership in the Korean Hospital Association (KHA). The membership costs $10,000 and KHA has sent SSH a bill that must be paid within ninety days. How would SSH record this transaction. (Hint: Be sure to distinguish between the long and short term aspects of the transaction.)
Seoul Specialty Hospital has just purchased a five-year membership in the Korean Hospital Association (KHA) costing $10,000 and the bill must be paid within ninety days. The hospital should record the transaction as a liability and then classify it as either a current liability or a long-term liability depending on the payment schedule.
The Seoul Specialty Hospital (SSH) would record the transaction as a liability in its accounting books. The hospital would classify this liability as either a current liability or a long-term liability, depending on the payment schedule.The bill for the five-year membership that costs $10,000 should be recorded as a liability in the books of the hospital. A liability is a debt or an obligation that the hospital owes to another party. In this case, the hospital owes $10,000 to the Korean Hospital Association (KHA) for the five-year membership.In terms of the payment schedule, the hospital should classify this liability as either a current liability or a long-term liability. A current liability is a debt that the hospital is expected to pay within the next 12 months. A long-term liability is a debt that the hospital is expected to pay after more than 12 months have passed from the balance sheet date.In this case, the bill must be paid within 90 days. Therefore, the hospital should classify this liability as a current liability. If the payment schedule were longer than 12 months, the hospital would classify this liability as a long-term liability. In conclusion, the hospital should record the transaction as a liability and then classify it as either a current liability or a long-term liability depending on the payment schedule.
To know more about debt visit:
https://brainly.com/question/32103869
#SPJ11
A consumer has an income of m available for expenditure on two goods. The price of good 1 is p and the price of good 2 is one. If he consumes x ≥ 0 units of good 1 and y 20 units of good 2, his utility is: u(x, y) = 1+xα (y + 1)β, where α € (0, 1) and β € (0, 1). We also assume that m > a/B. (a) Derive the consumer's marginal rate of substitution (MRS)xy between x and y. (b) Write down the Lagrangian function for the utility maximisation problem and obtain the first-order conditions. (c) Suppose that the second order conditions are satisfied. Solve the first-order conditions to obtain the consumer's demands for x and y as functions of p and m. Explain where you use the assumption m> a/B. (d) Determine the effect of an increase in m on the consumption of y. (e) Using economics intuition, find the optimal consumption of y if m
This condition gives us a useful insight into the effect of the budget constraint on optimal choices. It implies that when the consumer’s budget is very small relative to the price of good 2, she may not consume any of good 2 even if her marginal rate of substitution between the two goods is very low.
This is because she cannot afford any unit of good 2 until her budget rises above a certain threshold level. (d) Effect of an increase in m on the consumption of yThe effect of an increase in m on the consumption of y is ambiguous. On one hand, an increase in m would increase the consumption of y. However, since the price of y is normalized to 1, the consumer would have an additional income of (1/p) when m increases by 1 unit.
Hence, she may use this additional income to buy more of good 1 instead of good 2. Thus, the increase in the consumption of y would be less than proportional to the increase in m.(e) Optimal consumption of y if m < a/BIf m < a/B, then the consumer cannot afford any unit of good 2. Hence, she would consume only good 1. In this case, her optimal consumption of y is 0.
To know more about budget visit :
https://brainly.com/question/31952035
#SPJ11