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2 years ago

The income effect, the substitution effect, and diminishing marginal utility together explain:______.

1 answer:

3 0

The income effect, the substitution effect, and diminishing marginal utility together explain the Downsloping Demand Curve.

The Downsloping Demand Curve is explained by each of them. Because marginal utility decreases as more of a thing are consumed, a consumer's demand curve for that product slopes downward.

Income Effect: The change in demand for a good or service brought on by a shift in a consumer's purchasing power as a result of a change in real income is known as the income effect.

Substitution Effect: The substitution impact is the decline in sales of a product brought on by customers switching to less expensive substitutes when the price of the product increases.

Diminishing Marginal Utility: The phenomenon known as diminishing marginal utility describes how each extra unit of gain results in an ever-smaller rise in subjective value.

The income effect, the substitution effect, and diminishing marginal utility together explain the Downsloping Demand Curve.

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Product X-547 is one of the joint products in a joint manufacturing process. Management is considering whether to sell X-547 at

Katena32 [7]

Answer:

b. 1,2,3,4

Explanation:

Lets first understand what relevant cost is? Relevant cost is any cost that influences the decision of a decision maker. Therefore, the first four items are relevant in the decision of whether to sell the X-547 or to further process it.

Explanation for each item is as follows:

1- Selling price of X-547:

The selling price is relevant because it will help to determine the revenue generated from selling X-547 at the split off point and which could also be used for comparative purposes, if suppose the decision of further processing is chosen.

2- Variable cost of processing X-547 into Xylene:

The variable cost of processing X-547 is indeed relevant too, because at this stage management is not in a position to take a decision until they explore the possibilities coming out of processing X-547, therefore, in order to come to a decision making position the management will need to know the variable cost of processing X-547, making it relevant in the decision.

3- The avoidable fixed costs of processing X-547 into Xylene:

There is sometimes a fear (i.e fear of increase in step-fixed costs as a result of processing a product or fear of loss of control over costs) felt by the management when trying to process certain products for further development therefore those fixed costs which can be avoided during processing X-547 can also influence (i.e encourage) the decision of further processing X-547, making it relevant.

4- The selling price of Xylene:

The last but not the least, the selling price of Xylene. If the management finds that if X-547 is further processed into Xylene and it sells at a highly favorable/lucrative price, creating a huge margin for them then definitely they would be encouraged to taking the decision of further processing it.

5 0

3 years ago

The adjusted trial balance for Chiara Company as of December 31 follows.

faust18 [17]

Answer and Explanation:

The preparations are presented below:

a. For income statement

Chiara Company

Income statement

For the year ended Dec 31

Revenues

Fees earned $544,000

Interest earned $30,000

Total revenues $574,000

Less: expenses

Depreciation expense - Automobiles $26,000

Depreciation expense- Equipment $20,000

Salaries expense $187,000

Wages expense $43,000

Interest expense $32,200

Office supplies expense $34,200

Advertising expense $63,000

Repairs expense - Automobiles $25,200

Total expenses ($430,600)

Net income $143,400

b. For a statement of retained earnings

Chiara Company

Statement of retained earnings

For the year ended Dec 31

Beginning balance of retained earnings $257,220

Add: Net income $143,400

Less: Dividend -$45,000

Ending retained earnings balance $355,620

c. For balance sheet

Chiara Company

Balance sheet

For the year ended Dec 31

Liabilities & equity Amount Assets Amount

Liabilities & equity Cash $132,400

Accounts payable $98,000 Accounts receivable $50,500

Interest payable $20,000 Interest receivable $20,800

Salaries payable $22,000 90 days notes receivable $171,000

Unearned fees $28,000 Office supplies $16,500

Long-term notes payable $144,000 Automobiles 169,000

Common stock $26,580 Less:

Retained earnings $355,620 Accumulated depreciation

Automobiles $ 80,000 $89,000

Total liabilities & equity $694,200 Equipment 140,000

Less:

Accumulated depreciation

Equipment 23,000 $117,000

Land $79,000

Total assets $694,200

3 0

3 years ago

just paid its annual dividend of $1.15 per share. The required return is 12.3 percent and the dividend growth rate is 0.75 perce

IceJOKER [234]

Answer:

P5 = 10.41

Explanation:

To calculate the stock value with dividends for the fifth year the following formula would be used:

$P5 = \frac{Div_{0} * (1 + g)^{6} }{(r-g)}$

Where:

$Div_{0} =$ The first Dividend Paid.
G = Growth Rate.
R = Required Return.

Given Data:

$Div_{0} =$ $1.15

Growth Rate = 12.3%

R = 0.75%

P5 = ?

Substituting the values in the formula

$P5 = \frac{1.15 * (1 + .0075)^{6} }{(12.3-.0075)} = 10.41$

7 0

3 years ago

You have been managing a $5 million portfolio that has a beta of 1.05 and a required rate of return of 9.775%. The current risk-

Lilit [14]

Answer:

9.62%

Explanation:

Re = Rf + (B x Rp)

Re = cost of equity = 9.775%

Rf = risk free rate = 4%

B = beta = 1.05

Rp = risk premium = ?

Rp = (Re - Rf) B = (9.775% - 4%)/1.05 = 5.5%

Re portfolio = Rf + {Rp x [(B₁ x $5/$5.5) + (B₂ x $0.5/$5.5)]}

Re portfolio = 4% + {5.5% x [(1.05 x $5/$5.5) + (0.75 x $0.5/$5.5)]}

Re portfolio = 4% + {5.5% x [0.9545 + 0.0682]}

Re portfolio = 4% + 5.6249% = 9.62%

6 0

3 years ago

In the case of oligopolistic markets, self-interest makes cooperation difficult and it often leads to an undesirable outcome for

Tanya [424]

Answer: True

Explanation:

An Oligopolistic market is one where the suppliers are very few in number. Cooperation is indeed difficult in such markets as they are motivated by self-interest to try to make more profits than their competitors.

This usually leads to an undesirable outcome. For instance, if two oligopolistic firms agree on a price to sell goods, one of them might decide to sell at a lower price in order to gain more market share. This will cause the other firm to reduce its prices as well which means that both companies would be worse off than when they started.

7 0

3 years ago