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3 years ago

Setting a price ceiling below the equilibrium price can result in:

Business

1 answer:

lana [24]3 years ago

4 0

Answer:

The correct answer is option a.

Explanation:

A price ceiling is an upper limit on the price that could be charged for a product. It is generally imposed to protect consumers and to make necessary items affordable for the people.

A price ceiling below the equilibrium price is called a binding price ceiling. It creates a shortage in the market as at lower prices the consumers will demand more of a commodity but the suppliers will supply less.

Because of the law of demand and law of supply, the quantity demanded will be greater than the quantity supplied at a price that is fixed below the equilibrium price.

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Yvette is a customer of Apexon Bank, which is a member of the FDIC. She currently has a checking account that has $17,371 and a

GaryK [48]

Yvette has a checking account with $17,371 and a savings account with $240,000. Her combined money in Apexon Bank is $257,371.

To know how much of Yvette's money is protected you must note that:
FDIC insures: checking, savings, money market deposits and certificates of deposit. FDIC protects against $250,000 combined.

Since Yvette has $257,371 the FDIC protects against $250,000 of that amount leaving $7,371 unprotected.

4 0

3 years ago

Keller Cosmetics maintains an operating profit margin of 7% and asset turnover ratio of 4.

Yanka [14]

Answer:

A) ROA = 28%

B) ROE = 20%

Explanation:

Requirement A

We know,

Return on Asset = $\frac{Net Income}{Average Total Assets}$

If we break the ROA formula, we can get,

ROA = $\frac{Net Income}{Net Sales}$ × $\frac{Net Sales}{Average total assets}$

We know, Profit margin = Net Income ÷ Net Sales; and

Asset Turnover ratio = Net sales ÷ Average total assets

Therefore, ROA = Profit margin × Asset Turnover

Given,

Profit Margin = 7% = 0.07

Asset Turnover = 4.0

Hence, Return on Asset = 0.07 × 4 = 0.28 = 28%

It shows how assets generate income over a period.

Requirement B

We know,

Return on Equity = $\frac{Net Income}{Stockholders' Equity}$

If we break the formula, ROE = (Asset ÷ Equity) × (Debt Burden) × ROA

Given,

Debt-Equity ratio = 1

We know, Debt-equity ratio = $\frac{Total Debt}{Total Stockholders' Equity}$

As debt-equity ratio is 1, debt = equity

Therefore, assets = 2 times of debt or equity

Debt Burden = Net Income ÷ (EBIT - Interest)

Debt Burden = (EBIT - Interest - Tax) ÷ (EBIT - Interest)

Debt Burden = $(21,000 - 8,200 - 8,200) ÷ $(21,000 - 8,200)

Debt Burden = $4,600 ÷ $12,800

Debt Burden = 0.359375

We have already got ROA from requirement A, ROA = 28% = 0.28

Hence, ROE = (2 ÷ 1) × 0.359375 × 0.28

ROE = 0.20125

ROE = 20%

6 0

3 years ago

Jerrod is relatively new to Xenon Corporation and wants to make sure that he makes a good impression on his coworkers and superv

larisa86 [58]

I think the correct answer for this would be enchancement

6 0

3 years ago

An investor purchases a 12-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of in

marysya [2.9K]

Answer:

Value of the bond = $862.013

Explanation:

The value of the bond is the present value of the future cash receipts expected from the bond. The value is equal to present values of interest payment and the redemption value (RV).

Value of Bond = PV of interest + PV of RV

The value of the bond can be worked out as follows:

Step 1

Calculate the PV of Interest payment

Present value of the interest payment

PV = Interest payment × (1- (1+r)^(-n))/r

Interest payment = $40

PV = 40 × (1 - (1.05)^(-12×2)/0.05)

= 40 × 13.7986

= 551.945

Step 2

PV of redemption Value

PV of RV = RV × (1+r)^(-n)

= 1000 × (1.05)^(-12×2)

= 310.067

Step 3

Calculate Value of the bond

= 551.94567 + 310.067

=862.01

Value of the bond = $862.013

3 0

3 years ago

One bank offers a 2% variable rate loan, while a competitor offers a 3% fixed rate loan over the same period. It is likely bette

vodomira [7]

Answer:

The problem with variable rates is that they vary, i.e., they might unexpectedly increase and the increase might be pretty significant. One of the main factors leading to the Great Recession was the housing bubble and the increase in mortgage interest rates. Normally, interest rates tend to increase, they might sometimes decrease, but generally they only go up and up.

Even though the fixed interest rate might be higher, it will not change and that guarantees that you will always pay the same amount and that you can prepare your personal budget to cover it.

5 0

3 years ago