Answer:
a. Accounting profit for the business = $3,500
b. Economic loss = $1,000
c. The two friends can open the business and incur economic loss of $1,000 in the first year of operation. In subsequent years, the revenue may increase to generate better economic profit. This is the labor, risk, and reward of entrepreneurship.
d. If the two friends do not go ahead with the business because of the economic loss they suffer in the first year of operation, then they cannot be regarded as entrepreneurs. They are merely laborers who cannot assume any risk for greater rewards tomorrow.
Explanation:
Cost of business per month:
Operating expenses = $4,000
Lease of building = 2,000
Total expenses = $6,000
Revenue = $10,000
Accounting profit $4,000
Economic profit:
Revenue = $10,000
Total expenses = $6,000
Opportunity costs:
Lost salaries 4,500
Lost Interest 500
Total costs $11,000
Economic loss = $1,000
<span>An elasticity of 2 means that a 1% increase in price will cause a 2% decrease in demand.
Change in price in % = (20 - 16) / 20 * 100 = 4/20 * 100 = 20%. So there's a 20% decrease in price (from $20 to $16)
A 20% decrease in price will result in a 40% increase in demand since elasticity equals 2.
So 40/ 100 * 190, 000 = 76, 000
Hence since there's an increase in demand the people will make 190, 000 + 76, 000 = 266, 000</span>
Answer:
d. $91,250
Explanation:
We can calculate variable costs by using the contribution margin ratio formula.
Contribution Margin Ratio= Sales revenue Less Variable Costs/Sales revenue
45%= $ 425,000- Variable Costs / $ 425,000
45% * $425,000= $ 425,000 -Variable Costs
$ 191250= $ 425,000- Variable Costs
Variable Costs = $ 425,000- $ 191250
Variable Costs = $ 233750
Sales $ 425,000
Variable Costs 233750
Fixed Costs= $ 100,000
Income from Operations= $ 91250
Answer: (2) Conformity
Explanation:
The conformity is one of the principle value and it basically refers to the behavior, attitude and the beliefs for the social and the political group.
The term conformity is basically used to describe the person behavior and also beliefs so that the person are able to fit in the specific groups.
It is the process of matching the norms that are implicit and shared by the individual groups for the interaction and this principle value are adversely affected.
Therefore, Option (2) is correct.
Answer:
D. The threat of takeovers tends to reduce potential conflicts between stockholders and managers.
Explanation:
As with the threat of takeover, there comes the risk of losing control, power, monetary benefits, the stockholder's tend to agree with managers, and the manager's tend to agree with stockholders.
As both aims for no takeover of the company, both work in for each other, agreeing to the suggestions placed.
There is no dis-regard to any of the suggestions paid by any of the party. This threat actually creates moral harmony and unity among stakeholders and management.
Therefore, correct answer is:
D. The threat of takeovers tends to reduce potential conflicts between stockholders and managers.
