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mars1129 [50]
3 years ago
9

A price ceiling means that:

Business
1 answer:
Naddika [18.5K]3 years ago
5 0

Answer:

The most accurate answer in the list is:

government is imposing a legal price that is typically below the equilibrium price. (B.)

Explanation:

when you thing of Price ceiling, it would help to think of the literal ceiling in a house. The ceiling is the highest point anything inside the house can get to, nothing goes beyond the ceiling. Similarly in a market, the price ceiling is the highest possible legal price that a product or service can be sold for, and price ceilings are usually interventions of the government or certain companies (resale price maintenance) to protect consumers against excessive price increase as a result of inflation, or a monopolistic ownership of a product. Price ceiling is of advantage to regular consumers, because it ensures the affordability of these products, however, in the long run, price ceilings may be of disadvantage if the government sets unrealistic prices , especially to the economy, producers and the long-run consumers, because it can result to stock crashes, business failures and even economic crisis. Example of price ceiling can be seen in this scenario:

An imaginary town got featured in a popular magazine as a very good tourist destination spot, as a result more tourists visit the town, and as a result the hotel owners in the town increases the prices of hotel bookings from a Price (P1) to a price (P2), before the featuring of the post in the magazine, this increase in price would have caused a decrease in quantity of demand, but the demand kept increasing because more tourists were available to pay, then the locals contacted the law makers and they brought the price down back to its original rate, or even below that rate (equilibrium) and no hotel owner was allowed to charge above that price. This is Price ceiling, this is of advantage, but in the long run, there may not be hotels to be rented again for those who wish to rent , because demand still keeps rising, above supply, and people will be unwilling to build hotels since it is not a profitable venture, and the hotel owners might even go ahead to reduce the quality of their service, to make up for this reduction in price.

On the other hand, the opposite of price ceiling is Price flooring. Here the government sets a minimum maximum price for which a product or service can be sold, to protect the producers and the economy. An example here is in the setting of the minimum wage, which is the lowest amount a long term worker is to be paid in an economy, it is usually set above the poverty line. Also price flooring is implemented on agricultural products too, to encourage farming in an economy.

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Caribbean Reef Software has 8.4 percent coupon bonds on the market with 9 years to maturity. The bonds make semiannual payments
Zepler [3.9K]

Answer:

9.14%

Explanation:

Calculation for YTM

First step is to use financial calculator to find the I which represent Interest rate

FV = 1,000

PMT= 1,000*8.4%/2= 42

N= 9years*2= 18

PV= -955

Hence,

I= 4.57%

Now let calculate YTM

YTM = 4.57%*2

YTM =9.14%

Therefore YTM will be 9.14%

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3 years ago
issues new bonds to fund an acquisition. The face value of the bond is $100 and annual coupon is 6.5%. Further, this bond mature
grandymaker [24]

Answer:

KJ Pharma Corporation

KJ Pharma's after-tax cost of debt is:

= 4.55%.

Explanation:

a) Data and Calculations:

Face value of the bond = $100

Annual coupon rate (cost of debt) = 6.5%

Maturity period of bond = 20 years

Tax rate = 30%

After-Tax Cost of Debt = 6.5 (1 - 0.3)

= 4.55%

b) KJ Pharma's after-tax cost of debt is the interest paid on the bond less any income tax savings accounted for as deductible interest expenses. To calculate the after-tax cost of debt, KJ subtracts the company's effective tax rate from 1 and multiplies the difference by its cost of debt.

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From the list below, select the items that are classified as a materials activity. Select the correct answers. a.Raw materials u
USPshnik [31]

Answer:

A) Raw materials used

B) Raw materials beginning inventory

C) Raw materials purchases

Explanation:

When we are calculating the cost of goods sold, we must calculate total direct   materials used + total direct labor + overhead overhead costs applied.

To calculate how much direct (raw and intermediate) materials are used, we start with our beginning inventory of (raw and intermediate) materials + purchases of (raw and intermediate) materials - ending inventory of raw materials - indirect materials used.

Some industries only calculate raw materials used, but others might include intermediate components in the equation.

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3 years ago
The New York Times (Nov. 30, 1993) reported that "the inability of OPEC to agree last week to cut production has sent the oil ma
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Answer: The correct answer is a. true.

Explanation: If there is a supply glut and demand is falling, there will definitely be a fall in price. The same principle applies if Organization of Petroleum Exporting Countries (OPEC) disagree to cut production, price for domestic crude oil would fall.

The scenario above is similar to the recent happenings regarding the impacts of coronavirus on global economy and is very fresh in our memories. According to the TheNation Newspapers, "oil prices tanked more than seven per cent at the weekend to their lowest levels since mid-2017 after Russia balked at OPEC's proposed steep production cuts to stabilize prices."

OPEC is proposing a cut in oil production, but if this is not done, the impact on Brent would be devastating as the price would fall further.

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