Answer:
To maximize profit , the firm should shut down
Explanation:
In this question we are tasked with stating what a firm should do to maximize profits or minimize loss.
In this particular situation, what the firm should do is to shut down. why?
The reason why the firm should shut down is that the price per unit is less than the average variable cost. In the question, we can identify that the price per unit is $3 while the average variable cost is $3.50. We can see that the price per unit is less than the average variable cost from their values.
And hence to minimize loss or maximize profit, what the firm has to do is to shut down its operations
The market price of a security is $50. Its expected rate of return is 14%, and the market price of the security is mathematically given as
MR=27.368
<h3>What will be the market price of the security if its correlation coefficient with the market portfolio doubles?</h3>
Generally, the equation for expected rate return is mathematically given as
RR=(Rf+beta*(Rm-Rf)
Therefore
RR=(Rf+beta*(Rm-Rf)
Beta= (13-7)/8
Beta=0.75
In conclusion, the market price of a security
MR=DPs/RR
Where
Po=DPS/RR'
DPS=40*0.13
DPS=$5.23
and
RR=&+1.5*8
RR=19%
Hence
MR=$5.23/0.19
MR=27.368
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Answer:
Strong form
Explanation:
Efficient market hypothesis states that all information about a set of investment in a market is readily available, so it is impossible to beat the market and make unusual profit.
There are different forms that looks at the availability of public and non public information in the market system and their effect on stock prices.
The strong form of the efficient market hypothesis states that both public and non public information is accounted for in the price of a stock, therefore there is no way an investor can make unusual profit.
If a certain group of stocks have large positive price changes followed by large negative price changes, it is a violation of strong form of the efficient market hypothesis.
Answer:
It is cheaper to produce in-house. Cost savings= $3500
Explanation:
We need to find whether it is better to produce in-house or to purchase to a supplier.
Q= 175000
Produce in house:
Direct Materials $15,000
Direct Labor $5,000
Variable overhead $6,000
Fixed overhead $9,000
Total cost= $35000
Outsource:
Purchase Cost= 175000q*$0.18= $31500
Fixed Cost= (9000-2000)= $7000
Total cost=$38500
It is cheaper to produce in-house. Cost savings= $3500
Answer:
Tariffs and import quotas generally reduce economic welfare.
Explanation:
The vast majority of economists (over 90% according to the University of Chicago) agree that tariffs and import quotas generally reduce economic welfare. This is perhaps the normative statement in which economists agree the most.
The reason why is because tariffs and import quotas only benefit a small fraction of domestic producers, to the dismay of a larger number of consumers who end up having to pay higher prices for consumer goods.
