This question is incomplete. The complete question should be:
Suppose the market for cars is unregulated. That is, car prices are free to adjust based on the forces of supply and demand.
If a shortage exists in the car market, then the current price must be ____ than the equilibrium price. For the market to reach equilibrium, you would expect ______.
Answer:
If a shortage exists in the car market, then the current price must be <u>lower</u> than the equilibrium price. For the market to reach equilibrium, you would expect <u>buyers to pay higher prices.</u>
Explanation:
When demand is equal to supply in a market, the the market is said to be at equilibrium.
In a market for cars, the equilibrium price is the price at which cars are sold when demand for cars equals the supply of cars into the market.
If the price of cars in the market drops lower than the equilibrium price, <u>then there will be an increase in demand for cars. Without a corresponding increase in supply of cars, the market will experience a shortage of cars.</u>
For the market to reach equilibrium, prices will have to rise and car buyers will have to pay higher prices.
Question
Monty Manufacturing builds playground equipment that it sells to elementary schools and municipalities. Monty's management has contracted you to perform a variance analysis on the fixed manufacturing overhead for its line of slides. Monty's cost accounting team informs you that it allocates fixed overhead based on machine hours. This period production was budgeted at 35
0 slides
. Budgeted and actual production data follows:
Standard fixed overhead cost per machine hour $5.00
Standard machine hours per slide 9
Actual production 390
Actual fixed overhead cost $20,000
What is the fixed manufacturing overhead volume variance in this period?
Answer:
Fixed overhead volume variance $1800 Favorable
Explanation:
Standard fixed cost per unit = cost per hour × standard hours
= $5.00 ×9 = $45
Units
Budgeted production unit 350
Actual production unit <u>390</u>
Volume variance in (units) 40
Standard fixed over cost per unit <u>× $45</u>
Fixed overhead volume variance <u> 1800 </u>Favorable
Fixed overhead volume variance $1800 Favorable
The statement above is FALSE.
Loews conglomeration is into many businesses including hotels, insurance, watches, oil, gas, tobacco, etc. The diversification strategy of the company is to buy up firms that are in financial mess, turn them into profitable ventures and then sell them at a premium. They also diversified by investing into new business fields.
Answer:
a. How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? Briefly discuss.
Brian: 5 hours for PowerPoint and 5 hours for the calculations, total 10 hours.
Debbie: 10 hours for PowerPoint and 6 hours for the calculations, total 16 hours.
In total they would spend 26 hours combined.
If they divide the work equally, they will spend too much time.
b. How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? Briefly discuss
Brian will spend 10 hours doing PowerPoint slides and Debbie will spend 12 hours doping calculations. Total time spent 22 hours. By specializing they will save 4 hours.
c. If Brian and Debbie have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides? Briefly discuss
Yes, Debbie could pay $50 to Brian so that he does everything in 20 hours. That way they can save 2 more hours.
ANSWER: For any producer to gain and maximize profit, they can lower the costs of production and revenues should be greater than the cost. So, the options would be
B) They can work to decrease their marginal cost.
C) They can raise prices to increase marginal revenue.
E) They can keep marginal costs below marginal revenues.
All these factors will either lead to increased revenue and lower costs or only keep the costs low thus maximizing profit.
