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3 years ago

In three to four sentences, explain why prices decrease when the market moves from a monopoly to perfect competition?

2 answers:

7 0

When a company has a monopoly on a product, there is no other competition so that producer can price the product however high they want. When there is competition, the product must be priced appropriately or the consumer will go to another option. Additionally, monopolies can result is a lesser quality product.

Readme [11.4K]3 years ago

5 0

Answer:

Prices will decrease when a market moves from a monopoly to a perfect competition mostly due to the fact that different providers of goods will try to outbid the other providers and will for that reason try to provide lower prices; to attract more customers.

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2 years ago

Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Var

yanalaym [24]

Answer:

$1,482 unfavorable

Explanation:

Calculation to determine the variable overhead flexible-budget variance

Using this formula

Variable overhead flexible-budget variance=Variable overhead spending variance Unfavorable + Variable overhead efficiency variance Unfavorable

Let plug in the formula

Variable overhead flexible-budget variance=$1,300 (U) + $182 (U)

Variable overhead flexible-budget variance= $1,482 (U)

Therefore the variable overhead flexible-budget variance is $1,482 unfavorable

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3 years ago

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3 years ago

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3 years ago

The required rate of return on the stock of Knight Titles is 8%. Its expected ROE is 10% and its expected earnings per share thi

tensa zangetsu [6.8K]

Answer: Ke = 8% = 0.08

ROE = 10% = 0.10

Expected EPS = $6

Plowback rate ( b) = 40% = 0.40

Dividend per share (D) = 60%x $6 = $3.60

Po = D(1+g )/ke-g

Po = $3.6(1+0.04)/0.08-0.04

Po = $3.744/0.04

Po = $93.60

The current market price is $93.60

The price-earnings ratio = market price per share/Earnings per share

= $93.6/$6

= 15.6

The correct answer is C

Explanation: The price-earnings ratio is the ratio of market price per share to earnings per share. In this scenario, it is important to obtain the market price per share using the above formula. Thereafter, the market price per share is divided by the earnings per share. There is need to calculate the dividend per share based on the retention rate of 40%. since the retention rate is 40%, the dividend pay-out rate will be 60%. Thus, dividend is 60% of the expected earnings per share. The estimation of growth rate (g) is based on Gordon's growth model, which is g = r x b. r represents return on equity while b denotes the plowback(retention rate).

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3 years ago