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11111nata11111 [884]
3 years ago
9

Suppose all the producers sell toasters through Wal-Mart, and WalMart lets producers choose from 2 options. With Option A, a pro

ducer sells a toaster at $49 but has to offer a free warranty to the consumer. With Option B, a producer sells a toaster at $10 without any warranty. A free warranty means that if a customer's toaster breaks, then she can return it and the producer must give her a full refund. (The returned good is of no use to anyone and will be dumped.)
a. Which option will a low-quality producer choose, A or B? Justify numerically.
b. Which option will a high-quality producer choose, A or B? Justify numerically.
c. Will offering a free warranty send a useful signal to the consumer in this case? Why?
Business
1 answer:
Marta_Voda [28]3 years ago
3 0

Answer:

see explaination

Explanation:

1. A low-quality producer will not provide any warranty, because he knows there will be more warranty claims.

He will choose option B.

Example:

Option B:

Toaster sell 100

Price $10

Sales = $1000

Profit = $100 (let's say it costs him $9 to make it).

Toaster sell 35 (as 5 times high price).

Price $49

Sales = $1725

Warranty Expense (let's say, due to multiple times claims) = $1500

Profit = -$90 (let's say it costs him $9 to make it).

2. A high-quality producer will provide any warranty because he knows there will be very very few warranty claims.

He will choose option B.

3. Yes, the act of offering free warranty will go a long way in conveying a positive signal to customers that the brand is providing quality product & it trusts its product.

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At the beginning of the tax year, Barnaby's basis in the BBB Partnership was $50,000, including his $5,000 share of partnership
drek231 [11]

Answer:

$62,000

Explanation:

Calculation to Determine Barnaby's basis at the end of the tax year

Using this formula

Ending tax year Barnaby's basis in the partnership=[BBB Partnership basis+( Share of debt-Share of partnership debt)+ Share of Partnership's income +Share of partnership's nontaxable income-Cash distributions]

Let plug in the formula

Ending tax year Barnaby's basis in the partnership =$50,000 + ($8,000-$5,000) + $20,000 + $1,000 - $12,000

Ending tax year Barnaby's basis in the partnership =$50,000 + $3,000 + $20,000 + $1,000 - $12,000

Ending tax year Barnaby's basis in the partnership = =$62,000

Therefore Barnaby's basis at the end of the tax year will be $62,000

5 0
3 years ago
Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If
TiliK225 [7]

Answer:

1. C. $33.76 per share

2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return

3. 8.25% ; $35.62 ; 5.5%

Explanation:

1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.

The formula is;

Value = Next Dividend / (Required Return - Growth rate)

Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)

Value = 2.7852/8.25%

Value = $33.76

2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.

3. At Equilibrium, the stock dividend is growing as it should.

Dividend Yield should therefore be;

= Next Dividend / Stock Value * 100

= (2.7852 / 33.76) * 100

= 8.25%

Stock Price should grow at the growth rate so;

= 33.76 * ( 1 + 0.055)

= $35.62

Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.

5 0
3 years ago
Salon Products recently introduced a new all-natural shampoo. Logan, director of new product development, has just reviewed the
diamong [38]

Answer:

Acknowledge the team for their effort.

Explanation:

By acknowledging the effort of the team that worked on the shampoo, the members of the team are encouraged and motivate, knowing that their efforts are accepted. After so doing, Logan can now tell the team about the dismal results which isn't supposed to have happened and the motivation earlier would have let the team members open to innovation.

Cheers.

3 0
3 years ago
Ruth is a mother of two, loves to travel, is a member of a book club, enjoys jogging, likes to wear the latest fashions, and is
Margaret [11]

Answer:

(A) A component lifestyle.

Explanation:

Component lifestyle:-It is choosing goods and services that fulfills one's various needs and interests rather than following a single, traditional stereotype.

So according to the question Ruth is a person having various interests and also a police officer by profession.So she has very diverse needs and interest and they affects her choice of goods and services because she wants goods and services that meet's her diverse needs.So her lifestyle is component.

5 0
3 years ago
what recognizes the potential for valuable innovations to be launched from lower organizational levels and diverse locations, in
Mazyrski [523]

what recognizes the potential for valuable innovations to be launched from lower organizational levels and diverse locations, including merging markets, is known as:

"Reverse Innovation."

This is because reverse innovation is a type of innovation in which the product is originally innovated for poor neighborhoods such as developing regions, then repackaged in a way that is then sold to the rich neighborhoods such as developed regions.

Reverse innovation is a term originally coined by Vijay Govindarajan and Chris Trimble.

They claimed that reverse innovation is a kind of bottom-up innovation strategy whereby the products designed for poor areas are then redefined and sold to the rich areas.

Hence, in this case, it is concluded that the correct answer is "Reverse Innovations."

Learn more here: brainly.com/question/17931211

4 0
3 years ago
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