1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Maslowich
3 years ago
13

For example, the sticky-wage theory asserts that output prices adjust more quickly to changes in the price level than wages do,

in part because of long-term wage contracts. Suppose a firm signs a contract agreeing to pay its workers $15 per hour for the next year, based on an expected price level of 100. If the actual price level turns out to be 110, the firm's output prices will
Business
1 answer:
djverab [1.8K]3 years ago
8 0

Answer:

The firm's output prices will increase, because will the firm can quickly adjusts the prices of goods to the new price level of 110, it will not have to do so with wages, since wages are fixed by a year contract.

This will result in comparatively lower labor costs with higher prices at the same time, which will likely result in more economic and accounting profit for the firm.

The opposite effect will be felt by workers, whose wage is not keeping up with inflation, meaning that their income is losing purchasing power.

You might be interested in
What are the portfolio weights for a portfolio that has 138 shares of Stock A that sell for $48 per share and 118 shares of Stoc
Vika [28.1K]

Explanation:

The portfolio weight of an asset is the total investment in that asset divided by the total portfolio value. First, we will find the portfolio value, which is:

Total value = 122($32) + 102($22) = $6,148

The portfolio weight for each stock is:

WeightA = 122($32) / $6,148 = .6350

WeightB = 102($22) / $6,148 = .3650

7 0
3 years ago
Johnny Cake Ltd. has 30 million shares of stock outstanding selling at $40 per share and an issue of $40 million in 8 percent, a
erma4kov [3.2K]

Answer:

WACC = 0.16637 OR 16.637%

Explanation:

WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,

WACC = wD * rD * (1-tax rate)  +  wE * rE

Where,

  • w represents the weight of each component based on market value in the capital structure
  • r represents the cost of each component
  • D and E represents debt and equity respectively

To calculate WACC, we first need to calculate the Market value an cost of equity.

The market value of equity = 30 million shares * $40 per share

MV of equity = $1200 million

The cost of equity can be found using the formula for Price today (P0) under constant growth model of DDM.

P0 = D1 / (r - g)

40 = 4 / (r - 0.07)

40 * (r - 0.07) = 4

40r - 2.8 = 4

40r = 4+2.8

r = 6.8 / 40

r = 0.17 or 17%

MV of debt = 40 million * 96.5%  => $38.6 million

Total MV of capital structure = 38.6 + 1200 = 1238.6 million

WACC = 38.6/1238.6  *  0.08  *  (1-0.33)  +  1200/1238.6  *  0.17

WACC = 0.16637 OR 16.637%

4 0
3 years ago
You are comparing three securities and discover they all have identical Treynor ratios. Given this information, which one of the
Ede4ka [16]

Answer: The correct answer is "D. They earn identical rewards per unit of systematic risk.".

Explanation: If you are comparing 3 values and by calculating, find that they all have the same Treynor ratio means that they earn identical rewards per unit of systematic risk.

7 0
3 years ago
1. If the price of the share grows as the company grows, how does buying 25 points
Simora [160]

Answer: b. An investor will be able to sell these shares for a higher price and make a profit.

Explanation:

Capital gains are a way to earn a return from owning stock in a company. They involve buying stock at a certain price and then selling the stock when the price increases. The difference between the selling and the buying prices is your capital gain.

This is the benefit to the investor here. If they buy a stock that grows with the company. They will be able to sell at a higher price eventually such that they will make a capital gain.

6 0
3 years ago
This image shows a receipt from a shoe purchase what is the tax rate for the community in which this purchase was made A. 6.5% B
fomenos

Answer:

Its C

Explanation:

used a sales tax calculator

3 0
3 years ago
Read 2 more answers
Other questions:
  • A characteristic of the market system is:A. Extensive use of direct methods of productionB. A focus on labor, as opposed to capi
    6·1 answer
  • During a recent brainstorming session, one of Franklin's co-workers suggested that their company could sell some of the data con
    10·1 answer
  • If you need to keep track of a large number of published or scheduled messages sent to a variety of social networks, hootsuite _
    12·1 answer
  • ​Ashton is working on a project at PowerTek Inc., a well-known multinational corporation. He is using capital budgeting to estim
    10·1 answer
  • Interest rate​ (with changing​ years). Keiko is looking at the following investment choices and wants to know what annual rate o
    9·1 answer
  • Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected to have a useful life of
    5·1 answer
  • Tanek Corp.'s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company's income statem
    10·1 answer
  • Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would co
    10·1 answer
  • The interior angles of a hexegon are in the ratio 3:3:4:5:6:7. Find; (a) The size of the smallest angle. (b) The size of the lar
    12·1 answer
  • Marie purchases a test to use for customer service representative applicants. The vendor that sells her the test explains that t
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!