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Debora [2.8K]
3 years ago
10

The sticky-price theory helps explain what feature of the aggregate demand and aggregate supply model?

Business
1 answer:
zhuklara [117]3 years ago
7 0

Answer:

The stick price theory helps to explain the upward sloping shape of the aggregate supply curve.

Explanation:

The price tends to be sticky for a number of reasons.  

  1. Firms will need to incur menu costs if they constantly change prices
  2. Frequent change in prices may annoy the customers
  3. The wage rates remain the same even after change in price because the  wages are based on contracts

The short-run aggregate supply curve is upward sloping because of the stickiness of price, there is a positive and direct relationship between output and price. Due to the high expected price level in the short run, the firms will expect the input prices to rise along with an increase in the product price.  

To counter the increase in inputs price, the product price is kept high. The higher price provides motivation to produce more. That's why the short-run aggregate supply curve is upward sloping.

You might be interested in
Equinox Products Inc. Income Statement For the Year Ended December 31, 20Y8
Umnica [9.8K]

Answer and Explanation:

The preparation of the income statement is presented below:

                                     Equinox Products Inc.

                                        Income Statement

                     For the Year Ended December 31, 20Y8

Sales                                                                                    $5,313,000

Less: Cost of goods sold                                                   -3,700,000

Gross profit                                                                       $1,613,000

Less:

Operating expenses:

Selling expenses:

Sales salaries expense          $385,000

Sales commissions                 $185,000

Advertising expense               $150,000

Depreciation expense-

store buildings and equipment $100,000

Delivery expense $30,000

Store supplies expense $21,000

Miscellaneous selling expense $14,000

Total  -$885,000

Less:

Administrative expenses:

Office salaries expense $170,000

Office rent expense $50,000

Depreciation expense - office buildings and equipment $30,000

Office supplies expense $10,000

Miscellaneous administrative expense $7,500

Total $267,500

Total operating expenses                                                        $-1,152,500

Operating income                                                                       $460,500

Other revenue and expense:

Interest revenue $30,000

Less: Interest expense -$21,000

Income before income tax                                                           $469,500

Less: Income tax                                                                           -$140,500

Net income                                                                                      $329,000

We simply deduct the all expenses and add all revenues so that the net income could come

5 0
3 years ago
Which of the following statements is CORRECT? Question 9 options: The AFN equation for forecasting funds requirements requires o
EastWind [94]

AFN has negative and positive sides. The correct statement is A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed.

  • AFN is known as Projected increase in assets – spontaneous increase in liabilities – any increase in retained earnings.

When the AFN value is negative, it means the action or project that is underwork will bring about extra income for the company, which can be invested in another place.

Additional funds needed (AFN) is known as financial term used when a business intends to widen its operations.

Learn more About AFN from

brainly.com/question/13203205

3 0
2 years ago
You are writing a recommendation report on which vendor of audiovisual services to hire for your company's annual conference. Th
amm1812

Answer:

I suggest you delay your choice until you learn more of Zenith's current management

Explanation:

The management is just a position that doesn't carry the same character. Every manager carries different values and principles and one person might be satisfactory to you while another might not be. The new management may have some characters which might be off-putting to you and might ruin the company's conference. Best to go with what you know than what you don't.

4 0
3 years ago
g a. Provide the journal entry if the investor purchases the assets and assumes the liabilities of the investee company.
iragen [17]

Answer:

Debit : All assets bought at their Fair Value Amounts

Debit : Goodwill (<em>if Payment is greater than Net Assets acquired</em>)

Credit : All liabilities assumed at their Fair Value Amounts

Credit : Method of payment for example cash

Credit : Gain on acquisition (<em>if Net Assets acquired are greater than Payment</em>)

Explanation:

<em>Hi, your question is incomplete, i tried to look for the full question online but i could not find it.</em>

However, below is an explanation to solving the problem.

An acquisition of investee Assets and Liabilities is not a business combination transaction that requires preparation of consolidated financial statements.

A business combination is a transaction or event in which an ACQUIRER obtains CONTROL of one or more Businesses. So, if it is not a business, it is a mere ASSET ACQUISITION transaction.

Thus said, in our question investor purchases the assets and assumes the liabilities of the investee company, this is an Asset Acquisition transaction and not a Business Combination transaction.

The excess of consideration paid over the net assets acquired at fair value is called goodwill and must be recognized. If not the case the excess of net assets acquired over purchase price (gain on acquisition) must be recognized.

<u>Below are the accounting entries to record an Asset Acquisition transaction.</u>

Debit : All assets bought at their Fair Value Amounts

Debit : Goodwill (<em>if Payment is greater than Net Assets acquired</em>)

Credit : All liabilities assumed at their Fair Value Amounts

Credit : Method of payment for example cash

Credit : Gain on acquisition (<em>if Net Assets acquired are greater than Payment</em>)

5 0
3 years ago
Angel Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased b
Licemer1 [7]

Answer:

The hypothetical tax expense =$340,000 with assumption that tax rate is 34%.

Explanation:

The above figure is worked out like this=$1,000,000*34%=$340,000

The hypothetical tax expense is pretax income multiplied with statutory income tax rate.

In our scenario pretax book income is $1,000,000 and tax rate is 34%

Please note that 34% tax rate is assumed as the said rate is not given in question.

6 0
3 years ago
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