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A firm in a perfectly competitive market has a fixed cost of $1,000 and a variable cost of $500 while it is earning the revenue

grin007 [14]

Answer:

Firm should not shut down, as it is able to cover its Average Variable Cost

Explanation:

Perfect Competition firms in Short Run : The firms produce even if their average revenue (price) < their average total costs (AC). They continue production until Average variable cost (AVC) ≥ per unit price (P) i.e average revenue (AR). This is called Shut Down Point. P lower beyond AVC implies that firm won't continue even in short run.

Given : Variable Cost (VC) = 500 ; Revenue (R) = 510

Average Variable Costs & Average Revenue are variable costs & revenue, per unit quantity. AVC = VC / Q ; AR (P) = R / Q

R i.e 510 > VC i.e 500

So, R/ Q i.e AR is also > VC / Q i.e AVC

Since AVC > AR (P), firm should not shut down

8 0

3 years ago

Jasper makes a $44,000, 90-day, 9% cash loan to Clayborn Company. Jasper's entry to record the collection of the note and intere

vovikov84 [41]

Jasper's entry to record the collection of the note and interest at maturity should be:

Debit Cash Account 44,990

Credit Interest Income $990

Credit Notes Receivable $43,000

The amount collected is:

Cash collected

= $44,000 Amount lend + Interest Income

And

Interest Income

= Amount lend * Interest Percent * For the days / 360

= $44,000 * 9% * 90 / 360

= $990

Now putting the interest income value in the above equation, we have:

Cash collected

= $44,000 Amount lend + $990

= $44,990

So the cash is increase by $44,990 interest income increased is by $990 and the Note receivable is at amount issued which has been decreased by $44,000.

Learn more about Journal entry here: brainly.com/question/14972126

#SPJ1

3 0

2 years ago

An individual who wants to earn a living from a new business endeavor has decided to start his business as a not-for-profit orga

skad [1K]

Answer:An incorporated business that puts all of its profits back into the business is a corporation. They are used by those common people and it can help the others who need the money. This will secure that the funds of these corporation will be shared also into its members incase of emergency.

6 0

2 years ago

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with 2 risky securities, X

Leokris [45]

Answer:

% in T bills = 18.92%, % in P = 81.08%

Explanation:

Portfolio return = Weighted average return

Return of portfolio P = 0.14*0.6 + 0.10*0.4

Return of portfolio P = 0.124

Let % money in T bills be x

0.11 = 0.05*x + 0.124*(1-x)

0.11 = 0.05x + 0.124 - 0.124x

0.014 = 0.074x

x = 18.92%

Hence, % in T bills = 18.92%, % in P = 81.08%

3 0

3 years ago

US GAAP and IFRS differ on treatment of impairment of tangible assets as follows:

erik [133]

Answer:

A. IFRS, tangible assets are tested only when factors suggest impairment.

Explanation:

The tested of the tangible assets would be based on some kind of changes that are change in the market value, chnage in the technology, rise or reduction in the rate of interest in the market etc

In addition to this, the intangible assets such as goodwill would be testes on annually basis

Therefore the first option is correct

7 0

3 years ago