All categories

3 years ago

When a free-rider problem exists,

Business

1 answer:

Nataly_w [17]3 years ago

4 0

Answer:

C) the market will devote too few resources to the production of the good.

Explanation:

The problem with free riding is that a good or service is used by too many people and paid by only a few, because there is an oversupply of the good or service. But it is too difficult or too expensive to separate those who actually pay form those who don't. Therefore private markets tend to undersupply public goods.

For example, police officers must "serve and protect" everyone, not just the people that pay their taxes. The same applies to the use of public beaches or parks, anyone can use them even without paying for their maintenance.

You might be interested in

A decrease in supply is illustrated by the supply curve shifting to the left or right

ale4655 [162]

Answer:

Left******************

3 0

3 years ago

The money supply increases when the Fed a. lowers the discount rate. The increase will be larger the larger the reserve ratio is

jeka94

Answer: d. lowers the discount rate. The increase will be larger the smaller the reserve ratio is

Explanation: The money supply is given as the total amount of money (bills, coins, loans, credit, and other liquid instruments) in a particular economy (in circulation or in existence).

The Fed has a number of tools for managing the money supply which include: changing the discount rate, changing the reserve requirement, conducting open market operations and redeeming Federal Reserve notes.

Using the discount rate, which is the interest rate the Federal Reserve charges on loans from the Federal Reserve, to increase money supply, the Fed lowers the discount rate which basically increases excess reserves in commercial banks across the economy thus increasing the money supply. The increase in the money supply will be significantly larger the smaller the reserve ratio is.

4 0

3 years ago

An effective minimum wage law can be expected to clear the market for unskilled workers. increase employment for some affected w

RoseWind [281]

Answer:

all of the above

Explanation:

The law related to the effective minimum wage could be predicted for non-skilled workers market, it raised the employment for some workers that are impacted, the number of firms should be increased, it decreased the non-skilled workers hours

So all of the above options is correct as it included all

6 0

3 years ago

a trader creates a long butterfly spread from options with strike prices x, y, and z, where x < y < z, and y is exactly mi

Montano1993 [528]

Answer:

$1006

Explanation:

A long butterfly is created by following these steps

Long 1 call option for strike X ( highest premium say C)

Short 2 call option for Strike Y (premium =C-6.67 )

Long 1 call option for strike Z (premium = C-6.67 - 5.03 = C-11.70 where X<Y<Z

Here, Y-X = Z-Y =$11.70

i) whenever the price at maturity goes below the price of x ( no call option is executed )

payoff = 2*(C-6.67) -C-(C-11.7) = - 13.34 + 11.70 = - 1.64

ii) when the price at maturity is between X and Y, only call with strike X is executed

hence payoff = -1.64 +(P-X) where P is the Price at maturity

p - x = y-x = 11.70

hence maximum payoff = - 1.64 + 11.70 = $10.06

iii) When the price is between Y and Z , only call with strike X and Y are executed.

hence, payoff = -1.64 + (P-X) -2* (P-Y) = -1.64 +( 2Y - X - P) and this value decreases as P increases

the minimum payoff occurs when P=Z

So, maximum payoff = -1.64 + (Z-X) - 2*(Z-Y) = -1.64 + 23.4 - 2*11.7 = -$1.64

iv) When the price at maturity is more than Z , all calls are executed

hence, payoff = -1.64 +(P-X) -2* (P-Y) + (P-Z) = -1.64+(2Y-X-Z)

= -1.64+(Y-X -(Z-Y)) = -1.64+(11.7 - 11.70)

= -$1.64

the maximum payoff occurs when P=Y

considering the four options traded the maximum payoff = $10.06

Finally determine the maximum net gain when 400 options are traded

= 10.06 * 400 / 4

= 10.06 * 100 = $1006

3 0

3 years ago

Krepps Corporation produces a single product. Last year, Krepps manufactured 20,000 units and sold 15,000 units. Production cost

slega [8]

Answer:

Under variable costing, the company's net operating income for the year would be $60,000 lower than under absorption costing.

Explanation:

The computation of the operating income under variable costing is shown below:

But before that following calculations need to be done

Fixed manufacturing overhead per unit is

= $240,000 ÷ 20,000 units

= $12 per unit

Ending Inventory units is

= 20,000 units - 15,000 units

= 5,000 units

Now Cost of ending Inventory deferred under absorption costing is

= 5,000 units × $12

= $60,000

So, the second option is correct

5 0

3 years ago