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pav-90 [236]
3 years ago
6

Suppose the most you would be willing to pay to have a freshly washed car before going out on a date is $8.00. The smallest amou

nt for which you would be willing to wash someone else's car is $5.50. You are going out this evening and your car is dirty. How much economic surplus would you receive from washing it
Business
1 answer:
TiliK225 [7]3 years ago
8 0

Answer:

1. The most you would be willing to pay for having a freshly washed car before going out on a

date is $6. The smallest amount for which you would be willing to wash someone else's car is

$3.50. You are going out this evening, and your car is dirty. How much economic surplus

would you receive from washing it?

The economic surplus from washing your dirty car is the benefit you receive from doing so ($6)

minus your cost of doing the job ($3.50), or $2.50.

2. To earn extra money in the summer, you grow tomatoes and sell them at the farmers' market

for 30 cents per pound. By adding compost to your garden, you can increase your yield as

shown in the table below. If compost costs 50 cents per pound and your goal is to make as much

money as possible, how many pounds of compost should you add?

Pounds

of

compost

Pounds

of

tomatoes

Marginal

Cost

($)

Marginal

Benefit

(pounds)

Marginal

Benefit

($)

Net

Benefits

Marginal

Net

Benefits

0 100 ---- 0 --- 0 ---

1 120 0.50 20 6.00 5.50 5.50

2 125 0.50 5 1.50 6.50 1.00

3 128 0.50 3 0.90 6.90 0.40

4 130 0.50 2 0.60 7.00 0.10

5 131 0.50 1 0.30 6.80 - 0.20

6 131.5 0.50 0.5 0.15 6.45 - 0.35

The benefit of adding a pound of compost is the extra revenue you’ll get from the extra tomatoes

that result. The cost of adding a pound of compost is 50 cents. By adding the fourth pound of

compost you’ll get 2 extra pounds of tomatoes, or 60 cents in extra revenue, which more than

covers the 50-cent cost of the extra pound of compost. But adding the fifth pound of compost

gives only 1 extra pound of tomatoes, so the corresponding revenue increase (30 cents) is less than

the cost of the compost. You should add 4 pounds of compost and no more.

3. Residents of your city are charged a fixed weekly fee of $6 for garbage collection. They are

allowed to put out as many cans as they wish. The average household disposes of three cans of

garbage per week under this plan. Now suppose that your city changes to a "tag" system. Each

can of refuse to be collected must have a tag affixed to it. The tags cost $2 each and are not

reusable. What effect do you think the introduction of the tag system will have on the total

quantity of garbage collected in your city? Explain briefly.

In the first case, the cost is $6/week no matter how many cans you put out, so the cost of

disposing of an extra can of garbage is $0. Under the tag system, the cost of putting out an extra

can is $2, regardless of the number of the cans. Since the relevant costs are higher under the tag

system, we would expect this system to reduce the number of cans collected.

Explanation:

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In the chapter, we used Rosengarten Corporation to demonstrate how to calculate EFN. The ROE for Rosengarten is about 7.3 percen
satela [25.4K]

Answer:

Explanation:

Sustainable Growth:

The maximum growth rate a firm can achieve with no external equity financing while maintaining  a constant debt-equity ratio is known as Sustainable Growth Rate. It is the maximum rate of  growth a firm can maintain without increasing its financial leverage.

The formula for finding out the sustainable growth rate is:

sustainable\, grwth\, rate=\frac{ROE \times b}{1-ROE \times b}

Where

ROE — Retum On Equity

b — plowback or retention ratio

ROE is the product of profit margin, total asset turnover and equity multiptier.

External Financing Needed (EFN) is the increase in assets minus the addition to retained

earnings.

EFN = Increase in assets - Addition to retained earnings

The increase in assets is the product of the beginning assets and the growth rate.

Increase in assets = Beginning assets x growth rate

The addition to the retained earnings next year is the product of current net income and the

retention ratio and one plus growth rate.

Addition to retained earnings = Current net income x retention ratio x(1+ growth rate)

The ROE of Rosengarten Corporation is 7.3%, plowback ratio is 67%. Then, the sustainable  growth rate is 5.14% only. The question is whether a growth rate of 25% can be used to calculate  the EFN (External Funds Needed).

The growth rate of 25% can be used to calculate the EFN. The sustainable growth rate formula is

based on two assumptions that the company does not want to sell new equity, and that the  financial policy is fixed. If the company rises outside equity, or increases its debt-equity ratio. it  can grow at a higher rate than the sustainable growth rate.

A firm's ability to sustain growth depends on the following four factors:

1. Profit Margin: An increase in profit margin will increase the firm's ability to generate funds

internally and thereby increase its sustainable growth.

2. Dividend policy: A decrease in the percentage of net income paid out as dividends will

increase the retention ratio. This increase internally generated equity and thus increases

sustainable growth.

3. Financial policy: An increase in the debt-equity ratio increases the firm’s financial leverage.

Since this makes additional debt financing available, it increases the sustainable growth rate.

4. Total asset turnover: An increase in the firm's total asset turnover increases the sales  generated for each dollar in assets. This decreases the firm’s need for new assets as sales grow  and thereby increases the sustainable growth rate. The increasing total asset turnover is the

same as decreasing capital intensity.

The sustainable growth rate illustrates the explicit relationship between the firm's four major  areas; its operating efficiency as measured by profit margin, its asset use efficiency as measured  by total asset turnover, its dividend policy as measured by the retention ratio, and its financial  policy as measured by the debt-equity ratio.

Thus, the company could also grow faster when its profit margin increases, it it changes its dividend policy, by increasing the retention ratio or by increasing its total asset turnover.

7 0
2 years ago
Carroll Corporation has two products, Q and P. During June, the company's net operating income was $25,000, and the common fixed
Firlakuza [10]

Answer:

Option (d) is correct.

Explanation:

Total Segment Margin = Net Operating Income + common fixed expenses

                                       = $ 25,000 + $ 37,000

                                       = $ 62,000

Total Segment Margin = Segment Margin of Q + Segment Margin of P

$ 62,000 = $ 21,000 + Segment Margin of P

or Segment Margin of P = $ 62,000 - $ 21,000

                                         = $ 41,000

4 0
3 years ago
According to the principles of scientific management, the best way to improve productivity is to Multiple Choice give employees
Korolek [52]

The best way to improve productivity would be to find the best method of doing each job, then teach those methods to employees.

<h3>What is productivity?</h3>

In the business environment, the notion of productivity has to do with the ability of employees to carry out tasks in the work environment in a more efficient, faster and better way.

To increase productivity, it is important that the workers are taught the best way to carry out their jobs.

Read more on productivity here:brainly.com/question/2992817

5 0
2 years ago
Assume that skilled labor costs twice as much as unskilled labor, a profit-maximizing firm will
N76 [4]

Assume that skilled labor costs twice as much as unskilled labor, a profit maximizing firm will hire until the marginal product of unskilled labor is half that of skilled labor.

A profit maximizing firm is a firm that tries to create products that are of good quality at the barest or smallest cost.

The marginal product falls after an additional amount of the resource has been added. It is the extra amount that is gained due to the addition of an extra unit.

Due to the fact that both the skilled and unskilled would decrease eventually, the company would have to hire both at equal marginal products.

Read more on brainly.com/question/25706143

4 0
2 years ago
The Finishing Department of Parker and King​, ​Inc., the last department in the manufacturing​ process, incurred production cost
Ymorist [56]

Answer:

transferred-out 135,000

Explanation:

We solve using the following identity:

beginning WIP + cost added during the period:

total cost to be accounted for.

Then this value can be either ransferred-out r remain at the ending WIP

so we construct as follows:

beginning                     0

added                180,000

Total cost           180,000

ending             <u>  (45,000)  </u>

transferred-out 135,000

3 0
3 years ago
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