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SVETLANKA909090 [29]
3 years ago
7

The following is a free response question released by the College Board from a previous AP exam to be used as practice for futur

e exams. You can complete the assignment in this document, using the drawing tools in Word (or any photo editing program) or print this document, and complete the activity by hand, submitting a scan or photo of your work. When you are done, submit the assignment for grading by your instructor. This question will be graded out of 7 points.
1. Assume that two firms are operating with identical cost schedules, but one firm is in a perfectly competitive industry and the other is in a monopolistically competitive industry.

(a) Using two correctly labeled graphs, show the long-run equilibrium price and output levels for each of these two firms.

(b) Compare the long-run equilibrium price and output levels for these two firms.

(c) What level of economic profit will each firm earn in the long run? Why do these results occur?

(d) For each of the two firms at the equilibrium quantity, indicate whether the firm’s demand curve is perfectly elastic, inelastic, unit elastic, inelastic, or perfectly inelastic. How can you tell?

Business
1 answer:
astraxan [27]3 years ago
5 0

<u>Solution and Explanation:</u>

(a). Firm in perfect competition produces at minimum efficient scale, MEC where average cost AC is minimum. The price is determined by the market supply and demand.

(b) Note that q1 is at the minimum of AC while Q* is to the left of q1. Similarly, P1 is equal to MC while P* is higher than MC. This shows that firms in perfect competition produce more and charge less than the firms in monopolistically competitive market.

(c) All firms in monopolistically competitive market as well as perfectly competitive market earn zero economic profit in the long run. This is because there is a free entry and exit

(d) Demand is steeper for firms in monopolistically competitive market so that demand is elastic. Demand is horizontal for any quantity which means it is perfectly elastic for a firm in competitive market.  

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During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On
statuscvo [17]

Answer:

c. Kena recognizes a gain of $30,000

Explanation:

cash  650,000 debit

  land 250,000 credit

  gain at disposal 350,000 credit

liabilities 500,000 debit

        cash        500,000 credit

Then, the company will close all account and leave kena account with a capital of 150,000 to mathc the remaining 150,000 cash

as her basis is 120,000 there will be a gain for 30,000

4 0
2 years ago
Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders? A base sa
lianna [129]

Answer:

A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years

Explanation:

This options will force the employee to stay in the firm for at least 5 years

Also it will tie his contribution to the market share

So their interest will be alinged with the company's interest of increasing his value and project better earnings through the five years program.

3 0
2 years ago
FunnyTime Products uses humor in its ads to communicate with its fun-loving consumers. What type of ads does FunnyTime Products
pashok25 [27]

Answer: (C) Emotional

Explanation:

 The emotional advertisement is one of the type of emotional based appeal advertisement process that helps in communicating with the customers or consumers.

The emotional based advertisement include all the types of emotions so that the customers feel connected with the brand and the products in the market.

According to the given question, the Funny-time products  is basically using the emotional advertisement for communicating with the fun-loving customers. Therefore, Option (C) is correct answer.    

7 0
2 years ago
Frank noticed that Anna missed making their monthly sales quotas at a large auto dealer. He thinks this happened because she lac
masha68 [24]

Answer: Fundamental attributional error.

Explanation:

Frank is making a fundamental attributional error when judging the cause of Anna's inability to meet sales target. Frank is blaming her failure based on her character rather than on the real reason which is the attractive sales offer of their competitors. Fundamental attributional error is an error which arises from judging a person's action based on their character without considering other possible external causes.

8 0
3 years ago
All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's an
bearhunter [10]

Answer:

1) adjusting entries

a. On September 1 of the current year, Zimmerman collected six months' rent of $8,520 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,520.

Dr Unearned rental revenue 5,500

    Cr Rental revenue 5,500

b. On October 1 of the current year, the company borrowed $13,200 from a local bank and signed a one-year, 12 percent note for that amount. The principal and interest are payable on the maturity date.

Dr Interest expense 396

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Dr Depreciation expense 3,000

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Dr Unearned service revenue 600

    Cr Service revenue 600

e. On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,960, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount.

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f. The company earned service revenue of $4,200 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year. No entry has been recorded.

Dr Accounts receivable 4,200

    Cr Service revenue 4,200

g. At December 31 of the current year, wages earned by employees totaled $13,700. The employees will be paid on the next payroll date in January of the next year.

Dr Wages expense 13,700

    Cr Wages payable 13,700

h. On December 31 of the current year, the company estimated it owed $490 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year.

Dr Property taxes expense 490

    Cr Property taxes payable 490

2) Assets     = Liabilities + Stockholders’     Revenues - Expenses = Net

                                          Equity                                                          Income

a.    na               -                    +                           +               na                +

b.    na               -                    -                           na              -                   -

c.     -               na                   -                           na              -                   -

d.    na               -                    +                           +               na                +

e.     -               na                   -                           na              -                   -

f.      +              na                   +                           +               na                +

g.    na              +                    -                            na             -                   -

h.    na              +                    -                            na             -                   -

5 0
3 years ago
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