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3 years ago

If a firm is making an economic profit of zero:__________.

Business

1 answer:

kati45 [8]3 years ago

6 0

Answer:

The correct answer is letter "D": the firm should change to a different line of business.

Explanation:

Economic profit is the difference between the revenue a firm earns from sales and the firm's total opportunity costs. It is important to distinguish between accounting profit and economic profit. Accounting profit is total revenue minus the explicit costs of producing goods or services. Economic profit includes the opportunity costs a company losses or gains by choosing a route to pursue revenue. If a firm has an economic profit of zero, it implies the company should start looking for alternative ways to generate income.

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Question 7 of 10

joja [24]

Answer:

B. the set of plans for product, price, place, and promotion that the marketer will use

4 0

2 years ago

Use the following information to answer this... Use the following information to answer this question. Windswept, Inc. 2010 Inco

prisoha [69]

Answer:

The Quick ratio: 0.86:1

Explanation:

The question is completed first as follows:

Windswept, Inc. 2009 and 2010 Balance Sheets ($ in millions) 2009 2010 2009 2010 Cash $ 270 $ 300 Accounts payable $ 1,530 $ 1,485 Accounts rec. 1,080 980 Long-term debt 1,140 1,340 Inventory 1,930 1,755 Common stock $ 3,420 $ 3,370 Total $ 3,280 $ 3,035 Retained earnings 680 930 Net fixed assets 3,490 4,090 Total assets $ 6,770 $ 7,125 Total liab. & equity $ 6,770 $ 7,125 What is the quick ratio for 2010?

Solution:

The requirement is to use the given information to calculate Windswept Inc's Quick ratio for 2010.

Quick ratio: this represents the ability of an organisation's short term liquidity to cover and cater for its short term obligation. Basically, it looks at the ratio of the current assets of an organisation (those that can be quickly converted to cash) to meet the current liabilities.

The formula for quick ratio= Current Assets - Inventory / Current Liabilities

Windswept's quick ration = Cash + Accounts receivable / Accounts Payable (all for 2010)

= $300 + 980 / $1, 485

= $1,280/$1,485

= 0.86:1

This means that the current asset of the company can only cover its current obligations up to about 86%. This is the quick ratio.

5 0

3 years ago

The gross increases in retained earnings attributable to business activities are called

insens350 [35]

They are called revenues.

3 0

3 years ago

Touchtech earns revenue when edison purchases 100 shares, even if he purchases them from an existing shareholder.

Strike441 [17]

Answer:

A. An increase in the perceived profitability of Touchtech will likely cause the value of Edison's shares to rise.

B. Expectations of a recession that will reduce economy-wide corporate profits will likely cause the value of Edison's shares to decline

Explanation:

The price of the stock changes only because of the changes in the profitability of the firm. If the company is earning lower profits then the prices of the stock will fall and vice versa. So the option A is correct because increase in profitability increases the value of the shares.

So the main thing here is the profitability of the firm which is affected by the recession in the economy because during the recession period the profitability of the firm decreases and so the value of the stock decreases. So the option B is correct

6 0

2 years ago

Explain the difference between fixed and variable costs and give two examples of each. Can a company budget for variable costs?

galben [10]

Answer:

Fixed cost in an organization does not change and is fixed while the variable cost keep changing if the production is increased.

Explanation:

Fixed cost are said to be that cost which does not change with production level for a certain limit. Let us suppose there is no change in the rent amount if we have only factory for the production of goods.

But the variable cost are those cost which increases as production increases. More will be the variable cost when the production will be more. Also for per unit basis, the variable cost remains the same.

Fixed cost are not important in decision making if there is an excess of capacity available.

For example,

Direct labor, direct material -- variable cost

Salary of supervisor, rent of factory -- fixed cost

Even though there is not much change in the variable cost, like for suppose material price increases, a company can still make a budget that is based on the past experience and predicting the market prices. Similarly, if there is a machine that uses three units of direct material for a piece if finished product, which is not going to change in the future. Thus the company can make a budget.

5 0

3 years ago