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How does a market economy answer the three economic questions?

love history [14]

Answer:

A market economy answers the three economic questions by allocating resources and goods through markets, where prices are generated.

There are two extremes of how these questions get answered. In command economies, decisions about both allocation of resources and allocation of production and consumption are decided by the government. In market economies, there is private ownership of resources—established though property rights—and the factors of production and consumption are all coordinated through markets. In a market system, resources are allocated to their most productive use through prices that are determined in markets. These prices act as a signal for buyers and sellers. Most economies are mixed economies that lie between these two extremes.

In either system, a rational agent would allocate resources and production using marginal analysis. In command economies, this is more difficult to do because without markets, prices fail at being an effective signal.

Explanation:

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7 0

2 years ago

elected data of Islander Company follow: As of December 31, Balance Sheet Data 2017 2016 Accounts receivable $ 500,000 $ 470,000

Nataliya [291]

Answer:

(a) 5.41 times

(b) 3.48 times

Explanation:

(a) Accounts receivable turnover for 2017:

$=\frac{Net\ Credit\ Sales}{Average\ Accounts\ Receivables}$

$=\frac{2,500,000}{462,500}$

= 5.41 times

Working:

$Average\ Accounts\ Receivables=\frac{Sum\ of\ net\ accounts\ receivable\ in\ 2017\ and\ 2016}{2}$

$Average\ Accounts\ Receivables=\frac{475,000+450,000}{2}$

= 462,500

(b) Inventory turnover for 2017:

$=\frac{cost\ of\ goods\ sold}{Average\ Inventory}$

$=\frac{2,000,000}{575,000}$

= 3.48 times

Working:

$Average\ Inventory=\frac{Sum\ of\ inventories\ in\ 2017\ and\ 2016}{2}$

$Average\ Accounts\ Receivables=\frac{600,000+550,000}{2}$

= 575,000

8 0

3 years ago

SME Company has a debt-equity ratio of .57. Return on assets is 7.9 percent, and total equity is $620,000. a. What is the equity

PtichkaEL [24]

Answer:

(i) 1.57

(ii) 12.40%

(iii) $76,898.60

Explanation:

Debt-equity ratio = debt/equity

Hence debt= 0.57 equity

= (0.57 × 620000)

= $353,400

Total assets = debt + equity

= (353400+620000)

= $973400

1. Equity multiplier = Total assets ÷ Equity

= $973,400 ÷ 620,000

= 1.57

3. ROA = net income ÷ Total assets

net income = ($973,400 × 0.079)

= $76,898.60

2. ROE = net income ÷ Total equity

= $76,898.60 ÷ 620,000

= 12.40%(Approx).

7 0

4 years ago

What does the i in the fair test of ethical business communication stand for?

Naya [18.7K]

The i in fair test stands for impact stakeholders.

4 0

3 years ago

Beech Company produced and sold 105,000 units of its product in May. For the level of production achieved in May, the budgeted a

polet [3.4K]

Answer:

Contribution margin 12,500 Fav

Explanation:

Beech Company

Flexible Budget Performance Report

For the Month Ended May 31

Flexible Budget Actual Results Variance

Sales $1,300,000; $1,275,000 25,000 Unfav

Variable costs $750,000: 712,500 37,500 Fav

Fixed costs. $300,000 300,000 -

Contribution margin 250,000 262,500 12,500 Fav

We calculate the Variance by subtracting the actual and the flexible budget amounts. Because actual sales are less the variance is unfavorable and actual costs are also less the variance is favorable.

8 0

3 years ago