Answer:
A) production is determined by the interaction of supply and demand.
Explanation:
A pure market economy is an economy where production decisions are made by the forces of demand and supply. there is no intervention of the government in production decisions
Characteristics of a pure market economy
- Private ownership of means of production
- freedom of choice. Producers are free to produce what they desire
- competition among producers
- no government intervention.
Answer:
The correct answer is option a.
Explanation:
Comparative advantage refers to the situation where an individual, firm, or nation can produce a good at a comparatively lower opportunity cost.
It is given here that,
Hank's opportunity cost of producing a bushel of corn = 2 bushels of soybeans
And,
Tony's opportunity cost of producing a bushel of corn = 3 bushels of soybeans
We see that Hank has a lower opportunity costs in the production of corn. So we can say Hank has a comparative advantage in the production of corn. Or in other words, Hank specializes in the production of corn.
Answer:
will not change it prices
Explanation:
Economic profit is the difference between the total income received and the total costs of inputs minus opportunity costs. Opportunity costs will include other implicit costs.
While accounting profit considers the general expenses in calculating profit and loss, economic profit takes into account opportunity costs together with the regular expenses.
If the licensee fee will not affect the economic profit, it implies that the firm profitability will remain the same. The accounting profit, which is what is usually reported in the income statement, will not be significantly affected. Therefore, the company will likely not change its prices.
Answer:
Asset S has $103333 more depreciation expense per year than asset L
Option D is the correct answer.
Explanation:
The straight line depreciation method charges a constant depreciation expense per period throughout the estimated life of the asset. The depreciation expense per year is calculated as follows,
Depreciation expense per period = (Cost - Salvage value) / Estimated useful life of the asset
We first need to calculate the cost of each asset. The cost that is recognized should include all costs incurred to bring the asset to the place and condition of use as intended by the management.
Cost - Asset L = 4000000 + 750000 = 4750000 or 4.75 million
Cost - Asset S = 2000000 + 500000 = 2500000 or 2.5 million
<u>Depreciation expense per year </u>
Asset L = (4750000 - 0) / 15
Asset L = $316,666.67
Asset S = $420000
Difference = 420000 - 316666.67
Difference = $103333.33
Asset S has $103333 more depreciation expense per year than asset L
Answer: D) All of the above are correct.
Explanation:
Implicit costs are the opportunity costs which refers to the value of the next best alternative to the current decision path. As Dr. Lopez quit a job that was paying $100,000 in order to open this practice, that would be his implicit costs.
His accounting profit is;
= Revenue - expenses
= 400,000 - 80,000 - 60,000 - 25,000 - 150,000 - 10,000
= $75,000
His economic profit;
= Accounting profit - Implicit costs
= 75,000 - 100,000
= -$25,000
