A Cajun trinity, used in many Louisiana Creole and Cajun dishes such as gumbo, contains

With only two goods, if the income effect is in the same direction as the substitution effect then the good is ____.

Leya [2.2K]

Answer:

Normal good

Explanation:

Income effect Is change in quantity demanded when the consumers purchasing power change as a result of a change in real income.

Substitution effect is when quantity demanded falls as a result of rise in price of a good which leads consumers to purchase cheaper alternatives.

A normal good is a good whose demand increases as income increases.

If the price of a normal good falls, the real purchasing power of the consumer increases and the consumer buys more of the good. Also, the consumer substituites from more expensive alternative goods to the more cheap normal good. The income and substitution effect both move in the same direction.

7 0

3 years ago

Arbitrage proofs in futures market pricing relationships:_____.a. incorporate transactions costs. b. rely on the CAPM. c. demons

andreyandreev [35.5K]

Answer:

Option C: Demonstrate how investors can exploit misalignments.

Explanation:

Arbitrage is illegal in some countries. It is simply a means used by investors to purchase or sale an asset so as to make profit from a difference in the asset's price that is usually between markets.

Price is the amount of money charged for a product or service as itis used to determine a firm's market share and profitability and its produces revenue. Market pricing helps Finding combination of margin and market share to maximize long-term profitability.

5 0

3 years ago

Companies A and B are in the same industry and are identical except for cost structure. At a volume of 50,000 units, the compani

ASHA 777 [7]

Answer:

B. Company A's cost structure has higher fixed costs than B's.

Explanation:

Let's see the formula for income:

50,000 units x sales price - variable cost x 50,000 - fixed = net income

50,000 (sales - variable) - fixed = net income

At 50,000 both have equal net income.

Also we are given the fact that their sales is the same.

"identical except for cost structure"

So:

$50,000 (S-V_a)-Fixed_a = 50,000 (S-V_b)-Fixed_b$

We work it and remove sales from the equation:

$50,000S-50,000V_a-Fixed_a = 50,000S-50,000V_b-Fixed_b$

$-50,000Variable_a-Fixed_a = -50,000Variable_b-Fixed_b$

At 60,000 units, Company A has a higer income, so the increase of variable cost in company A is lower than company B

The cost of 10,000 more units is all variable cost, if Company A has more income, then their variable are lower.

If variable cost for 10,000 is lower, same applies for the variable cost for 50,000 so we have:

10,000Va < 10,000 Vb

50,000Va < 50,000Vb

So to have equal income at 50,000 units.

Fixed of A > Fixed of B

5 0

4 years ago

For each item below, indicate whether a debit or credit applies.

mrs_skeptik [129]

Answer:

1. Debit

2. Debit

3. Credit

4. Credit

5. Debit

6. Debit

7. Credit

8. Credit

9. Credit

10. Credit

Explanation:

In Financial accounting, debit refers to an entry made which would either increase an expense or asset account; therefore, decreasing an equity or liability account.

Credit refers to an entry made which would either increase an equity or liability account; therefore, decreasing an expense or asset account.

Generally, debit is an accounting entry which is made to the left of an account while credit is an accounting entry which is made to the right of an account. The standard rule is that, when a credit decreases an account, the opposite account should be increased with a debit.

1. Decrease in Notes Payable: Debit

2. Increase in Dividends: Debit.

3. Increase in Common Stock: Credit

4. Increase in Unearned Rent Revenue: Credit

5. Decrease in Interest Payable: Debit

6. Increase in Prepaid Insurance: Debit

7. Decrease in Salaries and Wages Expense: Credit

8. Decrease in Supplies: Credit

9. Increase in Revenues: Credit

10. Decrease in Accounts Receivable: Credit

8 0

4 years ago

On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,

LenKa [72]

Answer:

1) b) $25,000

2) d. $203,400

Explanation:

1)

Ref Particulars Amount

a Fair value of entity 200,000

b Total value without patent 175,000

c=a-b Patent 25,000

Therefore, the increase in the fair value of patents held by Side is;

b) $25,000

Fair value of consideration given:

Ref Particulars Amount

Stock 0

Cash 180,000

a Total consideration 180,000

b Stake acquired 90%

c=a/b Fair value of subsidiary 200,000

d=100%-b Minority interest 10%

e=c*d Fair value of minority interest 20,000

On acquisition date

Value of subsidiary without patent

Common stock 100,000

Paid in capital -

Retained earnings 60,000

Fair value adjustment:

Patent -

Equipment 10,000

Land 5,000

Fair value without patent 175,000

2)

Particulars Investment

Acquisition date 180,000

Add: share of net income 54,000

Less: Dividends 18,000

Less: Fair value amortization 12,600

Balance Jan 1, 20X8 203,400

{Share of earnings for 2 years = 30,000 × 2 × 90% = 54,000 }

{Share of dividends for 2 years = 10,000 × 2 × 90% = 18,000 }

{Fair value amortization for 2 years = 7,000 × 90% × 2 = 12,600}

Therefore Balance as at Jan 1, 20X8 is

d) $203,400

5 0

3 years ago