All categories

2 years ago

What is an externality? how do externalities relate to socially optimal quantity?

1 answer:

7 0

An externality in business or economics is where an industrial activity has an unexpected side effect which does not figure in the cost of the goods and services involved. For example, I worked many years at a large mine. Just the existence of the mine there meant it was a no-hunting area so a side effect was that the moose used it as a refuge during hunting season which as a side effect was beneficial to the moose (and deer). Another example is that we used to crush mine rock for the haulroads for winter traction. As a result, it was found that the fines from this were concentrated with copper values so were put in the mill for processing-an unexpected outcome.

You might be interested in

Jenks Company developed the following information about its inventories in applying the lower-of-cost-or-net-realizable-value (L

Neko [114]

Answer:

$365,000

Explanation:

The computation of the inventory reported on the balance sheet is shown below:

<u>Product Cost NRV Lower cost</u>

A $115,000 $125,000 $115,000

B $95,000 $75,000 $75,000

C $175,000 $180,000 $175,000

Total $365,000

7 0

3 years ago

A boycott occurs when workers collectively refuse to go to work.

nikitadnepr [17]

When workers refuse to work its called boycotting

3 0

3 years ago

3. Name two different market structures. Describe how and why they each have a different competitive situation.

xz_007 [3.2K]

Market structure is defined with characteristics of the market and there are four different market structures: perfect competition, oligopoly, monopoly and contestable market.
<span>Perfect competition is a market structure in which there is a large number of small firms who produce identical goods otherwise known as homogenous goods and it has a lot of buyers. The competition between these firms is huge, because they are many firms and each of them wants to attract more buyers.</span>
Oligopoly is a market structure in which there is a small amount of large firms, for example the supermarket industry. There are not so many buyers as in the perfect competition, but buyers can still choose from which supermarket, for example, they will buy. So there is a competition between the firms.

7 0

3 years ago

Marble Construction estimates that its WACC is 10 percent ifequity comes from retained earnings. However, if the company issuesn

dedylja [7]

Answer:

Projects E,F and G should NOT be considered.

Optimal Capital is $5,750,000

Explanation:

The accept-or-reject rule, using the IRR method, is to acceptthe project if its Internal Rate of Return (IRR) is higher than theWeighted Average Cost of Capital(k) [r>k]. The project shall berejected if its internal rate of return is e lower than theWeighted Average Cost of Capital cost of (r<k)

Accept if r>k

Reject if r<k

Mayaccept if r = k

If the Weighted Average Cost of Capitl (WACC) is less than IRRrate, then the project has positive NPV; if it is equal to IRR, theproject has a Zero NPV, and if it is greater than the IRR, theproject has negative NPV.

The projects should be accepted as the rate of return on theproject is higher than the WACC(10.8%) which means that theprojects will be profitable as the returns are higher than the costof the project (capital). Considering this projects E,F and G should NOT be considered.

And considering the sizes the Optimal Capital is $5,750,000 (the addition of sizes of all projects)

8 0

2 years ago

Chicken and tuna fish are substitutes in consumption. Suppose that new technology decreases the cost of catching tuna. This woul

mihalych1998 [28]

Answer:

B. a decrease; a decrease

Explanation:

Substitutes' goods are products that can be consumed in place of each other. If one product is missing, consumers will be ready and willing to buy its substitute. An increase or fall in the price of a good or services will cause the demand for its substitute to move in the opposite direction.

Equilibrium quantity is when supply matches the demand. If the price of Tuna fish decreases, its demand will increase as more customers will afford it. Tuna and chicken are substitutes, should the price of Tuna decrease, customers will prefer to consume Tuna over chicken. Consequently, the demand for chicken will reduce w leading to a decrease in its price.

6 0

2 years ago