Answer:
Sunk costs.
Explanation:
Sunk costs refers to historical funds spent or incurred that cannot be recovered. Such costs are considered irrelevant during decision making which impacts on the business's future as they present no influence on present or future prospects.
Example
ABC investors decide to acquire land and develop residential houses at a location X. This decision is informed on the fact that the government had recently enacted a policy that led to an increase in demand for residential properties in that location. 6 months into construction of the residential houses, the government reviews and rescinds the policy. This leads to a sharp decline in property values in location X. ABC investors had already incurred 10 million dollars in the project. The 10 million dollars is considered sunk cost.
Sunk costs are the opposite of relevant costs because they can't be changed or recovered, as they've been spent or contracted in the past already. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.
Hence, money that has been or will be paid regardless of the decision whether to proceed with the project is sunk costs.
Answer:
$4,500
Explanation:
Interest expense is deductible so, you will need to <u>deduct the amount of interest</u> expense from income, and then calculate the percentage of taxes to pay.
Interest paid (deductible) = .05* 100,000 = 5,000
Income - interest expense: 20,000-5,000 = $15,000
Taxes: .3 * 15,000 = $4,500
Answer:
Explanation:
When there are two factors used in producing a good, the least-cost rule specifies that costs have been minimized when the MPP of the first factor divided by its price is equal to the MPP of the second factor divided by its price.
The least cost rule evaluated two factors of production. Let's say labor and capital. production at least cost has the requirements that labor’s marginal product divided by its price is equal to capital’s marginal product divided by its price.
Answer:
B) The demand for good A is elastic.
Explanation:
Both Timothy and Jake believe that the demand is elastic, Timothy believes the PED = 1.75, while Jake believes the PED = 1.46. The difference is that Timothy believes the demand is more elastic.
Option A is not correct because Timothy believes total revenue will fall while Jake believes it will increase.
Option C is not correct because both believe that their market share will decrease.
Option D is not correct because both Timothy and Jake are arguing about higher prices, not lower prices.
Option E is not correct because an increase inn the price of a good does not shift the demand curve, it moves the equilibrium point within the given demand and supply curves.
