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Mumz [18]
3 years ago
8

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the foll

owing statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $600. (iii) Average revenue exceeds marginal revenue, but we don’t know by how much.
Business
1 answer:
miv72 [106K]3 years ago
4 0

Answer:

The correct answer is option i.

Explanation:

A firm is operating in a perfectly competitive market.  

The firm is selling 200 units of output.  

The price of each unit of output is $3.  

In a perfectly competitive market, a single firm faces a horizontal line demand curve. This horizontal line represents demand, price line, average revenue, and marginal revenue.  

So if the price is $3, it implies that the marginal revenue and average revenue is also equal to $3.  

The total revenue is $600.

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Define the following terms: a. Cost of debt b. Cost of equity c. After-tax WACC d. Equity beta e. Asset beta f. Pure-play compar
gtnhenbr [62]

Answer: The answers are explained below.

Explanation:

• Cost of debt: The cost of debt is the interest rate that a company is charged on its debts. It is the interest paid on bonds, loans etc. The cost of debt is usually the before-tax cost of a debt.

• Cost of equity: The cost of equity is the return a firm pays to its equity investors e.g shareholders in order to reward them for the risk taken by investing their capital. Companies need capital to operate and grow hence, individuals and organizations who provide funds to such companies are rewarded.

• After tax WACC: The Weighted Average Cost of Capital (WACC) is a firm's combined cost of capital including preferred shares, common shares, and debt after the deduction of tax.

• Equity Beta: It measures the sensitivity of the stock price to changes in market. Equity Beta is also called levered beta.

• Asset beta: It is the beta of a firm without the effect of debt. It is a company's volatility of returns without its indebtedness.

• Pure play comparable: The pure play comparable is the taking of the beta estimate of another company that is comparable and in same line of business.

• Certainty equivalent: It is the guaranteed return that an individual would take now, rather than awaiting a higher but uncertain return later in the future.

3 0
3 years ago
Read 2 more answers
ABC Hospital invests $5,095,000 in a joint venture with a reputable oncology group and the hospital agrees to a 55% interest in
Vsevolod [243]

Answer:

Year Cash Flow Cumulative Cash flow Discounted Cash Flow(8.9%) 0 $5,095,000 $5,095,000 $453,455 1 $1,500,000 $3,595.000 $3,141,5452 $3,000,000 $ 595,000 $141,5453 $4,500,000 ($3,905,000) $3,4515454 $6,500,000ABC Hospital will get ROI in 3 years, this option I would recommend to the CEO.

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8 0
3 years ago
Which of the following will not cause the production possibility frontier to shift? Group of answer choices the introduction of
algol13

Answer:

an increase in the working population

Explanation:

The Production possibilities frontier (PPF) is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised.  

The PPC is concave to the origin. This means that as more quantities of a product is produced, the fewer resources it has available to produce another good. As a result, less of the other product would be produced. So, the opportunity cost of producing a good increase as more and more of that good is produced.  

The PPF can shift either inward or outward.

An outward shift is associated with an increase in output while an inward shift is associated with a reduction in output.

Factors that cause the PPF to shift

1. changes in technology. technological progress leads to outward shift of the PPF. introduction of "fiber optic" technology would shift the PPF outward.

2. changes in available resources. a land reclamation program would increase the land available for production and this would increase output. While an explosion destroying a chemical plant would reduce output and lead to an inward shift of the PPF

3. changes in the labour force. A decrease in unemployment would increase output and shift the the PPF outward

Working population is the number of people between 15-59.

6 0
3 years ago
Danielle Corporation received $2,000,000 from investors and issued them shares of its stock. Danielle's journal entry to record
Korolek [52]

Answer:

c. Credit to common stock.

Explanation:

Usually it's the credit to common stock in an amount equal to the par times stocks issued with the rest credited to Paid-in capital in excess of par.

4 0
3 years ago
What is the key to successful investing?
eduard

- Make sure you know what your investing in (DYOR)

- Invest only money your willing to lose

- Learn from others and learn strategies

3 0
2 years ago
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