Answer:
<u>Part a: What will be the equilabrium price that Dumphy and Funke will charge?</u>
Answer: Price charged = $30
<u>Part b: What are the profits for Dumphy and Funke at the equilibrium price?</u>
Answer: Profit on equilibrium price = $0
<u>Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?</u>
Answer: Price competition
Explanation:
<u>Part a: What will be the equilabrium price that Dumphy and Funke will charge?</u>
Answer:
Price charged by each of the artists will be equal to their marginal cost.
Thus, equilibrium P = MC = $30.
<u>Part b: What are the profits for Dumphy and Funke at the equilibrium price?</u>
Answer:
Equilibrium profits will be 0 at the equilibrium because price charged is equal to MC, leading to no profits.
<u>Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?</u>
Answer:
Price competition - as changes in price will lead to changes in demand and thus sales
Answer:
$10,620
Explanation:
Depreciation for Year 1 = 0.202 × $50,000
= $10,100
Depreciation for Year 2 = 0.323 × $50,000
= $16,150
Depreciation for Year 3 = 0.194 × $50,000
= $9,700
Depreciation for Year 4 = 0.125 × $50,000
= $6,250
Accumulated depreciation = $10,100 + $16,150 + $9,700 + $6,250
= $42,200
Book value of machine as on date of sale:
= Purchase price - Accumulated depreciation
= $50,000 - $42,200
= $7,800
Selling price = $12,500
Gain on sale of machine = $12,500 - $7,800
= $4,700
Tax rate = 40%
Tax on capital gain = $4,700 × 0.40
= $1,880
Net proceeds on sale of machine:
= Selling price – Tax paid on capital gain
= $12,500 - $1,880
= $10,620
Answer:
C
Explanation:
Money neutrality is a theory which submits that money supply only affect nominal variable and not real variables.
Nominal variables include price, wages and exchange rate
real variables include employment and real GDP
Money is only neutral in the long run and not in the short run because of money illusion. Money illusion causes economic agents to respond to money supply changes.
Money is neutral only in the long run
Answer:
Total dividend paid = $340,000
Preferred dividend = 7% x $4 x 150,000 x 3 years = $126,000
Dividend paid to common stock holders
= $340,000 - $126,000
= $214,000
The correct answer is C
Explanation:
There is need to calculate the preferred dividend for 3 years, which is a function of dividend rate, current market price, number of preferred stocks outstanding and number of years. The current market price of the preferred stock is used for the computation because the preferred stock has no par value. Then, the amount of dividend paid to common stock holders is the difference between the total dividend paid and preferred dividend.
