Charles wants to survey recent customers about the quality of service they received at his small auto service dealership. He has
1 answer:
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Answer:
Increase quantity to where AC = MC = D=AR=MR
Explanation:
A perfectly competitive market is where there are many firms in the industry producing homogeneous products. There is ease of entry and exit into and out of the market. They are price takers and earn normal profits in the long-run. In order to maximize profits, a firm in a perfectly competitive industry should produce an the quantity where its average cost is equal to marginal cost when AR = MR = D. In other words, when the AC and MC curves intersect with AR = MR = D curve.
<em><u>Please refer diagram</u></em>
The firm is currently producing at a point where AC > MC at quantity 1000. In order to reach AC = MC, the firm has to increase its quantity to Qe. As it increases quantity, although marginal cost increases, average cost falls because now fixed costs are spread over a larger quantity of output.
At Qe, the three curves intersect and is the point where this firm can maximize its revenue (Price = Pe). At a price higher than this, it would lose customers since there are many others producing the same product and customers can easily shift to another.
Answer:
Preference shareholders = $36,000
Equity shareholders = $9,000
Explanation:
As provided the outstanding preference dividend at end of 2012 = $12,000
Total cash dividends declared = $45,000 in the year 2013
Regular preference dividends = $100 3,000
8% = $24,000
Thus, when dividends will be paid in 2013 then firstly they will be used for payment to preference shareholders.
Thus, the company shall pay:
$12,000 + $24,000 = $36,000 to preference shareholders.
Further the balance will be paid to equity shareholders.
= $45,000 - $36,000 = $9,000