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Free_Kalibri [48]
3 years ago
11

The Pampered Pet Shop operates in a perfectly competitive industry and hires you as an economic consultant. The firm is currentl

y producing at a point where market price equals its marginal cost. Its market price is less than its average variable cost. You advise the firm to:_____.
a. raise its price until it breaks even.
b. lower it's price so it can sell more units of output.
c. cease production immediately, because it is incurring a loss.
d. produce in the short run to minimize its loss, but exit the industry in the long run.
Business
2 answers:
Vladimir79 [104]3 years ago
8 0

Answer: cease production immediately, because it is incurring a loss

Explanation:

A perfectly competitive industry is an industry whereby firms make similar products, and there are many firms and customers.

Since from the scenario, the market price is less than its average variable cost, it is advisable for the firm to stop producing. This is because the firm isn't covering its variable cost, therefore it's running at a loss.

Sphinxa [80]3 years ago
5 0

Answer:

c. cease production immediately, because it is incurring a loss.

Explanation:

When a business engages in production it looks to make profit. That is for the production price to be higher than cost incurred in producing the good.

However when the price is lower than the average variable cost as is indicated in the scenario then the firm needs to shut down production in the short term.

Factors that will adversely affect a firm in the short term are price, average total cost, and average variable cost.

Once price is less than average total cost or average variable cost it is better to stop production.

As they are incurring an economic loss

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Explanation:

3 0
3 years ago
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Identify which control activity is violated in each of the following situations, and explain how the situation creates an opport
Inessa05 [86]

Answer:

1. Once a month, the sales department sends sales invoices to the accounting department to be recorded.

⇒ documentation procedures

Unless all of the company's sales take place only once a month, sales should be recorded as soon as possible. Accounting records must be as precise and accurate as possible, and they must be processed on time. Stacking invoices makes no sense, since sales might be on cash or the collection period might be very short. Who holds the money until the sales records are made?

2. Leah Hutcherson orders merchandise for Rice Lake Company; she also receives merchandise and authorizes payment for merchandise.

⇒ segregation of duties

One single person cannot be responsible for the whole process, since this creates a huge opportunity for fraud. Imagine if the person in charge of the inventory is also in charge of making new purchases, paying for them and reporting ending inventory. No company would be able survive one year, while the person in charge would get rich.

3. Several clerks at Great Foods use the same cash register drawer

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If everyone is allowed to collect money, no one can be responsible for any loss.

6 0
3 years ago
The point at which supply equals demand is called
sergejj [24]

Well when the supply and demand is met and aka a elaborate word is equilibrium price. <----

6 0
2 years ago
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Lochmonden already has a company registered under the name of CreateOne. The Aldemeren company with the same brand name was not
laila [671]

Answer:

This scenario is an example of B) direct foreign investment

Explanation:

Direct foreign investment is a kind of investment which is made by one company in another company which is based in a different country. This investment is controlled and is made directly to the foreign account.

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3 years ago
Describe the features of a voucher system and list typical supporting documents for a voucher
ahrayia [7]

A voucher has the following features:

Voucher is a written documentary evidence.

It supports the entry which appears in the company’s books of accounts.

It also  justifies the correctness of the entries made in the books.

Vouchers are pre-numbered, which helps in simplifying the audit trail.

Vouchers state the  complete details of the transaction

Vouchers contain true and complete details of the transactions

It is prepared by the firm’s accountant and  also countersigned by the firm’s accountant.

It is used for internal accounting control, which makes confirm that every transaction is duly authorized.

It is prepared at the time the transaction takes place.

Some of the supporting documents in a voucher can include:

Invoice received from the supplier.

Terms for payment including the amount owed, the due date of voucher, and any discounts granted by the supplier for paying the invoice early.

Vendor or supplier name to whom it is to be paid.

The company's purchase order.

To know more about voucher here:

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