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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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3 years ago
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Enron Corporation ultimately failed, in part, because top management at the company maintained the belief that it didn't matter
Sonbull [250]

Answer: Organizational culture.

Explanation:

The management at Enron Corporation are building an organizational culture of making profit by all means regardless of how it is made. An Organizational culture is what is expected from workers of an organization, this culture is normally developed overtime.

6 0
3 years ago
The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account
a_sh-v [17]

Answer:

See below

Explanation:

Assets =

Liabilities + Stockholder's equity

Accounts receivables $34,000(+)

Revenue $34,000(+)

Cash $26,000(+)

Accounts receivables $26,000(-)

Bike equipment $19,000(+) Notes payable $19,000(+)

Cash $3,400(-)

Retained earnings $3,400(-)

The first transaction increases asset(account receivable) by $34,000 while revenue(stockholder's equity) increased by the same amount

The cash receipt of $26,000 increases assets cash by $26,000 and decreases an asset , account receivable by the same amount

The purchase of an asset by note payable increases asset, bike equipment by $19,000 while liabilities note payable also increases by $19,000

The payment of utilities for $3,400 decreases asset cash by $3,400 while stockholder's equity retained earnings decreases by same amount.

7 0
3 years ago
The Woods Co. and the Speith Co. have both announced IPOs at $69 per share. One of these is undervalued by $16, and the other is
lana [24]

Answer:

(a) $18,000

(b) $3,600

Explanation:

(a) Profit would be:

= (No. of shares × Undervalued) - (No. of shares × Overvalued)

= (1,800 × $16) - (1,800 × $6)

= $28,800 - $10,800

= $18,000

(b) Only half your order will be filled.

With rationing (and being an uninformed investor) we expect our profits:

= (No. of shares × Undervalued) - (No. of shares × Overvalued)

= (900 × $16) - (1,800 × $6)

= $14,400 - $10,800

= $3,600

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3 years ago
Strong family ties to the surrounding social context, as indicated by frequent contact with friends and relatives, organized you
jolli1 [7]

Answer:

The correct answer is: reduce stress and enhance adjustment.

Explanation:

Families bond with their surrounding society promotes a friendly atmosphere in society. Cooperation, kindness, respect, and honesty are core values that families should share among them. By doing this, their atmosphere is likely to be <em>less stressful</em> and adults and children can <em>adapt to the community</em> easier.

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3 years ago
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