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Lemur [1.5K]
2 years ago
12

Firms A and B plan to collude in an economy for their similar​ products, which includes the grim strategy for punishment. They p

lan to set the price of their product at​ $8. The marginal cost of Firm A is​ $5 and Firm B is​ $4.50. If firm A is impatient to earn more profits and Firm B wishes to last in the business for the​ long-run, which of the following situations would likely​ occur? A. Firm B reduces the price to​ $7 causing Firm A to exit the market. B. Firm B reduces the price to​ $7 causing Firm A to reduce its price to​ $7. C. Firm A reduces the price to​ $7 causing Firm B to reduce its price to​ $4.50. D. Firm A reduces the price to​ $7 causing Firm B to exit the market.
Business
1 answer:
denis-greek [22]2 years ago
3 0

Answer: C. Firm A reduces the price to​ $7 causing Firm B to reduce its price to​ $4.50.

Explanation:

Since firm A is impatient to earn more profits and Firm B wishes to last in the business for the​ long-run, then Firm A will reduce the price to​ $7 causing Firm B to reduce its price to​ $4.50.

Since Firm A reduces the price to​ $7, this will lead to an increase in the quantity demanded of the product and therefore the firm can earn more profit. On the other hand, firm B will reduce its price to a point where the price meets the marginal cost which is $4.50.

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Explanation:

The journal entry is as follows

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         To Sales A/c $11,100

(Being the sales is recorded)

Since the merchandise transaction is done through note receivable so we debited the note receivable account and the transaction is of sale type so the sales account is credited. Both the transactions are recorded at $11,100

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Reddit, Digg, and StumbleUpon are examples of popular
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social bookmarking sites

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They fetch the contents from other Web sites and encourage their users to share their preferences on what they like and see all over the Internet with their friends.

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2 years ago
Microsoft project is the most widely used project management software today and is an example of a ________ tool.
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3 years ago
King Company issued bonds with a face amount of $1,600,000 in 2015. As of January 1, 2020, the balance in Discount on Bonds Paya
zimovet [89]

Answer:

January 1, 2020

Bonds Payable                                          1600000 Dr

Loss on Redemption of bonds                 36800 Cr

     Discount on Bonds Payable                        4800 Cr

     Cash                                                              1632000 Cr

Explanation:

The redemption of bonds before the maturity usually requires a payment for redemption which is a certain percentage of its face value. It is usually higher than the face value. The above bonds are redeemed at 102 which means at 102% of the face value of the bonds. Thus, the cash paid to redeem the bonds is,

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Carrying value = 1600000 - 4800  =  $1595200

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The loss on redemption is,

Loss = 1595200 - 1632000 = $36800

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3 years ago
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