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2 years ago

How are prices determined in a free market economy

Business

1 answer:

professor190 [17]2 years ago

5 0

If it’s free then I don’t think they need to determine the price bc it’s free

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An individual has utility function U(x)=x1/4U(x)=x1/4 for salary, and is considering new job offer which pays $80,000 with a bon

vladimir2022 [97]

Answer:

108,280.22

Explanation:

Certainty equivalent is solved by taking the inverse utility function from the expected utility of a random wealth variable

U(x) = x^1/4

U^-1(x) = x^4

U^-1(x) === x^4

CE(x) = x^4

Salary Bonus Total income U(x)= x^(1/4) P(x) U(x)*P(x)

80000 0 80000 16.82 1/7 2.4

80000 10000 90000 17.32 1/7 2.47

80000 20000 100000 17.78 1/7 2.54

80000 30000 110000 18.21 1/7 2.6

80000 40000 120000 18.61 1/7 2.66

80000 50000 130000 18.99 1/7 2.71

80000 60000 140000 19.34 1/7 <u>2.76</u>

Sum <u>18.14</u>

CE(x) = 18.14^4

CE(x) = 108280.22

So therefore, the certainty equivalent of this job offer is 108,280.22

5 0

3 years ago

You own a portfolio that is 31 percent invested in Stock X, 46 percent in Stock Y, and 23 percent in Stock Z. The expected retur

MrRa [10]

Answer: 13.53%

Explanation:

The expected return on the portfolio will be calculated by multiplying the investment in each stock by the expected return of the stocks. This will be:

= (31% × 11%) + (46% × 14%) + (23% ×16%)

= 3.41% + 6.44% + 3.68%

= 13.53%

6 0

3 years ago

1. Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead based on 125,000 budgeted d

melamori03 [73]

Answer:

a. $17.44 per hour

b. $43,600 ; $104,640

Explanation:

The computation is shown below:

a. Single plantwide overhead rate equals to

= Total Overhead Amount ÷ Budgeted Direct Labor Hours

where,

Total overhead amount is

= $625,000 + $900,000 + $105,000 + $175,000 + $300,000 + $75,000

= $2,180,000

And, the budgeted direct labor hours is 125,000

So, the overhead rate is

= $2,180,000 ÷ 125,000

= $17.44 per hour

2. Now the overhead cost is

For Deluxe model

= 2,500 direct labor hours × $17.44 per hour

= $43,600

For basic model

= 6,000 direct labor hours × $17.44 per hour

= $104,640

7 0

3 years ago

Another name for the originator of a change plan is known as ________.

victus00 [196]

The answer to this question is a Change agent.

A change agent is a person that can be inside or from outside the company / organization that will help the company to change their processes and helps the organization to re-evaluate their day to day operations. A change agent also sees to it that the operations of the company will improve, develops, and become effective after the evaluation.

3 0

3 years ago

Equity Method for Stock Investment On January 4, Year 1, Ferguson Company purchased 108,000 shares of Silva Company directly fro

r-ruslan [8.4K]

Answer:

January 4, year 1, investment in Silva Company (36% of outstanding stocks)

Dr Investment in Silva Company 5,184,000

Cr Cash 5,184,000

July 2, year 1, distributed dividends ( $292,000 x 36%)

Dr Cash 104,400

Cr Investment in Silva Company 104,400

December 31, year 1, net income reported by Silva Company ($971,000 x 36%)

Dr Investment in Silva Company 349,560

Cr Revenue from investment in Silva Company 349,560

Balance of Investment in Silva Company = $5,184,000 - $104,400 + $349,560 = $5,429,160

Explanation:

Since Ferguson exercises significant influence over Silva Company, they must record the investment using the equity method.

7 0

3 years ago

How are prices determined in a free market economy​

How are prices determined in a free market economy