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Anna [14]
3 years ago
5

Explain precisely why ‘Opportunity Cost’ is always a RELATIVE concept and is never to be construed in ABSOLUTE terms. In additio

n, why is the PPF function never strictly convex -what is the economic implication of strict convexity? You are free to provide appropriate examples of your choice.
Business
1 answer:
telo118 [61]3 years ago
3 0

Answer:

Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.

For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?

The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.

In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.

When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.

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Economics students often confuse (a) diminishing returns related to the variable factors of production and (b) diseconomies of s
Sholpan [36]

Answer:

Marginal Product:

The marginal product of an input that is being used in the production process of a good or services is the extra output generated by using the extra unit of that input. Alternatively, the marginal product is the output generated by the last unit of the input added only.

Explanation:

  1. Diminishing marginal returns means that as you adds more units of that input, the marginal product declines. That is, each additional of extra unit of the input results in decreased and less additional output. For example, the marginal product of labor usually decreases as the amount of labor increases because there is a fixed amount of capital used in the short run, so when labor increases, the capital per unit of labor decreases, which results in each and every extra working being less productive than the previous one.
  2. Dis-economies of scale, whereas, results in an increase in the average cost of production as the number of units increases. That's why diminishing marginal returns refers to production, and dis-economies of scale refers to the average cost. Dis-economies of scale often happened because the production levels get high, there is less management on each employee, resulting in each employee having less motivation to work as hard due to lack of production making it hard to notice that change.So, it may results in the average worker's productivity decreasing, causing the per-unit cost to rise.
7 0
3 years ago
Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its m
algol [13]

Answer:

option (b) $69,768

Explanation:

Data provided in question:

Estimated manufacturing overhead = $73,440

Estimated machine-hours = 1,800

Actual manufacturing overhead = $68,700

Actual machine-hours = 1,710

now,

The predetermined overhead rate = \frac{\textup{Estimated manufacturing overhead}}{\textup{Estimated machine-hours}}

or

The predetermined overhead rate = \frac{\textup{73,440}}{\textup{1,800}}

or

The predetermined overhead rate = $40.8 per hour

Therefore,

The applied manufacturing overhead for the year

=  Actual machine-hours × predetermined overhead rate

= 1,710 × $40.8

= $69,768

Hence,

the correct answer is option (b) $69,768

5 0
3 years ago
December 31 Total assets Total liabilities
Neporo4naja [7]

Answer:

Net Income or Loss : a. 2019 = $53000  ; b. 2020 = $4000 loss ; c. 2021 = $43000

Explanation:

Assets - Liabilities = Capital  (Closing/Opening)

458000 - 317000 = 141000 (2019 Closing Capital)

Profit = Closing Capital - Opening Capital + Drawings - Additional Capital

A.  2019 Opening Capital = 100000 (Given)

2019 Closing Capital = A - L = 458000 - 317000 = 141000

2019 Profit = CC - OC - D + AC = 141000 - 100000 + 12000 =  53000

B. 2020 opening capital = 2019 Closing Capital = 141000

2020 closing capital = A - L = 538000 - 367000 = 171000

2020 Profit =  CC - OC + D - AC = 171000 - 141000 - 34000 = 4000 Loss

C. 2021 opening capital = 2020 closing capital = 171000

2021 closing capital = A - L = 668000 - 467000 = 201000

2021 Profit = CC - OC + D - AC = 201000 - 171000 + 25000 - 12000 = 43000

6 0
3 years ago
Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Rat
tiny-mole [99]

Answer:

Accounts, Amounts, and Effects on the Accounting Equation:

Apr. 30 Assets increase (Cash +$876,000) = Liabilities increase(Promissory note payable (Commercial Bank) +$876,000) + Equity

June 6 Assets increase (Inventory +$98,000) = Liabilities increase (Accounts payable +$98,000) + Equity

July 15 Assets decrease (Cash -$98,000) = Liabilities decrease (Accounts payable -$98,000) + Equity

 

Aug. 31 Assets increase (Cash +$35,500) = Liabilities increase (Deferred Revenue +$35,500) + Equity

Dec. 31 Assets = Liabilities increase (Salary and wages payable +$63,000) + Equity decrease (Retained earnings (Salary and wages expenses) -$63,000)

Dec. 31 Assets = Liabilities increase (Interest payable +$49,640) + Equity decrease (Retained earnings (Interest Expense) -$49,640)

Dec. 31 Assets = Liabilities decrease (Deferred Revenue -$23,667) + Equity increase (Retained earnings (Security Service Revenue) +$23,667)

Explanation:

a) Data and Analysis:

Apr. 30 Cash $876,000  12-month, 8.50 percent, Promissory note payable (Commercial Bank) $876,000

June 6 Inventory $98,000 Accounts payable $98,000

July 15 Accounts payable $98,000 Cash $98,000

Aug. 31 Cash $35,500 Deferred Revenue $35,500

Dec. 31 Salary and wages expenses $63,000 Salary and wages payable $63,000

Dec. 31 Interest Expense $49,640 Interest payable $49,640 ($876,000 * 8.5% * 8/12)

Dec. 31 Deferred Revenue $23,667 Security Service Revenue $23,667

4 0
3 years ago
Single Corp. is a company with three divisions that produce completely different products. These three divisions must seek fundi
Lorico [155]

Answer:

pooled interdependence.

Explanation:

The single crop is a company with three different division. Three division who work independently and do not interact with each other but work towards the betterment of the whole company can be described as pooled interdependence. Pooled interdependence is a way in which companies operated by designing different department that works independently towards a common goal.

3 0
3 years ago
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