Answer:
Self-interest in a market system will automatically promote the public interest as well.
Explanation:
An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.
Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.
A free-enterprise system also referred to as capitalism or free market can be defined as a type of economy in which prices, products and services are being determined by the market rather than the government. Thus, a free-enterprise system is devoid (free) of government regulations, interference or control because the market (enterprises) are the ones who are saddled with the responsibility of determining the market forces.
Simply stated, a free-enterprise system is a type of economy that is completely driven by demand and supply of goods and services.
The "invisible hand" concept asserts that the self-interest by producers and suppliers of resources in a market system will automatically promote the public interest as well.
This ultimately implies that, public and private interest will always coincide assuming there exist competition in a free market system.
In conclusion, the invincible hand concept is a metaphorical description of the unforeseen forces that typically moves a free market system or economy.
Answer:
The net present value of this investment is $3,256.06.
Explanation:
Note: There two errors in the figures provided in this question. They are they therefore fixed before answering this question as follows:
Park Co is considering an investment that requires immediate payment of $28,245 and provides expected cash inflows of $9,300 annually for four years. Assume Park Co requires a 7% return on its investments.
What is the net present value of this investment?
The explanation of the answer is now provided as follows:
The present value (PV) of the annual expected cash inflows of $9,300 can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV of the annual expected cash inflows = Annual expected cash inflows * ((1 - (1 / (1 + rate of returns))^number of years) / rate of returns) = $9,300 * ((1 - (1 / (1 + 0.07))^4) / 0.07) = $31,501.06
Net present value = PV of the annual expected cash inflows – Required immediate payment for the investment = $31,501.06 - $28,245 = $3,256.06
Therefore, the net present value of this investment is $3,256.06.
Answer: (B) Non-profit
Explanation:
The non-profit organization is one of the type of charitable association that do not paying any type of tax and it basically operating on the basis of scientific, educational and the religious purpose.
According to the given question, Judy is basically starting the new business and she recognizing the various types of music activities socialization and also the memory challenging process for the senior citizen.
She is using the excess funds for developing the programs rather than focusing on the personal profit. Hence, on the basis of given scenario, Judy organization is classifying as non-profit organization.
Therefore, Option (B) is correct answer.
Answer:
much <em>more </em>likely;
There is only one car dealership in a small town, giving the dealership the ability to influence the price of cars. - <em>Market power</em>
A person smoking in a restaurant emits second-hand smoke that harms other restaurant patrons. - <em>Externality</em>
Explanation:
<u>Property rights</u> are an incentive for individuals to create goods that are needed on the market. In other words, when a discrepancy between demand and supply occurs on a specific market, entities, businesses or individuals that create the goods are motivated to meet market needs through enforced property rights.
On the other hand, when there is a lack of property rights that regulate the market, <em>market failures</em> occur. Two common types of market failures include <em>market power</em> and <em>externalities</em>.
The car dealership example shows <u>market power</u> in practice, as the reigning company can dictate car prices.
The second example shows an externality, as there is evident influence (cost or benefit) on the third party, which they cannot change. People are affected (negatively) by smoke they did not create.
Answer:
$27,400 and $59,600
Explanation:
The computation of the depreciation expense and the book value using the sum of-the-years'-digits method is shown below:
Depreciation expense is
= (Purchase cost - residual value) × useful life ÷ sum of years
= ($87,000 - $4,800) × 5 years ÷ (5 + 4 + 3 + 2 + 1)
= $27,400
And, the book value is
= Purchase cost - depreciation expense
= $87,000 - $27,400
= $59,600
