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2 years ago

What is a market economy?what are some disadvantages of living in a market economy? Explain

Business

1 answer:

mrs_skeptik [129]2 years ago

3 0

Answer:

A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand.

Disadvantages:

A tendency for an inequitable distribution of wealth, poorer work conditions, and environmental degradation.Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically. Unemployment and Inequality.

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Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant ra

Paul [167]

Answer:

1. $4.5

2. 45%

3. 55%

4. $4.50

5. $1,800

6. $3,150

7. $1,750

8. 500 units

9.$5,000

10. 2,300 units

11. $5,000

12. 2

13. 1.5%

Explanation:

1. Contribution margin per unit = Unit sales price - Variable cost per unit

• $10 - $5.5 = $4.5

2. Contribution margin ratio = (sales - variable expense) / Sales

• ($10,000 - $5,500) / $10,000

• $4,500/$10,000

•45%

3.Variable expense ratio = variable cost per unit / Sales per unit

•$5.5/$10 = 55%

4. Net operating income @1,000 - Net operating income @1,001

•@1,000 units

Sales (1,000 x 10) $10,000

Variable expense (1,000 x 5.5) $5,500

Contribution margin $4,500

Less: Fixed Cost $2,250

Net operating income $2,250

•@1,001 units

Sales (1,001 x 10) $10,010

Variable expense (1,001 x 5.5) $5,505.50

Contribution margin $4,504.50

Less: Fixed cost $2,250

Net operating income 2,254.50

Therefore, $2,254.50 - $2,250 = $4.50

5. Sales (900 x 10 ) $9,000

Variable expense (900 x 5.5) $4,950

Contribution margin $ 4,050

Less: Fixed cost $2,250

Total net operating income $1,800

6. Sales (900 x 11.50) $10,350

Variable cost (900 x 5.50) $4,950

Contribution margin $5,400

Less: Fixed cost $2,250

Net operating income $3,150

7. Sales (1,250 x 10) $12,500

Variable cost (1,250 x 6) $7,500

Contribution margin $5,000

Less: Fixed cost (2,250 + 1,000) $3,250

Net operating income $1,750

8. Break-even point in unit sales

BEP =Total fixed cost / (sale per unit - variable cost)

BEP = $2,250 / (10-5.5)

BEP = $2,250/$4.5

BEP = 500 units

9.Break-even point in dollar sales

BES = Total fixed expense/contribution margin ratio

BES = $2,250/([10,000-5,500]/10,000)

BES = $2,250/0.45

BES = $5,000

10. Let’s begin with the desired net operating income.

•$8,100 + Fixed cost = Contribution margin / (Sales per unit - Variable cost)

•$8,109 + $2,250 = $10,350/(10-5.50)

•$10,350/4.50

•2,300 units

11.Margin of safety = Projected sales - Break-even sales

MOS = $10,000(1,000 x 10) - $5,000 (as computed above #9)

MOS = $5,000

12. Degree of Operating leverage

DoL = (Sales-Variable cost) / (Sales - Variable cost - Fixed cost)

DoL = ($10,000 - 5,500) / ($10,000 - 5,500 - 2,250)

DoL = $4,500/$2,250

DoL = 2

13. 3% / 2 = 1.5%

• DoL simply signifies how many times the operating profit increase or decrease in relation to sales.

6 0

3 years ago

For widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping

cluponka [151]

Answer:

The dead-weight loss from the tax is $2,250

Explanation:

Free market equilibrium price is P1

Total social economic benefit is the sum of:

consumer surplus (area below demand curve and above price line P1) and
producer surplus (area above supply curve and below P1)

When tax is imposed, quantity is reduced, price increased to P2 for consumer, P0 for supplier.

The part of the loss from consumer and producer surplus is compensated with the revenue from tax.

The other part (red triangle) is the dead-weight loss. Its amount is given by the area of the triangle with:

base length being the tax amount ($15/unit) and
height being the reduced quantity (300 units)

S = $\frac{1}{2} \times 15 \times 300 = 2,250$

3 0

4 years ago

Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 30 million bottles of wine were sold ev

AysviL [449]

Answer:

False

Explanation:

The burden of tax refers to who pays the tax between the buyer and the seller.

More burden of tax usually falls to the party with the more inelastic demand because the quantity demanded would not change despite the increase in price as a result of the tax.

To find the amount of tax per bottle = price of wine - amount received by producers = $6 - $3 = $3

The amount paid by consumers = price after tax - price before tax = $6 - $4 = $2

Amount received by sellers = tax- amount paid by consumers = $3 - $2 = $1

It can be seen that consumers bear a higher burden of tax because they pay the greater tax. This means they have an inelastic demand.

If the tax had been levied on producers, the effect on quantity demanded would have been greater because producers have a more less elastic supply when compared to consumers .

I hope my answer helps you

7 0

4 years ago

Read 2 more answers

________ play an important role in matching supply and demand by providing consumers with a broad assortment of products in sma

konstantin123 [22]

Intermediaries play an important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities.

When goods are produced or manufactured by producers, there will be need to make those goods available to final consumers.

The intermediaries- Wholesalers and retailers buys these goods from the producers and make them available to final consumers in small quantities.

By making the goods available to consumers, the intermediaries are playing important role in matching supply and demand by providing consumers with a broad assortment of products in small quantities.

Learn more about intermediaries here : brainly.com/question/25736500

5 0

3 years ago

The big difference between business process reengineering and continuous improvement programs like TQM or Six Sigma is that ____

Oksanka [162]

Answer:

C. reengineering is a tool for achieving one-time quantum improvement, whereas TQM and Six Sigma programs aim at ongoing incremental improvements.

Explanation:

4 0

3 years ago