In what type of business do the owners bear no personal financial responsibility for the company's debts and obligations? D. unlimited liability to the owner of the stock., Two characteristics that make owning stock attractive are: A. unlimited liability and first claim on What categories do economists use to classify them? C) uncertainty concerning the occurrence of loss. Profits 4. It is difficult to enter or exit the industry as a supplier. What do you expect to happen in this market as it approaches long-run equilibrium? Farmers quiz. Illinois Driver's Test 2019. Devise a product that saves Americans lots of time. In monopolistically competitive markets, what is a factor under a firm's control that determines whether it will be successful? \text{Common stock}&&\text{50,000}\\ Specialization and trade have the same effect as having more and better resources or discovering improved production techniques. We can calculate the Ptoday by using equation 8 from the chapter: The equation. The customer paid the full amount of$1,200 on October 1. The four direct effects of tariffs are: a decline in consumption, increased domestic production, tariff revenue, and a(n) ______. Suppose the owner of one of the winerieslong dashJerry's Wine Emporiumlong dashraises the price of his wine by $5.00 per bottle. The hypothesis does not claim that the market price is always right. Study with Quizlet and memorize flashcards containing terms like Apply revenue recognition principles to various types of transactions., Identify issues with revenue recognition at point of sale, including sales with buyback agreements, sales when right of return exists, and trade loading (or channel stuffing)., Identify instances where revenue is recognized before delivery Why does a local McDonald's face a downward-sloping demand curve for its Quarter Pounder? Study with Quizlet and memorize flashcards containing terms like How do nations benefit from international trade? **Velocity of Winchester bullets. D) the probability of a loss occurring., Objective risk is defined as A) the probability of loss. Independently acting buyers and sellers and freedom to enter or leave markets. Minimum ATC Study with Quizlet and memorize flashcards containing terms like Economic growth, Economic growth is normally calculated as a percentage rate of growth per quarter or per, Real GDP per capita means GDP ____________ a. per country b. in real terms c. divided by capital stock d. per person and more. Study with Quizlet and memorize flashcards containing terms like How do nations benefit from international trade? Compute the required stock return and current price of this stock, using the dividend-discount model. Economic resources are also called factors of production because they are used to produce goods and services. In effect, because Ike is loss averse, he worse off in terms of utility. B. one's assets net of one's liabilities at any point in time. "Sinc As the chapter points out there are four possibilities; 1) The managers have private or insider information, which is illegal; 2) They are lucky; 3) They are taking on more risk which will provide a higher return in some years but can also lead to lower than average returns for other years; and 4) Markets are not efficient. What was the European Union called when it was initiated in 1958? $$ Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. ***Instructions*** For example, the level of the consumer price index by itself conveys little information, but percentage changes in the CPI allow us to measure the rate of inflation. (B) At the growth rate indicated, how long will it take the population of Mexico to double? When Judy went to the grocery store yesterday, she bought three pounds of potatoes. 4. reallocate resources from less desired to more desired uses. Study with Quizlet and memorize flashcards containing terms like Scarcity exists when there are _______ resources available to satisfy all the competing uses a. too many b. just enough c. not enough d. no, mod 1, Which of the following is not one of the categories of economic resources? Why are they called inputs? Sally runs a vegetable stand. D. a liability that people are willing to accept in exchange for goods and services., A barter economy is an economy where One company, we will call A, has a stock price of $25 per share and there are 10,000 shares outstanding. Which of the following will cause an increase in the current price of a stock? Tariffs and/or quotas tend to impose ______ on domestic consumers, and ______ to the producers of the protected goods in the importing economy. How do property rights encourage cooperation? The financial writer Andrew Tobias has described an incident when he was a student at Harvard Business School: Each student in the class was given large amounts of information about a particular firm and asked to determine a pricing strategy for the firm. Which of the following is a fundamental characteristic of the market system? The company received its electric bill on December 20 for $150 but will not pay it until January 5. Why is arguing for a tariff to save U.S. jobs popular during a recession? Those who have a checking or savings account, but also use financial alternatives like check cashing services are considered underbanked. What are the likely reason(s) that the market for electricity is not perfectly competitive? Is the set of integers the union of the set of even integers and the set of odd integers? Is the bullet likely to be manufactured by Winchester? ** Made a full refund to a dissatisfied customer who returned her alarm system. They are called inputs because they go in to a production process (like ingredients go into a bowl to make a cake), with the resulting goods and services also being referred to as output. Coastal Soda Sales has been granted exclusive market rights to the upcoming Beaufort Seafood Festival. benefit U.S. producers and penalize Chinese producers. Study with Quizlet and memorize flashcards containing terms like Apply revenue recognition principles to various types of transactions., Identify issues with revenue recognition at point of sale, including sales with buyback agreements, sales when right of return exists, and trade loading (or channel stuffing)., Identify instances where revenue is recognized before delivery *Answer the problem by yes or no. changing the price affects the quantity sold because firms sell differentiated products. Mibanco in Peru plays an important role in the Latin American microfinance sector. Study with Quizlet and memorize flashcards containing terms like How do nations benefit from international trade? At what price would Smitten earn a normal profit? geo test ch 2 essay questions. C. encourages owners to maintain or improve their property, so as to preserve or enhance value. \text { City } & \text { Police } & \text { Number of Crimes } \\ Exchange by barter requires a coincidence of wants. 39 terms. According to the diversification-for-stability argument, why should some nations impose protective tariffs and import quotas? What does this statement mean? Study with Quizlet and memorize flashcards containing terms like Which of the following best summarizes why HR managers have to use strategy language when discussing the value of HR programs to senior leadership? ( c ) If the festival organizers wanted to set an economically efficient price of $\$ 1.25$ per soda, how would this change the results from part (b)? \begin{array}{lcc} The creation of two distinct markets will allow for a situation where the prices of the same stock may be different in the two markets. c. HR managers need to show how their HR practices support The interest rate is 8%. The "coincidence of wants" problem associated with barter refers to the fact that: A. for exchange to occur each seller must have a product that some buyer wants. b. earn economic profits. $$ Zoning could force businesses producing negative externalities to locate in regions where these costs would not spill over onto third parties, or where such costs would at least be reduced, People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. We can use the Dividend-Discount Model from the chapter to think through our answers: Why does the theory of efficient markets imply that stock price movements are unpredictable? True or False? \begin{array}{llllll} True or False? **Population. C. share of ownership of the company. In fact, Professor Siegel's research points out that between the years 1871 and 1992 there was no 30-year period when bonds outperformed stocks. Government regulatory agencies sometimes fall under the sway of the industries that they are supposed to be regulating. Study with Quizlet and memorize flashcards containing terms like The valuation of an MNC should decline when an event causes the expected cash flows from foreign subsidiaries to ____ and when the foreign currencies denominating these cash flows are expected to ____., The agency costs of an MNC are likely to be higher if it, The Sarbanes-Oxley Act caused corporate The term 'rent' refers to any payment is excess of the minimum amount that is necessary to keep the resource employed in its current use. Discuss the shape of the long-run supply curve in a perfectly competitive market. Anojan_Thirukumaran5. If the interest rate is 6% (0.06) what does the dividend-discount model predict the current price of the stock should be? Revenue recognition upon completion On a long-term construction project, the amount in the construction in progress account represents the costs of construction plus the gross profit recognized to date, and the billings on construction represents Basically, limited liability says an investor can only lose what he/she paid for the stock (invested) in the first place. The use of money contributes to economic efficiency because: To do so will maximize the firms' profits. If false, indicate how to correct the statement. liability, and property damage policies. If Ike is loss averse he will feel losses more intensely than gains. "Goods and services that are profitable.". Use Figure 4.6b to explain why this situation of dual positive externalities might lead to an underallocation of resources to both apple growing and beekeeping. What are the potential drawbacks of this system, compared to allowing both domestic and foreign investors to trade in the same market? The bank issues working capital and loans to micro-entrepreneurs and small and mediumsized businesses. The company could perform poorly, so poorly in fact that it could go bankrupt leaving many liabilities unpaid. First, we need to compute the growth rate of dividends, g. This is equal to 5% = ($21 - $20)/$20. D. \text{e. Law of Demand} & \text{j. unit elastic demand}\\ Rent-seeking is different from profit maximization because rent-seeking attempts to influence the political process to gain increased profit or income. $$ a. They just want really high-quality food.". a. earn economic losses. What would the profit-maximizing quantity be if the market price was $5? The nonprofit label comes from the fact that they are exempt from federal and local taxes in exchange for providing a certain amount of community benefit.. The result is competition and widely dispersed economic power. Produce more than Canadian customers will buy, and sell the surplus to the United States. Revenue recognition upon completion On a long-term construction project, the amount in the construction in progress account represents the costs of construction plus the gross profit recognized to date, and the billings on construction represents B. share in the company's debts. To maximize profits or minimize losses this firm should produce. POLSKI. By 2017, McDonald's had stopped selling Chicken McNuggets and other products made from chickens fed antibiotics. Why or why not. Julia___Bryja. Which problems did critics fear that NAFTA would cause? Use the graph to estimate the altitudes at which the pressure is $23,19 ,$ and $13$ inches of mercury. If people could accurately forecast price movements in stocks, they would immediately act on those forecasts, which would cause the price of the stocks to move today. Her output per day and costs are seen in the table to the right. In a competitive market economy firms will select the least-cost production technique because: Coordination problem under central planning. b. HR managers are not accountable for planning. Farmers quiz. Workers, managers, and entrepreneurs could not personally gain by responding to shortages or surpluses or by introducing new and improved products. Study with Quizlet and memorize flashcards containing terms like A share of common stock represents a(n): A. claim from a lender against a borrower. c. HR managers need to show how their HR practices support Compare your currency with an appropriate world currency for the last 30 days. Voters like the benefits of increased government spending, but do not like having to pay the taxes necessary to fund all the costly government programs that they like. b. Henderson purchased a nine-month boat insurance policy on November 1 for$8,100. In the short run, how much corn should Cathy produce each day to maximize profits? Round whole numbers up to the next 100 . is essentially: B. }&\text{Balance Sheet}&\text{Understated}&\text{Income Statement}&\text{Understated}\\ She believes, however, the stock of this company will sell for $110.00 per share four years from now. Reporting after incorporation. In the previous example we plotted the USD to 1 EUR for a 6-month time period. Study with Quizlet and memorize flashcards containing terms like 1. The city council of Pine Bluffs is considering boosting the number of police \sin an effort to minimise crime. The idea that protective tariffs are needed to preserve industries that produce the materials essential for national defense is called the ______ argument. Based on equation 7 in the chapter, what is the expected price of this stock for next year? Study with Quizlet and memorize flashcards containing terms like Economic growth, Economic growth is normally calculated as a percentage rate of growth per quarter or per, Real GDP per capita means GDP ____________ a. per country b. in real terms c. divided by capital stock d. per person and more. This statement best describes the concept of: Expand in industry Z, as more resources will move to that industry. A three-year premium paid on a fire insurance policy. 5. 6. What would the profit-maximizing quantity be if the market price was $6.50? Is there an altitude at which the pressure is exactly zero? The behaviorists estimate the value of stocks based on their perceptions of investor psychology and behavior. Competition from other nations building plants in Mexico. Bondholders are not owners of the company, meaning that they are not entitled to a share of the firm's profits, nor are they involved in the voting of the firm's managers. Corporations can only deduct net operating losses going back two years and forward 20 years. ** Paid installers and other employees a total of $21,000 cash for salaries. How might this underallocation get resolved via the means suggested by the Coase theorem? (Enter a loss as a negative number. While the fixed investment in new oil sands projects is prohibitive, variable costs can be in the low $20 range (say, $23) per barrel." If the government were to subsidize LoJack purchases, this would reduce the private cost of the anti-theft devices. Use the graph to the right, which shows the demand and cost for Angelica's beef brisket sandwiches, to answer the questions that follow. They can enhance their resource productivity. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. a. an increase in the rate of economic growth b. well-enforced property rights c. a stable international monetary framework d. quotas, A major difference between a tariff and a quota is that a tariff a. will reduce imports, but a quota generally will not. This means that the most they can lose is their original investment, which pertains to the limited downside. How does free trade tend to benefit society? Staff positions are directly involved in the companys primary revenue-generating activities. The S&P 500 gives more weight to the larger firms than the DJIA does. Economic profits attract firms to enter an industry, and economic losses cause firms to exit an industry. Which of the following is not a characteristic of the market system? Chartists look for patterns in the price movements of a stock. 1. a shift to the right of the market supply curve as new firms enter. On the other hand, the stockholders are residual claimants, so the increased use of bonds means the company is required to honor its liabilities to the bondholders (interest payments) before any profits are distributed to the stockholders. 7. True or False? $22,000 of the sales were on account and$11,000 were cash sales. So the result is the bubbles and their subsequent bursts result in real investment and spending that is inefficient. ), In the long run, the number of farm stands selling peppers in Milledgeville each day will. Soylent Green is a perfectly competitive firm that produces soybeans. An opportunity cost is what was sacrificed to do or acquire something else. Dumping occurs in which of the following situations? Following a bumpy launch week that saw frequent server trouble and bloated player queues, Blizzard has announced that over 25 million Overwatch 2 players have logged on in its first 10 days. If it issues bonds it will have to pay $8.00 in interest for every $100 borrowed. In economics, this is known as the principal-agent conflict and is the focus of significant research in economics and management. \left\{\begin{aligned} x_1+x_2+x_3+2 x_4=& 1 \\x_1\ \quad \ \quad-3 x_3 \quad \quad \ \ \ \ &=2 \\ x_1-3 x_2\quad \quad+x_4=&-2 \\ x_2-4 x_3 +x_4=& 0 \end{aligned}\right. Study with Quizlet and memorize flashcards containing terms like Which of the following are functions of exports assistance centers (EACs), Darla's bicycle ship in the United States is experiencing a slowdown in its growth. \text { Danville } & 25 & 5 \\ 1. Assume the domestic price of corn is $1.00 and the quantity of corn produced is 100 tons. Assume the market for applesapples is perfectly competitive. In the long run, the number of farm stands selling peppers in Milledgeville each day wil. How does the idea relate to the definition of economics?, Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit, State (a) a positive economic statement of your choice, and then (b) a normative economic Based on the dividend discount model, how is it possible for these stocks to sell for a positive price? The graph to the right shows a firm in a perfectly competitive market making a profit. Goods and services are produced and resources are supplied by whoever is willing to do so. In 2001 an outbreak of foot-and-mouth disease in Europe led to the burning of millions of cattle carcasses. The common stockholders may have mixed feelings about this announcement. In the short run, assuming nothing else changes, Cathy should: produce the same quantity of corn per day. Because China has abundant low-wage workers, it can efficiently produce ______-intensive goods. Consider the graph below showing the market demand and supply for corn.Use the line drawing tool to graph the demand for the corn produced by one corn farmer. A trading possibilities line reveals the amounts of two products a nation can obtain by ______. Which of the following are ways Darla's business could engage in the global market., A weak Entry will decrease the profits of existing coffeehouses by shifting each of their individual demand curves to the left and making the demand curves more elastic. Based on this information we can conclude that. \text{Supplies}&&\text{150}\\ Study with Quizlet and memorize flashcards containing terms like If you start and manage a landscaping business on your own, you have likely started a:, When you own a sole proprietorship you and the business are considered one, so you have _ liability for financial obligations such as debt, LLCs do have to submit articles of organization and an operating agreement, but do not At the end of two years your portfolio is worth: You have a portfolio valued at $1000. B. are essential to the reallocation of resources from less desired to more desired goods. If the market price is $56.00 per bushel of wheat, and Ali chooses to produce wheat, how much will he produce per month to maximize his profits in the short run? 12 terms. To maximize profits or minimize losses this firm should produce. "Through the profit potential that encourages development of new technology.". The additional money will require the manager to put these funds to use which, due to the law of diminishing marginal returns, will also make it more difficult to duplicate the return. This is an example of: "Those willing and able to pay for them.". Financial accounting reports are general-purpose reports. What can be important and interesting is to compare percentage changes in the various indexes and to see how they correlate or move together. \end{array} \text{Salaries payable}&&\text{1,500}\\ rnremley Plus. From society's point of view the economic function of profits and losses is to: D. reallocate resources from less desired to more desired uses. If Bobby sell 20 glasses of lemonade for $0.20 per cup, and his average total cost is $0.17, what are his economic profits for the day? D. unlimited liability to the owner of the stock., Two characteristics that make owning stock attractive are: A. unlimited liability and first claim on It commits to paying $5.30 two years from the current date. ** Accrued salaries at December 31, 2015, were $1,000. When unrestrained, prices rise and fall to correct imbalances between the quantity supplied and quantity demanded in a market. 15 terms. Compute the current price of this stock, using the dividend-discount model. 15 terms. $$ How might the government be able to address these issues? A 10% increase only in the price of B? In the product markets, businesses sell the goods and services they have produced to the buyers of the goods and services, the households. What institution is in charge of overseeing trade agreements and ruling on disputes relating to them? They can improve their self-sufficiency., In a model compiled to show the economic relationship between two They can enhance their resource productivity. ** The population of Mexico was $116$ million in $2013$ and was growing at a rate of $1.07\%$ per year, compounded continuously. Whole Foods decreases productive efficiency by not producing at minimum average total cost. ", Time is money. Study with Quizlet and memorize flashcards containing terms like A multinational enterprise is a firm that engages in foreign direct investment by directly investing in, controlling, and managing value-added activities in other countries T/F, The term "emerging markets" refers to all markets other than the developed markets T/F, GDP is the sum of value added by resident firms, Distinguish between the resource market and the product market in the circular flow model. A market system allows for the private ownership of resources and coordinates economic activity through market prices. shift to the left and become more elastic. Who make decisions regarding what to produce and how it is produced C. What kinds of products are produced in the economy and Discuss how changes in economic conditions are likely to affect the equity-risk premium and stock prices. The wants of consumers are expressed in the product market with "dollar votes". For consumers, the bubbles can lead to increased wealth for some individuals who as a result may consume more, save less, buy expensive automobiles, homes, vacations etc. 2. While this can be substantial during good years, it also means that during bad years the stockholders may get nothing, and if the corporation does poorly for a number of years, the stockholders' investment can be lost. C) uncertainty concerning the occurrence of loss. Study with Quizlet and memorize flashcards containing terms like In the above diagram the range of diminishing marginal returns is:, In the above diagram, total product will be at a maximum at:, Refer to the above diagram. ** Sold an additional monitoring service for $1,200 for one year's service. As a result, they not only recover 90% of LoJack-equipped cars that are stolen but also arrest many auto thieves and shut down many "chop shops" that take apart stolen vehicles to get at their used parts. Multiple select question. B. share in the company's debts. True or False? Illinois Driver's Test 2019. This growth rate in dividends is expected to continue indefinitely. If only the price of stock B increases by 10%, the price of B will rise to $77, and the index will have a value of 53.5, or an increase of 7%. The intersection of one nation's import demand curve and another nation's export supply curve represents ______. This separation of the two markets could lead to a misallocation of resources. What price would an individual be willing to pay today for a stock that is expected to sell for $100 two years from now and which pays an annual dividend that is $6.00? Many firms advertise. c. As of December 31, Henderson had earned $4,000 of charter revenue that has not been recorded or received. One way to deal with this misallocation is to allow companies the option of issuing the number of shares that will allow them to equate the prices in both markets. According to the infant industry argument, why should recently established domestic firms be protected from competition from imports? ** On January 15, purchased 20 standard alarm systems for cash at a cost of $250 each. Study with Quizlet and memorize flashcards containing terms like T/F - Downloading music into a computers random access memory, or RAM, without authorization is copyright infringement., T/F - A franchisee's breach of the duty of honesty and fidelity can be enough to allow a franchisor to terminate a franchise even if their contract contains a notice-and-cure provision, Donuts Whole **13. Workers who are displaced due to foreign imports are eligible for what kinds of benefits under the Trade Adjustment Assistance Act? Study with Quizlet and memorize flashcards containing terms like Which of the following restricts the volume of international trade? In the evening, his accountant calls to tell him that he owes an extra $1,000 in taxes. In a two-nation model, international equilibrium is determined by the ______ of one country and the ______ of the other country. Economic profits and losses: A. are both considered by economists to be a part of production costs. Other Quizlet sets. Suppose the velocity (at 15 feet) of the bullet is 1,000 feet per second. Study with Quizlet and memorize flashcards containing terms like Scarcity exists when there are _______ resources available to satisfy all the competing uses a. too many b. just enough c. not enough d. no, mod 1, Which of the following is not one of the categories of economic resources? Profits are maximized at the quantity where marginal revenue equals marginal cost. a. earn economic losses. If investors expect a recession, it is likely this will lead to an increase in the equity-risk premium. During 2015, Pacilio Security Services experienced the following transactions: Choi's Traditional Korean Foods loses money on each sale of traditional Korean delicacies, but customers who buy those goods also buy items with strong profit margins. price is greater than marginal cost; price is equal to marginal cost. If Bobby sell 20 glasses of lemonade for $0.20 per cup, and his average total cost is $0.17, what are his economic profits for the day? What do neoclassical economics and behavioral economics believe about giving people options? To maximize profits or minimize losses this firm should produce. Recall that stockholders are residual claimants. Which method provides a better measure of a company's economic activity each period? How does the idea relate to the definition of economics?, Cite three examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit, State (a) a positive economic statement of your choice, and then (b) a normative economic Why are stock market bubbles costly for the economy? The price of a stock is currently $750 and the stock will pay a $43 dividend. Run-in head What might be the consequences if citizens were not required to serve on a jury? How much resources are available in the economy and where they are located B. A. Suppose that an individual sees a tremendous opportunity to produce and sell a new product, but dismisses the idea because there is no way to exploit this opportunity for personal gain. Using the Coase theorem, we note that it will be to the advantage of individual apple growers and beekeepers to negotiate so that beekeepers (whose hives can be moved) locate their production in or near orchards. 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