Briefly explain whether the following are assessable as ordinary income or statutory income, or non-assessable (1 mark each) i. A $1000 bonus voluntarily given by an employer to an employee for working overtime. ii. A $3000 allowance given by an employer to an employee so that they can buy home office equipment due to having to work from (due to the lockdown resulting from the COVID-19 pandemic). The employee is not obliged to spend this money. iii. $10,000 in pre-judgment interest given as part of a compensation package to a taxpayer who suffered a foot injury due to medical negligence. iv. A non-transferrable, non-refundable holiday worth $2000 received by an employee accountant from a client. The client gave this to the accountant as a 'tip' because they were so happy with the work the accountant undertook form them.
Answers
The following items can be classified as ordinary income, statutory income, or non-assessable depending on the circumstances surrounding their receipt.
i. The $1000 bonus voluntarily given by an employer to an employee for working overtime is considered ordinary income and therefore assessable. This is because the employee has earned it as a result of performing work-related duties.
ii. The $3000 allowance given by an employer to an employee to purchase home office equipment due to the COVID-19 pandemic is considered non-assessable. This is because it is a reimbursement for expenses incurred in carrying out employment duties, and the employee is not obliged to spend the money.
iii. The $10,000 in pre-judgment interest given as part of a compensation package to a taxpayer who suffered a foot injury due to medical negligence is considered non-assessable. This is because it is a payment for damages and not related to employment.
iv. The non-transferable, non-refundable holiday worth $2000 received by an employee accountant from a client is considered ordinary income and therefore assessable. This is because it is a benefit received in connection with employment duties, even though it was given as a 'tip' by a client.
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Related Questions
Financial instruments Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital between borrowers and lenders, financial instruments trade in the financial markets. These financial instruments can be categorized on the basis of their issuers, maturity, risk, and other factors. Identify the financial instruments based on the following descriptions. Description Financial Instrument Backed by the U.S. government, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk free Investments. Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.Issued by corporations, these financial instruments fund their long-term financing requirements and have less risk than equity securities. Which of the following instruments are traded in the capital markets? A. Certificates of deposit.B. Common stocks.C. Treasury bills.D. Preferred stocks.E. Corporate bonds. The process in which derivatives are used to reduce risk exposure is called:_______.
Answers
Answer:
1. Identification of financial instruments:
Treasury Bills: Backed by the U.S. government, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk free Investments.
Commercial Papers: Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk.
Money Market Instruments: These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.
Corporate Bonds: Issued by corporations, these financial instruments fund their long-term financing requirements and have less risk than equity securities.
2. Instruments traded in the capital markets are:
B. Common stocks
D. Preferred stocks
E. Corporate bonds.
3. The process in which derivatives are used to reduce risk exposure is called:
Hedging
Explanation:
Financial instruments can be stocks, bonds, commercial papers, or treasury bills. Some financial instruments are capital market instruments (e.g. stocks and bonds), while others are money market instruments (e.g. commercial papers and treasury bills).
When the value of a contract depends on an underlying financial asset, it is called a derivative. Examples of underlying instruments are bonds, commodities, currencies, interest rates, market indexes, and stocks.
Find solutions for your homeworkFind solutions for your homeworkbusinessfinancefinance questions and answershere is the condensed 2021 balance sheet for sunrise company (in thousands of dollars): condensed 2021 balance sheet 2021 current assets $2,000 net fixed assets 3,000 total assets $5,000 accounts payable andThis problem has been solved!You'll get a detailed solution from a subject matter expert that helps you learn core concepts.See AnswerQuestion: Here Is The Condensed 2021 Balance Sheet For Sunrise Company (In Thousands Of Dollars): Condensed 2021 Balance Sheet 2021 Current Assets $2,000 Net Fixed Assets 3,000 Total Assets $5,000 Accounts Payable AndHere is the condensed 2021 balance sheet for Sunrise Company (in thousands of dollars):Condensed 2021 Balance Sheet2021Current assets $2,000Net Fixed assets 3,000Total assets $5,000Accounts payable and accurals $900Short term debt 100Long term debt 1,100Preferred Stock (10,000 shares) 250Common Stock (50,000 shares) 1,300Retained earnings 1,350Total common equity $2,650Total liabilities and equity $5,000Sunrise’s earnings per share last year were $3.20. The common stock sells for $52.00, last year’s dividend (D0)was $2.25, and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 8.8%. Sunrise’s preferred stock pays a dividend of $2.90 per share, and its preferred stock sells for $25.00 per share. The firm’s before-tax cost of debt is 12%, and its marginal tax rate is 25%. The firm’s currently outstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5.2%, the risk-free rate is 5.5%, and Sunrise’s beta is 1.526. The firm’s total debt, which is the sum of the company’s short-term debt and long-term debt, equals $1.2 million.Use this data to answer the questions in the assignment.Question 112.5 ptsCalculate the cost of the following capital components (answers should be in % with two decimal points):the after-tax cost of debtFlag question: Question 2Question 212.5 ptsCalculate the cost of the following capital components (answers should be in % with two decimal points):the cost of preferred stockFlag question: Question 3Question 312.5 ptsCalculate the cost of the following capital components (answers should be in % with two decimal points):the cost of equity from retained earnings using the DCF methodFlag question: Question 4Question 412.5 ptsCalculate the cost of the following capital components (answers should be in % with two decimal points):the cost of newly issued common stock using the DCF methodFlag question: Question 5Question 512.5 ptsNow calculate the cost of common equity from retained earnings, using the CAPM method.Flag question: Question 6Question 612.5 ptsWhat is the cost of new common stock based on the CAPM? (Hint: Find the difference between re and rs as determined by the DCF method, and add that differential to the CAPM value for rs.)Flag question: Question 7Question 712.5 ptsIf Sunrise continues to use the same market-value capital structure, what is the firm’s WACC assuming that(a) it uses only retained earnings for equity (for cost of equity use the average of your calculated costs via DCF and CAPM)Flag question: Question 8Question 812.5 ptsIf Sunrise continues to use the same market-value capital structure, what is the firm’s WACC assuming that(b) if it expands so rapidly that it must issue new common stock?
Answers
After-tax cost of debt is 9.00%; cost of preferred stock is 0.116 or 11.60%; Cost of equity (DCF) is 13.10%; Cost of new common stock (DCF) is 13.10%; Cost of equity (CAPM) is 13.70%
The after-tax cost of debt can be calculated using the following formula:
After-tax cost of debt = Cost of debt x (1 - tax rate)Given that the before-tax cost of debt is 12% and the tax rate is 25%, the after-tax cost of debt is:After-tax cost of debt = 0.12 x (1 - 0.25) = 0.09 or 9.00%Answer: 9.00%
The cost of preferred stock is the dividend yield on the preferred stock. The dividend yield can be calculated as follows:
Cost of preferred stock = Preferred stock dividend / Preferred stock priceGiven that the preferred stock dividend is $2.90 per share and the preferred stock price is $25.00 per share, the cost of preferred stock is:Cost of preferred stock = 2.90 / 25.00 = 0.116 or 11.60%Answer: 11.60%
The cost of equity from retained earnings using the DCF method can be calculated using the following formula:
Cost of equity (DCF) = (Dividend / Current stock price) + Growth rateGiven that the dividend (D0) is $2.25, the current stock price is $52.00, and the growth rate is 8.8%, the cost of equity from retained earnings using the DCF method is:Cost of equity (DCF) = (2.25 / 52.00) + 0.088 = 0.131 or 13.10%Answer: 13.10%
The cost of newly issued common stock using the DCF method can be calculated using the following formula:
Cost of new common stock (DCF) = (Dividend / Net proceeds) + Growth rateGiven that the flotation cost of issuing new common stock is 10%, the net proceeds are 90% of the issue price. Therefore, the net proceeds per share are:Net proceeds per share = Issue price x (1 - Flotation cost) / Number of sharesNet proceeds per share = 52.00 x (1 - 0.10) / 50,000 = $46.80 per shareGiven that the dividend (D0) is $2.25 and the growth rate is 8.8%, the cost of newly issued common stock using the DCF method is:Cost of new common stock (DCF) = (2.25 / 46.80) + 0.088 = 0.136 or 13.60%Answer: 13.60%
The cost of common equity from retained earnings using the CAPM method can be calculated using the following formula:
Cost of equity (CAPM) = Risk-free rate + Beta x (Market risk premium)Given that the risk-free rate is 5.5%, the market risk premium is 5.2%, and Sunrise's beta is 1.526, the cost of common equity from retained earnings using the CAPM method is:Cost of equity (CAPM) = 0.055 + 1.526 x 0.052 = 0.137 or 13.70%Answer: 13.70%
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Is advertising used in oligopoly?
Answers
Many oligopolistic markets are dominated by non-price competition. In these marketplaces, advertising is the main form of competition.
What do you mean by oligopolistic markets?A market structure known as an oligopoly is one in which there are a small number of firms and none of them can prevent the others from having a large impact.
The market share of the big firms is calculated using the concentration ratio.
One producer dominates a monopoly market, two companies dominate a duopoly market, and three or more companies dominate an oligopoly market.
Even if the maximum number of businesses in an oligopoly is undetermined, it must be small enough for each business' operations to have a major impact on those of the others.
Numerous industries, including steel, oil, railroads, tires, grocery store chains, and wireless, have historically had oligopolies.
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Cash flows from interest received are reported in the statement of cash flows as part of:
a. operating activities
b. financing activities
c. investing activities
d. non-cash activities
e. none of these as this is not reported in the statement of cash flows
Answers
Cash flows from interest received are reported in the statement of cash flows as part of operating activities.
Option A is correct.
What are the main responsibilities?A company's operating activities are the tasks that go into making its goods and/or services available to the market. Manufacturing, distributing, marketing, and selling a product or service are examples of the company's core business activities.
Cash Flow from Operating Activities: What Is It (CFO)?
The term "cash flow from operating activities" (CFO) refers to the amount of money a company receives from its regular, ongoing operations, such as manufacturing and selling goods or providing a service to customers.
In the statement of cash flow, what is operating?Activities carried out: Cash flow activities are those that either record the money spent on producing a product or service or generate revenue. Inventory transactions, interest and tax payments, employee wages, and rent payments are examples of operational business activities.
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58:50
Shona is buying a rug for her room. Store A has the rug for $45 with a 10% discount. Store B has the same rug for
$46 and is offering a $10 off coupon. The sales tax is 6% on either purchase. If Shona only has $40 to spend, which
store will she purchase the rug from, and how much will she have left over?
Answers
Answer:
Shona can afford the rug in store B. She will have $1.84 left over.
After reading the article, what are three facts that susan needs to tell jenny to clear up misconceptions about taxes?
Answers
After reading the article, they aren't required to pay much until they earn around $12,000. Age has no bearing on taxes. It makes no difference whether you work part-time as well as full-time if you are required to pay taxes.
The three facts that Susan needs to tell jenny to clear up misconceptions about taxes are tax brackets, tax deductions and return
1. Tax brackets do not determine how much of your income will be taxed. Your total taxable income and filing status are the two main factors that determine how much tax you'll owe.
2. Tax deductions are not the same as tax credits. Tax deductions reduce the amount of income that will be taxed, while tax credits directly reduce the amount of tax owed.
3. Filing your tax return doesn't necessarily mean you'll owe the IRS money. Depending on your income and deductions, you may be eligible for a refund. In addition, there are certain credits that can be claimed on your taxes that can reduce the amount of tax you owe and even result in a refund.
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In video case study about using powerbi in rwanda, the production of what agricultural product benefited from greater transparency in the value chain between the 200,000 famers and 160 collection points for their product?.
Answers
Milk, A sustainable supply chain must include transparent production as a key component.
What is transparency in value chain?
Having a transparent supply chain means that businesses can tell internal and external stakeholders, including customers, where and how their products are made based on trustworthy data.
Visibility: Accurately recognizing and gathering information from every supply chain connection. Disclosure: Sharing the information with the appropriate level of detail, both internally and externally.
A sustainable supply chain must include transparent production as a key component. This requires entrepreneurs to be transparent about their product sourcing, detailing the precise processes taken in the supply chain to ensure that their items get at the doorstep of their customers.
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the date/time and amount of an atm transaction is an example of ____.
Answers
The date, time, and amount of an ATM transaction is an example of metadata.Metadata refers to data that provides information about other data.
In this case, the date, time, and quantum of an ATM sale give information about the sale itself. The date and time inform us when the sale took place.while the quantum tells us how important plutocrat was withdrawn or deposited.
This metadata helps us understand the environment and details of the sale, and is useful for shadowing, monitoring, and assaying ATM operation.Metadata is used extensively in colorful systems and operations to give a more complete picture of the data being stored and used.
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n 2003, the price of the new good, dogs, is 10. between the cpi and gdp deflator, which one is easier to calculate for 2003, using 2000 as the base year?
Answers
Economists argue that the GDP deflator is a more accurate measure of inflation since it accounts for all products and services, whereas the CPI only accounts for price movements in a defined basket of commodities. The GDP deflator is calculated by dividing nominal GDP by real GDP.
The GDP deflator is simpler to calculate than other inflation indices such as the CPI. The GDP deflator is not as often reported as the CPI. The CPI more accurately reflects the prices of goods and services purchased by consumers. The year used for reference in determining price changes using the GDP deflator price index; in a base year, the deflator is always equal to =100.
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Question 2(Multiple Choice Worth 5 points)
(02.06 MC)
In general, what kind of people earn the most money?
O People with skills that are in high demand and high in supply
O People with skills that are in high demand but low in supply
O People with skills that are in low demand and low in supply
People with skills that are in low demand but high in supply
Answers
They earn the most money since skills also follow the law of supply and demand, so consumers are willing to pay more due to low supply
Which of the following is an example of an entrepreneur being influenced by
the economic principle of supply and demand?
A. Wendy has researched ways to maximize productivity in her new
business.
B. Lindsey notices that the only coffee shop in town is very popular,
so she opens her own coffee shop.
C. Saul has come up with an advertising budget for his new
business's marketing campaign.
D. At his new bike shop, Nick hires polite, friendly individuals to work
the registers.
Answers
Answer:
B. Lindsey notices that the only coffee shop in town is very popular, so she opens her own coffee shop.
Explanation:
According to the economic principle of supply and demand, the relationship between the two is directly proportional to each other. With the increase in the demand of any product, there arises an increase in the supply of the product and vice versa.
From the given options, option B. is representing the relationship between supply and demand. The popularity of coffee shop among the people in the town led Lindsey to open her own coffee shop. Increase in demand led to the increase in the supply of the product.
Answer:
Lindsey notices that the only coffee shop in town is very popular,
so she opens her own coffee shop.
Explanation:
One problem with business-to-business e-procurement is that it _______.
A.
increases paperwork requirements
B.
increases transaction costs
C.
reduces purchasing efficiency
D.
increases the time between order and delivery
E.
can erode long-standing customer-supplier relationships
Answers
One problem with business-to-business e-procurement is that it can erode long-standing customer-supplier relationships. While B2B e-procurement offers many advantages, it also has some disadvantages.
One such problem is that it can disrupt long-term customer-supplier relationships. Indeed, e-procurement often involves the use of third-party vendors or web-based platforms, which can undermine the trust that has been built up over time between the customer and its supplier. E-procurement can also increase transaction costs because both the customer and the supplier must pay fees to third-party suppliers. All of these factors can lead to disruption of customer-supplier relationships, which can be detrimental to both the customer and the supplier.
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100 percent of your income after you re tire will probably come from social security
and the companies that employed you.
Is it true or false?
Answers
Answer:
average, retirement beneficiaries receive 40% of their pre-retirement income from Social Security. As you make your retirement plan, knowing the approximate amount you will receive in Social Security benefits can help you determine how much other retirement income you'll need to reach your goals.
Explanation:
please mark me as brainlist itt is trueWhich picture illustrates the result of constructive conflict?
a. Il
b. I
C. V
d.IV
Answers
HELP ASAP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
About which activity or aspect of the distribution function does David need more guidance?
David works as a warehouse employee for a business that manufactures kitchenware. The utensils and other items that the business manufactures are extremely delicate. Recently, David dropped some expensive glassware when he was loading the items in a truck. David’s manager has decided to provide him better guidance about an important aspect of distribution, which is BLANK.
Answers
Answer: I think it’s marketing
Explanation:
please answer asap thanks
Answers
Note that two possible financial goals for which you may require $12,000. are:
1. Saving for a down payment on a car - Need
The average cost of a new car is around $37,000, and the average down payment is around 20%, so $12,000 would be enough for a down payment on a new car.
2. Saving for a vacation - Want
$12,000 can cover the cost of a nice vacation for two people. However, depending on the location and type of vacation you decide to take, you may need to save more money.
What is a financial goal?A financial objective is something to strive towards while managing your money. It may entail saving, investing, earning, or investing. A list of financial goals is essential for constructing a budget. Working towards your goal is simple when you have a clear vision of what you want.
Financial goals are classified into two types: short-term goals and long-term goals. Each of these goals has a distinct time span, and your plan should account for them.
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Why are wages and salaries generally determined by the market for labor?
Answers
According to maximum economics textbooks, our wages and salaries are decided similar to another price: with the aid of using deliver and call for. People deliver their labor, and organizations call for it, growing a marketplace for labor.
Many dealers and shoppers of exertions services. Consequently, salary and salaries are decided by the intersection of the call for exertions and the deliver for exertions. A curve displaying the one-of-a-kind portions of exertions employers are inclined to lease at one-of-a-kind salary quotes in a given time period, ceteris paribus.
Wages are determined via way of means of deliver and demand, however they may be encouraged via way of means of an extensive kind of factors, along with the price of dwelling in a selected area, the presence of a union and the present-day minimal wage.
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Which of the following might vary in on online purchase depending on where the purchaser lives?
A. The quality of the object
B. The sales tax charged
C. The appearance of the item
D. The retail price of the item
Answers
Answer:
The sales tax
Explanation:
On August 9, Pierce Company receives a $8,500, 90-day, 8% note from customer Eric Simms as payment on his account. Compute the maturity date for the note.
Answers
The maturity date for the note is November 7.
This is determined by adding the term of the note, which is 90 days, to the date it was received, August 9. Since the note has a term of 90 days, it means that it is due and payable 90 days after the date it was issued. By adding 90 days to August 9, we can calculate the maturity date of the note, which falls on November 7.
Calculating the maturity date involves considering the length of time specified in the note's term and adding it to the date of issuance. In this case, the note has a term of 90 days, indicating that it will become due and payable after 90 days. By adding 90 days to August 9, we accurately determine that the maturity date for the note is November 7.
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Which of the following statements is true of Milton Friedman's view of the corporate world?
Answers:
a) Friedman argues that it is not considered unethical for a corporation to just deliver the profits of the company to the society rather than delivering it to its investors.
b) Friedman's theory that a company no longer requires senior executives to be accountable to the board of directors has been a crucial turning point in the business world.
c) Friedman's position illustrates that an organization has a social responsibility that goes beyond serving the interests of their stockholders.
d) Friedman argues that, as an employee of the corporation, a manager has an ethical obligation to fulfill his role in delivering on the expectations of his employers.
Answers
The true statement of Milton Friedman's view of the corporate world is d) Friedman argues that, as an employee of the corporation, a manager has an ethical obligation to fulfill his role in delivering on the expectations of his employers.
Friedman believed that a corporation's primary responsibility was to maximize profits for its shareholders, and that managers had an ethical obligation to act in their best interests.
He did not believe that corporations had a broader social responsibility beyond this goal.
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What is the purpose of a limited liability company?
Answers
an insurer having a large number of similar exposure units is considered important because
Answers
**The large number of similar exposure units is important for an insurer** because it allows for a more accurate estimation of risk and better predictability of losses.
Having a **large number of similar exposure units** is beneficial for an insurer due to the principle of large numbers. When an insurer deals with a substantial number of similar risks, such as insuring multiple individuals or properties with similar characteristics, it helps in establishing more reliable statistical data. With a larger sample size, the insurer can better analyze and assess the potential risks involved, leading to more accurate predictions of future losses. This allows the insurer to set appropriate premiums, manage reserves effectively, and maintain financial stability. Additionally, a larger pool of similar exposure units provides greater diversification, reducing the overall impact of individual losses on the insurer's financial position.
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Firm entry rates tend to be highest during the growth stage of an industry life cycle because:
[See pp.212-214]
A. Shortage of production capacity keeps margins attractive.
B. The propensity for entrepreneurs and venture capitalists to imitate one another.
C.Growing legitimacy of the industry attracts resources to the industry.
D. Both (a) and (c).
Answers
The Firm "entry-rates" tend to highest during "growth-stage" because: (a) Shortage of production capacity keeps margins attractive, and (c) Growing legitimacy of industry attracts resources to industry, the correct option is (d) Both (a) and (c).
During the "Growth-Stage" of an industry life cycle, there is a high demand for the products or services offered, which creates a shortage of production capacity.
This shortage results in high profit margins, which are attractive to entrepreneurs seeking to enter the market. The growing legitimacy of the industry during growth stage attracts more resources to the industry, such as funding and talent.
This creates a positive feedback loop, as increased resources lead to further growth and legitimacy, which attracts even more resources, it leads to higher entry-rate during this stage.
Therefore, the correct option is (d).
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plt restaurant sold 2,500 lunch boxes during the past month with a price of $10.00 per lunch box. during this month, the price of a lunch box is increased by $5.00 and the total number of lunch boxes sold now is 2,200. what is the price elasticity of demand? what is the effect of the decrease in the
Answers
the price elasticity of demand is 0.24
Since we are given that, a restaurant sold 2,500 lunch boxes, with a price of $10.00 per lunch box, later the price increased by $5.00 and they told 2,200 boxes for the new price
we know the percentage change in quantiy is to work out the difference between the two quantities which is
Increase = New quantity - Original quantity / original number x 100
= 2500-2000/2500 × 100
= 300/2500 × 100
= 0.12 × 100
= 12%
The percentage change in price will be:
= 10-5/10 × 100
= 5/10 × 100
= 0.5 × 100
= 50%
Since Price elasticity of demand is the proportion of the rate alter in the amount demanded of an item to the rate alter in price
the price elasticity of demand will be :
= 12%/50%
= 0.24
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The operating ratio for a PC insurer equals _________. A. loss ratio plus the ratios of loss adjustment expenses to premiums earned. B. loss ratio plus expense ratio plus dividend ratio. C. combined ratio minus dividends paid to policyholders. D. acquisition costs plus dividends paid as a proportion of premiums earned. E. combined ratio after dividends minus the investment yield.
Answers
Answer:
. E. combined ratio after dividends minus the investment yield
Explanation:
The operating ratio for a PC insurer
can be regarded as the comparison of total expenses of a company compared to net sales generated or the generated revenue. The operating ratio gives the measurement of a overall operational profitability of a firm from both underwriting as well as investment activities. It can be calculated by finding the ratio of
(property's operating expense after substraction of depreciation) and ( the gross operating income). It should be noted that The operating ratio for a PC insurer equals combined ratio after dividends minus the investment yield.
how many visits does it typically take for a new client to become a loyal current client?
Answers
The number of visits it typically takes for a new client to become a loyal current client can vary widely depending on the nature of the business and the industry.
There is no one-size-fits-all answer to this question, as the time it takes for a customer to become loyal can depend on many factors, such as the quality of the product or service, the customer service experience, the price, and the customer's individual preferences and needs.
Some studies suggest that it can take between 5 to 7 visits for a new customer to become a loyal customer, but this is not a universal rule. Other studies suggest that the time it takes for a customer to become loyal can vary widely, with some customers becoming loyal after just one positive experience, while others may require many more interactions before they are convinced to return.
Ultimately, the key to developing a loyal customer base is to provide a consistently high-quality experience that meets or exceeds the customer's expectations, and to build a strong relationship with the customer over time through effective communication, personalized service, and ongoing engagement.
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The table below contains the demand and supply schedule for apartments in a city. Suppose the city council feels that the equilibrium rent is too high and imposes a price ceiling of $750 a month.
Rent/Month Quantity Demanded Quantity Supplied
$1,750 300 4,800
$1,500 600 2,400
$1,250 1,200 1,200
$1,000 2,400 600
$750 4,800 300
Based on the results, would we expect a surplus or shortage of apartments? How many apartments would be affected by this price ceiling?
Answers
Based on the given demand and supply schedule for apartments in a city, with a price ceiling of $750 a month: 4,500 apartments would be affected by the price ceiling of $750 a month
we can determine whether there would be a surplus or shortage of apartments and how many apartments would be affected.
To analyze the situation, we need to find the quantity demanded and quantity supplied at the imposed price ceiling of $750 a month. According to the table, at a rent of $750/month, the quantity demanded is 4,800 apartments, and the quantity supplied is 300 apartments.
Since the quantity demanded (4,800 apartments) is higher than the quantity supplied (300 apartments) at the price ceiling, we would expect a shortage of apartments in the city.
The number of apartments affected by this price ceiling can be calculated by finding the difference between the quantity demanded and the quantity supplied at the price ceiling level:
Affected apartments = Quantity demanded - Quantity supplied
Affected apartments = 4,800 - 300
Affected apartments = 4,500
So, 4,500 apartments would be affected by the price ceiling of $750 a month.
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A firm has a Cobb-Douglas production function given by Q=10 L 0.8 K 0.2 where Q is output, and L is the quantity of labour employed and K is the quantity of capital employed. What combination of L and K will be chosen to maximise output if the total cost of production is €500, the wage rate is €10 per labour unit employed and capital costs €15 per unit? At what level of Q is output maximised? [45 marks]
Answers
The optimal combination of labor (L) and capital (K) that maximizes output while keeping the total cost of production within €500 is approximately L ≈ 28.5714 and K≈ 14.2857
How to calculate tie valueSetting up the Lagrangian:
∂L/∂L = 8Q/L = λ(-€10) (1)
∂L/∂K = 2Q/K = λ(-€15) (2)
∂L/∂Q = 10L^0.8K^0.2 = 0 (3)
∂L/∂λ = €500 - €10L - €15K = 0 (4)
From equation (3), we have Q = 0. It means that output is zero, which is not possible in this context.
Now, let's solve equations (1), (2), and (4) to find the values of L, K, and λ.
From equation (1):
8Q/L = λ(-€10)
8Q = -λ€10L (5)
From equation (2):
2Q/K = λ(-€15)
2Q = -λ€15K (6)
Dividing equation (5) by equation (6):
(8Q)/(2Q) = (-λ€10L)/(-λ€15K)
4 = 2L/K
L = 2K (7)
Substituting equation (7) into equation (4):
€500 - €10(2K) - €15K = 0
€500 - €20K - €15K = 0
€500 - €35K = 0
€35K = €500
K = €500/€35
K ≈ 14.2857
Substituting the value of K back into equation (7):
L = 2(14.2857)
L ≈ 28.5714
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A firm has a Cobb-Douglas production function given by Q=10 \(L^{0.8}\) \(K^{0.2 }\) where Q is output, and L is the quantity of labour employed and K is the quantity of capital employed. What combination of L and K will be chosen to maximise output if the total cost of production is €500, the wage rate is €10 per labour unit employed and capital costs €15 per unit?
At what level of Q is output maximised?
Give a proper definition of money.
Answers
Answer:
Money is an economic unit that functions as a generally recognized medium of exchange for transactional purposes in an economy. Money provides the service of reducing transaction costs, namely the double coincidence of wants. Money originates in the form of a commodity, having a physical property to be adopted by market participants as a medium of exchange. Money can be: market-determined, officially issued legal tender or fiat money, money substitutes, and fiduciary media, and electronic cryptocurrencies.
Explanation:
In iitts fiirstt year,, "Aboll Buna Co" had tthe follllowiing experiience Salles = 25,,000 uniitts Selllliing priice = br.. 100 TVC = br.. 1,,500,,000 TFC = br.. 350,,000
Answers
1. revenue: Total revenue is calculated by multiplying the number of units sold by the selling price per unit. In this case, Aboll Buna Co sold 25,000 units at a selling price of br. 100 per unit, so its total revenue is:
Total revenue = 25,000 x br. 100 = br. 2,500,000
2. Total variable costs (TVC): TVC are the costs that vary with the level of production. In this case, the TVC for Aboll Buna Co is given as br. 1,500,000.
3. Total fixed costs (TFC): TFC are the costs that do not vary with the level of production. In this case, the TFC for Aboll Buna Co is given as br. 350,000.
4. Total cost (TC): Total cost is the sum of TVC and TFC. In this case, the TC for Aboll Buna Co is:
TC = TVC + TFCTC = br. 1,500,000 + br. 350,000
TC = br. 1,850,000
5. Gross profit: Gross profit is the difference between total revenue and total variable costs. In this case, the gross profit for Aboll Buna Co is:
Gross profit = Total revenue - TVCGross profit = br. 2,500,000 - br. 1,500,000
Gross profit = br. 1,000,000
6. Operating profit: Operating profit is the difference between gross profit and total fixed costs. In this case, the operating profit for Aboll Buna Co is:
Operating profit = Gross profit - TFCOperating profit = br. 1,000,000 - br. 350,000
Operating profit = br. 650,000
These metrics provide a snapshot of Aboll Buna Co's financial performance in its first year of operation.
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