Answer and Explanation:
Since Katherine is under 65 years of age and is the Head of Household. Therefore, in order to file a tax return, her gross income should at least be $13,400.
You manage a popular nightclub, and lately revenues have been disappointing Your bouncer suggests that raising drink prices will increase revenues. Your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that:
a) Your bouncer thinks the demand for drinks is elastic and the bartender thinks the demand for drinks is inelastic.
b) Your bouncer thinks the demand for drinks is inelastic and the bartender thinks the demand for drinks is elastic.
c) Both the bouncer and bartender think the demand for drinks is elastic.
d) Both the bouncer and bartender think the demand for drinks is inelastic.
Answer:
The correct answer is option b.
Explanation:
The manager of a nightclub wants to increase the revenues. The bouncer suggests increasing the price of drinks while the barender suggests decreasing the price.
An increase in the price of drinks will cause the revenues to increase if the demand for drinks is inelastic. The increase in the price will cause a less than proportionate decrease in the quantity demanded. In this situation, a price rise will increase revenues as well.
While a decrease in the price of a product will cause the revenues to increase if the demand is elastic. In this situation a decrease in the price will cause a more than proportionate increase in the quantity demanded. As a result, the revenues will increase.
This implies that the biuncer thinks the demand for drinks is inelastic while bartender thinks it is elastic.
To maximize revenues, a nightclub manager should understand the price elasticity of demand for drinks and adjust prices accordingly. If demand is elastic, lowering prices should increase total revenue, whereas if demand is inelastic, raising prices should lead to higher total revenue.
The question focuses on the concept of price elasticity of demand, which is crucial in determining how to maximize revenues from drink sales in a nightclub setting. The decision to either raise or lower drink prices should be based on whether the demand for drinks is elastic or inelastic.
If the demand for drinks is elastic, lowering prices would lead to a proportionately larger increase in the quantity sold, thus increasing total revenue. This is because consumers are more responsive to price changes when demand is elastic, and a lower price encourages more purchases. On the other hand, if the demand is inelastic, an increase in drink prices would lead to a smaller percentage decrease in the quantity sold, resulting in higher total revenue. In this scenario, consumers are less responsive to price alterations, and the higher price does not substantially deter sales.
Given the differing opinions between the bouncer and the bartender, the club manager must determine the elasticity of demand for drinks to make an informed pricing decision. If demand is elastic, as the bartender suggests, decrease in drink prices could be the right strategy. If demand is inelastic as the bouncer argues, increasing drink prices may be more appropriate to boost revenues.
Additional property improvments that bring no corresponding increase in income or value provide an example of
Answer:
Additional property improvement that bring no corresponding increase in income or value, the law of decreasing return is operating.
Explanation:
Improvements to land and structures eventually will reach a point at which there will have no positive effect on property values. As long as money spent on such improvements produces a proportionate or greater increase in income or value, the law of increasing returns is in effect.
At the point when additional improvement that bring no corresponding increase in income or value, the law of decreasing return is operating.
A government has the following liabilities at the end of the year:
General obligation bonds $1,500,000
Compensated absences 120,000
Salaries payable 40,000
What amount of liabilities should be reported in the governmental activities column of the
government-wide statement of net position?
A. $40,000
B. $160,000
C. $1,540,000
D. $1,660,000
Answer:
option (D) $1,660,000
Explanation:
Data provided in the question:
General obligation bonds = $1,500,000
Compensated absences = $120,000
Salaries payable = $40,000
Now,
The amount of liabilities that should be reported in the governmental activities column of the government-wide statement of net position
= General obligation bonds + Compensated absences + Salaries payable
= $1,500,000 + $120,000 + $40,000
= $1,660,000
Hence,
The answer is option (D) $1,660,000
A tax rate on a building with a $530,000 taxable value is 4.5 mills per thousand dollars of assessed valuation. What is the annual tax liability?
A: $23,850
B: $1,590
C: $2,385
D: $15,900
Answer:
C: $2,385
Explanation:
A tax liability by definition is basically known as debt owed by a corporation or an individual to a tax authority like the Internal Revenue Service(IRS). To solve this question, set it up like this;
If $1,000 pays 4.5mills in taxable value, then 530,000 would pay how much?
If $1000 = 4.5
then tax liability on $530,000 would be= (530,000 *4.5) / 1,000
= 2,385,000/ 1000
= $2,385
According to the chart, which country has an absolute advantage over the other countries in oil production?A. BrazilB. MexicoC. ArgentinaD. United States
The country that has an absolute advantage over the other countries in oil production is D. United States.
The United States has an absolute advantage in oil production compared to the other three countries. An absolute advantage is when a country can produce a good or service using fewer resources than any other country. The United States has an absolute advantage in oil production based on the number of worker hours required.
So, In this case, the United States can produce one unit of oil using only 6 worker hours, while the other countries all require more worker hours to produce the same amount of oil. For example, it takes Argentina 10 worker hours to produce one unit of oil, which is almost twice as long as the United States.
Adam Smith’s explanations of national economic living standards became known as the ___________ Theory..
Answer: Classical theory
Explanation:
The classical theory is one of the type of traditional method that explain about the national economy standard in an organization for building an accounting model by using various types o business strategies.
According to the question, the Adam smith's explaining about the national economical living standards.
The main benefits of the classical theory is that it helps in providing the high quality, efficiency, management and cost reduction in the specific organization system.
Therefore, Classical theory is the correct answer.
New ________________ can improve economic activity provided that production costs are reduced and the economy can absorb those workers who become unemployed as a result of the new __________________..
Answer and Explanation:
New technology
With the advent of certain technology, it is true that there has been reduction in production cost and an increase in output. However, these new technology has put many employees to home as well.
Last year, Joan bought 50 pounds of hamburger when her household income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. Holding everything else constant, Joan's income elasticity of demand for hamburger is ____ .a) positive, so joan considers hamburger to be an inferior good.b) negative, so joan considers hamburger to be an inferior good.c) negative, so joan considers hamburger to be a normal good.
Answer:
The answer is b) negative, so Joan considers hamburger to be an inferior good.
Explanation:
Le re-visit the concepts of inferior goods and normal goods before we applying them to answer the questions.
* Inferior goods are goods whose demand increases when consumer's incomes declines which is because these goods are considered to be more affordable, yet, more economical than normal goods.
* Normal good offers more values/pleasures than inferior goods. As a result, once consumers incomes increases, demand for normal goods will be increased subsequently.
In the question, Joan income has decreased and her hamburger demand has decreased. This can be interpreted as hamburger is a inferior goods which is cheaper and thus Joan substitutes hamburger for other normal goods ( such as pizza, proper meal at local food stall).
As a result, b is the correct answer.
The question is about elasticity of demand
Joan bought 50 pounds of Hamburger when her household income was $40,000
While she bought 60 pounds of Hamburger when her household income was $30,000.
This pattern suggests that Joan considers Hamburger a necessity and increasing the consumption even when her household income is reducing
Hamburger is an inferior good but Joan is taking an inverse i.e negative effect.
Therefore the correct answer to the given question is B. Negative, so Joan considers hamburger to be an inferior good.
Learn more about Business at https://brainly.com/question/15838440
Marlow Company purchased a point of sale system on January 1 for $7,000. This system has a useful life of 5 years and a salvage value of $1,200. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?
Answer:
$1,680
Explanation:
Data provided in the question:
Purchasing cost = $7,000
Useful life = 5 years
Salvage value = $1,200
Now,
Rate of depreciation using double declining method
= 2 × [ 1 ÷ Useful life ]
= 2 × [ 1 ÷ 5 ]
= 0.4
Therefore,
Depreciation expense for the year 1 = Rate of depreciation × Purchase cost
= 0.4 × $7,000
= $2,800
Thus,
Book value for the year 2 = cost - Depreciation expense for the year 1
= $7,000 - $2,800
= $4,200
Thus,
Depreciation expense for the year 2
= Rate of depreciation × Book value for the year 2
= 0.4 × $4,200
= $1,680
To calculate the second year's depreciation expense using the double-declining-balance method, double the straight-line rate (40%) and apply it to the book value at the beginning of the second year ($4,200). This results in a depreciation expense of $1,680 for the second year.
Calculating Depreciation Using Double-Declining-Balance Method
To calculate the depreciation expense for the second year using the double-declining-balance method for Marlow Company's point of sale system, we first need to determine the depreciation rate. The double-declining-balance method involves doubling the straight-line depreciation rate. Since the point of sale system has a useful life of 5 years, the straight-line depreciation rate is 1 / 5, or 20%. Accordingly, the double-declining rate is 40%.
Next, we calculate the second year's depreciation. In the first year, the depreciation would be 40% of $7,000, which equals $2,800. The book value at the end of the first year would then be the original cost minus the first year's depreciation ($7,000 - $2,800 = $4,200). For the second year, we again apply the 40% rate, but this time to the book value at the beginning of the second year, which is $4,200. The second year's depreciation would therefore be 40% of $4,200, or $1,680.
It is important to note that the salvage value is not considered in the annual calculation of depreciation expense using the double-declining method until the book value reaches the salvage value. At that point, depreciation stops to ensure that the book value does not fall below the salvage value.
Adelle is a department manager at a large corporation. She has made a conscious choice to lead in ways that enrich the lives of her subordinates, to help them develop and perform to their greatest capacity. Adelle’s attitudes and behaviors are most consistent with which stage of moral development?
Answer:
Adelle’s attitudes and behaviors are most consistent with the post-conventional stage of moral development.
Explanation:
According to Kohlberg's theory of moral development, there are three stages of moral development. They are the pre-conventional, conventional and post-conventional stages.
Adelle's behavior is consistent with the post-conventional stage. In this stage a person develops his/her own sense of morality and make conscious decisions, not just relying on what the society believes to be right or wrong.
in a mass production of machining the cutting speeds are 100,200, 300 ft./minute and the corresponding production rates (P) are 8,12 and 10 parts per hour respectively. Calculate the best cutting speed and the corresponding maximum number of parts per hour
Answer:
The best production speed = 300ft/minute
18000/10 = 1800ft/part hr
Explanation:
Cut Speed A = 100ft/minute
Cut speed B = 200ft/minute
Cut speed C = 300ft/minute
Since 60 minutes = 1 hour
Machine works for one hour
Total length with cut for speed A = 60* 100 = 6000ft
Total length with cut speed B = 200 *60 = 12000ft
Total length with cut speed C = 300 * 60 = 18000ft
Number of 8 part in length A = 6000/8 = 750ft/part hr
Number of 12 parts in length B = 12000/12 = 1000ft/part hr
Number of 10 parts in length C =
18000/10 = 1800ft/part hr
New real estate disclosure regulations require sellers and their agents to tell prospective buyers about any existing problems with the property. Previously, they were expected only to answer buyers' questions. The new regulation addressed the marketing ethical problem of
A. deceptive pricing tactics.
B. misleading advertising.
C. withholding information.
D. high-pressure sales techniques.
Answer: (C) Withholding information
Explanation:
The withholding information is one of the type of holding information in which we easily hold the various types of data or information deliberately in order to showing more power as compared to others.
According to the question, the agent of the real estate are withholding the data or information from the buyers and the various types of new regulations are addressing to the specific withholding information ethical problem in the market.
Therefore, Option (C) is correct.
The correct answer is C. withholding information.
Earlier the real estate agent could withhold information from buyer unless the buyer explicitly asked for it. But now, keeping in mind the benefit of the buyer regulations have changed against withholding information. It has become a mandate now to disclose existing problems of the property with the buyer so that they can make a well informed decision from their end.
Coronado Company purchased land for $80,000. The company also paid $12,000 in accrued taxes on the property, incurred $5,000 to remove an old building, and received $2,000 from the salvage of the old building. At what amount will the land be recorded in the accounting records
Final answer:
The land will be recorded in the accounting records at $95,000, which is calculated by adding the purchase price, accrued taxes, and removal costs, and then subtracting the salvage revenue received.
Explanation:
The amount at which the land will be recorded in the accounting records is based on the total costs incurred to prepare the land for its intended use. The land will be recorded by adding the purchase price of the land ($80,000) to the accrued taxes paid ($12,000) and to the costs incurred ($5,000) to remove the old building. From this total cost, we deduct the amount received from the salvage of the old building ($2,000).
The calculation can be summarized as follows:
Purchase price of the land: $80,000
+ Accrued taxes paid: $12,000
+ Cost to remove building: $5,000
- Salvage received: $2,000
Total recorded amount: $95,000
Which of the following is not true of depreciation accounting?
A. It retains funds by reducing income taxes and dividends.
B. Depreciation allocates replacement values as part of the matching of revenues and expenses.
C. It is not a matter of valuation. It is part of the matching of historical costs to revenues and expenses.
Answer:
B. Depreciation allocates replacement values as part of the matching of revenues and expenses.
Explanation:
Depreciation allocates replacement values as part of the matching of revenues and expenses is not entirely true about depreciation accounting.
Venus Inc. paid $5,000 for account payable. How does this transaction affect the accounting equation of Venus?
A) Assets decrease by $5,000 and equity increases by $5,000
B) Assets decrease by $5,000 and liabilities decrease by $5,000
C) Assets increase by $5,000 and equity decreases by $5,000
D) Assets increase by $5,000 and liabilities increase by $5,000
Answer:
B) Assets decrease by $5,000 and liabilities decrease by $5,000
Explanation:
Account equation of any entity can be represented by following equation:
Assets=Equity+Liabilities
When the entity pays for any account payable, its current liabilities in balance sheet are decreased and at the same time the cash included in the current assets of the balance sheet is also decreased.
In this case, the $5,000 paid by Venus Inc. will decrease the liabilities and assets section of Venus's balance sheet by $5,000.
So based on the above discussion, the answer shall be B) Assets decrease by $5,000 and liabilities decrease by $5,000
A client is visiting the prenatal clinic for the first time. While giving the nursing history the client states that her last menstrual period started on June 10. What is her expected date of birth (EDB), according to Nägele's rule?
Answer:
Expected date of birth will be 17 march
Explanation:
We have given last menstrual period started on June 10
We have to find the expected date of birth
According to Nägele's rule expected birth will be subtracting 3 month from last menstrual period and add 7 days
So after subtracting 3 month from last menstrual period it will be 10 march
And after adding 7 days it will become 17 march
So expected date of birth will be 17 march
A firm using the perpetual inventory method returned defective merchandise costing P2,000 to one of its suppliers. The entry to record this transaction will include a debit to a. Accounts Receivable. b. Inventory. c. Purchase Returns and Allowances. d. Accounts Payable.
Answer:
Correct option is (d)
Explanation:
Purchase returns is a contra account which is related to purchases. Some part of purchases are returned due to many reasons such as receipt of defective goods or goods are not needed anymore. In such cases, a contra journal entry is passed in the books of both supplier and purchaser.
Following entry is passed in the books of the purchaser if goods were purchased on account:
Particulars Debit Credit
Accounts payable P2,000
Purchase returns and P2,000
allowances
(To record purchase returns)
The initial entry passed when purchases were made was"
Particulars Debit Credit
Purchases P2,000
Accounts payable P2,000
(To record purchases made
on account)
The above is reversed when purchases are returned.
So, the firm will debit accounts payable.
Limpuntof Heritage Festival is an annual cultural event held in the country of Pompottis. A number of domestic companies extend their sponsorships for this event as part of their corporate social responsibility activities to preserve the heritage of the country. Which of the following marketing strategies does this scenario best illustrate.
Answer: Event marketing
Explanation: Event marketing is experiential marketing via special events of a company, facility or product. This generally involves direct communication with associates of a company.
It must not be mistaken with event management, that is a method under which activities are coordinated, supported and performed. Experiential branding incorporates the company communication model which seeks to connect with the audience additionally.
Experimental embraces a simple method that blends the image of a brand with interactive elements. This marketing style puts the intended audience in a live setting that might promote the intended result.
The scenario best illustrates Cause-Related Marketing, a strategy where a company associates itself with a social cause to promote its business and make a positive contribution to society.
Explanation:The scenario presented—domestic companies sponsoring the Limpuntof Heritage Festival in Pompottis as part of their corporate social responsibility activities—best illustrates the marketing strategy known as Cause-Related Marketing.
This strategy is used when a company associates itself with a social cause or issue in an effort to promote its business and benefit the cause. In this scenario, the cause is the preservation of the country's heritage. Such tactics serve various purposes: they help enhance a company's image, attract conscious consumers, and contribute positively to the community. Other examples of this can be found in celebrations like the Diwali festival, Saint Patrick's Day, and Cinco de Mayo where sponsors assist in preserving cultural identity, much like the Limpuntof Heritage Festival
Learn more about Cause-Related Marketing here:https://brainly.com/question/33721312
#SPJ3
KL Airlines paid an annual dividend of $1.18 a share last month. The company is planning on paying $1.50, $1.75, and $1.80 a share over the next 3 years, respectively. After that, the dividend will be constant at $1.50 per share per year. What is the market price of this stock if the market rate of return is 10.5 percent?
Final answer:
The market price of KL Airlines stock can be calculated by discounting its expected dividends by the market rate of return of 10.5%. This includes the specific dividends for the first three years and a constant dividend thereafter as a perpetuity.
Explanation:
The market price of a stock can be determined by calculating the present value of expected future dividends. In the case of KL Airlines, which has a varying dividend for the next three years before settling into a constant dividend, we must calculate the present value of each dividend separately and then use the Gordon Growth Model to find the present value of all future dividends after the period of changing dividends.
To calculate the present value of the dividends paid in the first three years, we discount each dividend by the market rate of return, which is 10.5% in this case. Then, for the constant dividend that begins in year 4, we use the formula for a perpetuity:
Present Value of Constant Dividend = Dividend per share / Market rate of return
Since the dividend will be $1.50 starting in year 4 indefinitely, we calculate the present value of the constant dividends beginning at year 4, which also needs to be discounted back to present value using the same market rate of return.
Finally, we sum up the present values of all dividends to find the current market price of the stock. It's important to remember when you're doing these calculations, that the dividends expected in the future are not the same as actual cash in hand today. Due to the time value of money, a dollar received in the future is worth less than a dollar received today. Therefore, we must adjust or discount the future dividends to reflect their present value.
Obtain the relevant authoritative literature on accounting for accounts receivable using the fasb's codification research system at the fasb website (www.fasb.org). what is the specific citation that describes the information about loans and trade receivables that is to be disclosed in the summary of significant accounting policies
Answer:
FASB: Financial Accounting Standards Board (FASB) is the board that governs GAAP by setting guidelines for financial accounting.
Explanation:
Requirement 1:
The specific citation that specifies these disclosure policies is FASB ACS 310-10-50-9: "Receivables—Overall—Disclosure—Accounting Policies for Credit Losses and Doubtful Accounts."
Requirement 2:
FASB ACS 310-10-50-9 — Disclosures:
"In addition to disclosures required by this Subsection and Subtopic 450-20, an entity shall disclose a description of the accounting policies and methodology the entity used to estimate its allowance for loan losses, allowance for doubtful accounts, and any liability for off-balance-sheet credit losses and related charges for loan, trade receivable or other credit losses in the notes to
The financial statements. Such a description shall identify the factors that influenced management's judgment (for example, historical losses and existing economic conditions) and may also include discussion of risk elements relevant to particular categories of financial instruments."
Under autarky a country produces three goods: oranges, books, and calculators. The price of oranges is $1. If the wage is equal to $6 and each worker spends 1/3 of her income on each of the three goods, what is the consumption of oranges per person?
Answer:
The consumption of oranges per person is two.
Explanation:
Given data:
Price of oranges = 1$
Wage of worker = 6$
Consumption of oranges per person = ?
Solution:
As given each worker spends 1/3 of income on each of three goods that means
1/3 of income will be spend on oranges
1/3 of income = 1/3 x 6
1/3 of income = 2$
That means 2$ will be spent on oranges
As one orange has price of 1$ so with 2$, we can buy two oranges.
Which of the following is an individual characteristic of employees that improves individual mechanisms such as stress and motivation?A) Organizational structureB) SkillsC) PersonalityD) MotivationE) Leadership style
Answer: C) Personality
Explanation:
Personality is an individuals quality that helps them succeed in life. If you improve your personality you can control stress and increase your motivation.
You have just purchased a home by borrowing $400,000 for 30-years at a fixed APR of 3.87%. The loan payments are monthly and interest is compounded monthly.a. What is the periodic interest rate? (I.e., what is the monthly interest rate?)b. What is the effective annual rate on the loan? (I.e., what is the interest rate once we take into account compounding?)c. What is the monthly mortgage payment?
Answer:
a. 0.3225% per month
b. 3.9393874%
c. $1,879.80
Explanation:
a. 3.87%/12
= 3.87/100
= 0.0387/12
= 0.003225 * 100
= 0.3225% per month
b. (1 + .003225)^12 - 1
= 1.039393874 - 1 = .039393874
= 3.9393874% (note how this is slightly larger than 3.87%)
c. The formula to solve this is P r/(1 - ((1/(1+r))^n)
$400,000 * .003225 / (1 - ((1/(1+.003225 ))^360) = $1,879.80
Answer:money
Explanation:
Which stage of the selling process deals with the actual point of sale where the customer agrees to buy? Which stage relates to the post-sale interaction with the customer?
The ______ A.approach B.closing C.pre-approach stage relates to the point where the customer actually agrees to buy. The ______ A.overcoming objections B.follow-ups C.presentation stage relates to the post-sale interaction with the customer.
Answer:
B.closing
B.follow-ups
Explanation:
You should know as a real estate buyer or seller that the actual point of sale where the customer agrees to buy the property is the closing stage. At this stage, everything is finalized, and the buyer is now ready to buy the property.
Also, you should know that the stage that relates to the post-sale interaction with the customer is the follow-ups. All the processes that are required to be completed after the closing stage, is being done during the follow-ups. And if you want to become a real estate agent, you should learn these by heart for your whole life.
Answer:
B.closing
B.follow-ups
Explanation:
"The __________ provision specifies what an insured must do, if a policy has lapsed, in order to put it back in force."
Answer:
The correct answer is Reinstatement.
Explanation:
The Reinstatement provision specifies what an insured must do, if a policy has lapsed, in order to put it back in force.
A reinstatement clause is a clause in insurance policy which grants the policy owner the right to reinstate a lapsed policy for specified reasons, such as non-payment of premiums, by furnishing satisfactory evidence of insurability and paying all unpaid premiums.which grants the policy owner the right to reinstate a lapsed policy for specified reasons, such as non-payment of premiums, by furnishing satisfactory evidence of insurability and paying all unpaid premiums.
The reinstatement provision in insurance contracts specifies the steps a policy holder must take to put a lapsed policy back into effect, typically involving repayment of overdue premiums, proof of insurability, and sometimes interest payments.
Explanation:The reinstatement provision specifies what an insured must do, if a policy has lapsed, in order to put it back in force. To regain the coverage, the policy holder must pay all overdue premiums, provide proof of insurability, and may be required to pay interest on the unpaid premium. This is an important provision in insurance contracts, helping to protect both the insurance company and the policy holder. The reinstatement provision in insurance contracts specifies the steps a policy holder must take to put a lapsed policy back into effect, typically involving repayment of overdue premiums, proof of insurability, and sometimes interest payments.
Learn more about reinstatement provision here:https://brainly.com/question/33590565
#SPJ3
During recessions investment
a. falls by about the same percentage as GDP.
b. falls by a smaller percentage than GDP.
c. falls by a larger percentage than GDP.
d. falls but the percentage change is sometimes much larger and sometimes much smaller.
During recessions investment falls by a smaller percentage than GDP.
Answer: Option B
Explanation:
GDP is the gross domestic product of the country which talks about the growth rate of the country. During the time of recession in the trade cycle, the GDP of a country falls down.
The recession also sees the falling down of the demand, income, investment and so on. But during the time of recession, the fall in investment by the citizens of the country in various assets is less than the fall in the GDP of the country.
The money multiplier process also works in reverse when a loan is repaid and the amount of money that is destroyed is equal to the loan repayment times the money multiplier.A. TrueB. False
Answer:
The correct answer is TRUE
Personal selling can take place in all situations except when
Answer:
Through the newspaper ads.
Explanation:
Personal selling is one of the ways of selling of products by various businesses where the seller and the customers come in direct contact or face to face in order to discuss the features, benefits, and worthiness of any product that the seller is interested in selling This can be done through direct face to face interaction, on telephones, through video conferencing, and also on the internet but not through newspaper ads.
Sandra visits the local farmer's market every Friday during the summer, where she picks up fresh produce that was grown by the same farmers who are there to sell the goods. The farmer's market where Sandra likes to shop illustrates what type of distribution channel?
Answer:
Direct Distribution Channel
Explanation:
A direct distribution channel is the process to which a company receives its goods directly to consumers without any middlemen.
In this case, Sandra gets her produce from the farmer that produces them.
Many businesses may use systems involving middlemen to deal with the delivery of their products. A business that is directly responsible for manufacturing, shipping and distributing its goods to the consumer, however, uses a direct distribution channel.
The farmer's market where Sandra likes to shop illustrates a direct channel of distribution.
When Sandra visits the local farmer's market every Friday during the summer to pick up fresh produce grown by the same farmers who are there to sell the goods, she is engaging in a direct channel of distribution. This is because there are no intermediaries between the producer (the farmers) and the consumer (Sandra). The goods are sold directly by the producers to the end consumers, which is characteristic of a direct channel of distribution.
In contrast, an indirect channel of distribution would involve one or more intermediaries, such as wholesalers or retailers, between the producer and the consumer. Since Sandra is purchasing directly from the farmers, the scenario does not involve any intermediaries and thus represents a direct channel of distribution.
Suppose Juliana owns a small business making handbags. Each month she makes 18 handbags, which she sells for $100 each. The materials used to make each handbag cost $50. In addition, Juliana uses a spare room in her house to make the handbags and store her supplies. If she were not using the spare room for her business, she would use it as a guest room, an option that Juliana would value at $250 per month. If Juliana weren’t making handbags, she would work at Trader Joe’s earning $800 per month. What is Juliana’s economic profit each month?
Answer:
$-150
Explanation:
Sales Revenue = 18 handbags per month X $100 per handbag
= $1,800
Variable costs = 18 handbags X $50 cost per handbag
= $900
Juliana's Net Income = $1,800 - $900
= $900
Juliana's opportunity costs = $250 for renting guest room + $800 at job
= $1050
Juliana's Economic Profit = Net Income - Total Opportunity Costs
= $900 - $1,050
= -$150
Hence, her economic profit is actually a negative 150 dollars.
Final answer:
Juliana's economic profit is negative, a loss of $150 per month, after considering both explicit costs of materials ($900) and implicit costs of foregone opportunities ($1,050), which includes the use of her spare room and alternative income from a job.
Explanation:
To calculate Juliana's economic profit each month from her handbag business, we must consider both explicit and implicit costs. Explicit costs are her direct costs for materials, which are $50 per handbag. Given that she produces 18 handbags a month and sells them for $100 each, her total revenue is 18 x $100 = $1,800. The total explicit costs are 18 x $50 = $900. Therefore, her accounting profit before considering implicit costs would be $1,800 - $900 = $900.
However, economic profit also includes implicit costs, such as the opportunity costs of her time and the use of her space. Juliana values the use of her spare room as a guest room at $250 per month, and she would earn $800 per month by working at Trader Joe's. Thus, the total implicit cost is $250 + $800 = $1,050.
Subtracting the total implicit cost from her accounting profit gives us her economic profit: $900 (accounting profit) - $1,050 (total implicit cost) = $-150. Therefore, Juliana's economic profit is a loss of $150 per month.