A. Explain the role labor’s productivity plays in wage determination in the competitive labor market. If productivity increases, what happens to wages and why? b. What is meant by the term "compensating wage differentials?"
c. Why is the demand for labor called a "derived demand."

Answers

Answer 1

Answer:

(A)Wages decrease in the long term

Explanation:

(A) The principles of supply and demand applies here.

Higher worker productivity in a particular industry implies increased demand for workers in the industry (short term effect).

Increased supply of workers implies:

1. output per worker increases, resulting in increase in supply of products in the industry. But, the laws of supply and demand comes in, because when supply increases, prices decrease.

That is, the increase in worker productivity may cause a decrease in prices resulting in a decrease in wages since the firm's revenue declined (long term effect).

2. Increase in the supply of workers in the industry with increased in productivity over workers from other industry because of initial increase in wages. This would lead to a decrease in wages because the supply of workers would exceed demand.

(B) The compensation differential is the additional amount of money that a given worker must be offered in order to motivate him to accept a given undesirable job, relative to other jobs that the worker could perform.

For example, when consumers want more of a particular good or service eg clothing, more firms in the industry will want workers that make this product.

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Gator Corporation manufactures several types of accessories. For the year, the gloves and mittens line had sales of $489,000, variable expenses of $360,000, and fixed expenses of $140,000. Therefore, the gloves and mittens line had a net loss of $11,000. If Gator eliminates the line, $35,000 of fixed costs will remain. Prepare an analysis showing whether the company should eliminate the gloves and mittens line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Sales $ $ $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ $ $ The analysis indicates that Gator should the gloves and mittens line.
Stanley Roper has $2,300 that he is looking to invest. His brother approached him with an investment opportunity that could give Patrick $4,800 in 4 years. What interest rate would the investment have to yield in order for Stanley’s brother to deliver on his promise? (Answer needs to be stated as a decimal. For example: .1192) Round to four decimal places.
A local bank advertises the following deal: "Pay us $100 at the end of each year for 12 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 4.00%.
Swinnerton Clothing Company's balance sheet showed total current assets of $2,250, all of which were required in operations. Its current liabilities consisted of $575 of accounts payable, $300 of 6% short-term notes payable to the bank, and $145 of accrued wages and taxes. What was its net operating working capital that was financed by investors?

Imagine that you are holding 5,000 shares of stock, currently selling at $40 per share. You are ready to sell the shares but would prefer to put off the sale until next year for tax reasons. If you continue to hold the shares until January, however, you face the risk that the stock will drop in value before year-end. You decide to use a collar to limit downside risk without laying out a good deal of additional funds. January call options with a strike of $45 are selling at $2, and January puts with a strike price of $35 are selling at $3. 1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:
(a) $30
(b) $40
(c) $50
2. Compare these proceeds to what you would realize if you simply continued to hold the shares.

Answers

Answer:

1. What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at:

(a) $30 ⇒ $170,000

(b) $40 ⇒ $195,000

call strike price $45

call premium received $2

put strike price $35

put premium paid $3

you pay $2 - $3 = -$1

stock price

$30 $40 $50

stock value $30 $40 $50

put value $5 - -

call value - - -$5

premium paid -$1 -$1 -$1

net stock value $34 $39 $44

total # of stocks 5,000 5,000 5,000

portfolio's value $170,000 $195,000 $220,000

2. Compare these proceeds to what you would realize if you simply continued to hold the shares.

if you hold the stocks:

(a) $30 ⇒ $150,000 - $170,000 = -$20,000 (you gain by using a collar)

(b) $40 ⇒ $200,000 - $195,000 = $5,000 (you lose by using a collar)

You win a lottery with a prize of $1.5 million. Unfortunately the prize is paid in 10 equal annual installments. The first payment is next year. How much is the prize really worth

Answers

The prize is really worth $1,006,512.21.

What is present value?

Present value is the sum of cash flows discounted at the rate of interest or the discount rate. The annual cash flows for the next 10 years = $1.5 million / 10 = 150,000

The present value can be determined using a financial calculator

Cash flow from year 1 to 10 = $150,000

Discount rate = 8%

Present value = $1,006,512.21

Here is the complete question: You win a lottery with a prize of $1.5 million. Unfortunately the prize is paid in 10 an¬nual installments. The first payment is next year. How much is the prize really worth? The discount rate is 8 percent.

To learn more about present value, please check: brainly.com/question/25748668

Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following values and adjusted bases:FMV Adjusted basis
Inventory $35,750 $10,100
Building 153,000 106,500
Land 291,750 375,000
Total $480,500 $491,600
The corporation also assumed a mortage of $153,750 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $320,750.
Required:
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Carla recognize on the transfer of the property to the corporation?
c. What is Carla's basis in the stock she receives in her corporation?

Answers

Answer:

a. The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation

c. The amount of Carla's basis in the stock she receives in her corporation is $337,850

Explanation:

a. In order to calculate the amount of gain or loss does Carla realize on the transfer of the property to the corporation we would have to use the following formula:

amount of gain or loss=Fair market value of stock received+morgage assume by corporation-Adjusted tax basis of the property transferred

amount of gain or loss=$320,750+$153,750-$491,600

amount of gain or loss=-$17,100

The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation because the requirements are met and no boot is received in exchange.

c. In order to calculate the amount of Carla's basis in the stock she receives in her corporation we would have to use the following formula:

amount of Carla's basis in the stock=Adjusted tax basis of the property transferred-morgage assume by corporation

amount of Carla's basis in the stock=$491,600-$153,750

amount of Carla's basis in the stock=$337,850

The amount of Carla's basis in the stock she receives in her corporation is $337,850

Alpha Company has budgeted activity for October to reflect net income $120,000. All sales are credit sales. Receivables are planned to increase by $35,000, payables to decrease by $25,000 and Depreciation Expense is $55,000. Use this information to determine how much cash will increase (decrease) during the month of October. (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units)

Answers

Answer:

The cash is increased by $115,000 during the month of October.

Explanation:

The computation of net effect of cash is shown below:

= Net income - increased in receivables - decrease in payable + depreciation expense

= $120,000 - $35,000 - $25,000 + $55,000

= $115,000

The increase in receivable should be deducted as the outflow of cash is there, which decrease the cash balance so we deduct it

The decrease in account payable reflect that the company has paid the amount which ultimately reduce the cash balance, hence it is deducted in the computation part

Depreciation expense is added in the cash balance because it is a non cash expense.

Thus, the amount is in positive number which reflects increase in cash

Hence, the cash is increased by $115,000 during the month of October.

In the initial Cournot duopoly equilibrium, both firms have constant marginal costs, m, and no fixed costs, and there is a barrier to entry. Show what happens to the best-response function of firms if both firms now face a fixed cost of F Let market demand be p-a -bQ, where a and b are positive parameters with 2 firms. Let q1 and q2 be the amount produced by firm 1 and firm 2, respectively. Assuming it is optimal for the firm one to produce, its best-response function is I. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. Eg., a subscript can be created with the- q1 = character.)

Answers

Answer:

The best response functions are given by

$q_1=(a-m)/(2b)-(q_2)/(2)$

$q_2=(a-m)/(2b)-(q_1)/(2)$

Explanation:

Under no fixed costs the total costs is

$CT_i= mq_i$

for i=1,2. The market demand is given by

$p=a-bQ$

where $Q=q_1+q_2$ is the total production

Firm 1 and 2 will maximize its own profits. Since this firms are symmetric the problems are too

$max\,\Pi_1=p=(a-b(q_1+q_2))q_1-mq_1$

The first order conditions (take derivative of the profit with respect to $q_1$ are given by

$a-2 b q_1-b q_2-m=0$

Then the best-response function for Firm 1 will be

$q_1=(a-m)/(2b)-(q_2)/(2)$

and the solution for Firm 2 would be the symmetric

$q_2=(a-m)/(2b)-(q_1)/(2)$

Now we can add fixed costs, so total costs now look

$CT_i= F+mq_i$ for i=1,2

the profit maximization problem for firm 1 looks now

$max\,\Pi_1=p=(a-b(q_1+q_2))q_1-F-mq_1$

The first order conditions are given by

$a-2 b q_1-b q_2-m=0$

note that this equation is the same as in the absence of Fixed Costs. So the solutions would be the same. Fixed costs don't change the optimal level of production of these firms.

Note that Total Costs are given by fixed costs (F) and marginal costs (m) that depend on the production level of the firm

$CT_i=F+mq_i$

for i=1,2. The market demand is given by

$p=a-bQ$

where $Q=q_1+q_2$ is the total production, so it's the sum of each firms production

Firm 1 will maximize it's own profits

$max\,\Pi_1=p=(a-b(q_1+q_2))q_1-F-mq_1$

The first order conditions (take derivative of the profit with respect to $q_1$ are given by

$a-2 b q_1-b q_2-m=0$

Then the best-response function for Firm 1 will be

$q_1=(a-m)/(2b)-(q_2)/(2)$

and the solution for Firm 2 would be symmetric.

Note that only marginal costs are relevant for getting the best-response function, so adding fixed costs (F) don't change the results

Explanation:

Gabby Company sells a product for $ 100 per unit. Variable costs are $ 60 per unit, and fixed costs are $ 2 comma 500 per month. The company expects to sell 600 units in September. Calculate the contribution margin per unit, in total, and as a ratio.

Answers

Answer:

(a) $40

(b) $24,000

Explanation:

Given that,

Selling price = $100 per unit

Variable costs = $60 per unit

Fixed costs = $2,500 per month

Contribution margin per unit:

= Selling price - Variable costs

= $100 per unit - $60 per unit

= $40

Total Contribution margin:

= Contribution margin per unit × No. of units sold

= $40 × 600 units

= $24,000

Contribution margin ratio:

= (Selling price - Variable costs) ÷ Selling price

= ($100 per unit - $60 per unit) ÷ $100 per unit

= 0.4 or 40 %

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A. Explain the role labor’s productivity plays in wage determination in the competitive labor market. If productivity increases, what happens to wages and why? b. What is meant by the term "compensating wage differentials?" c. Why is the demand for labor called a "derived demand."

Answers

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A. Explain the role labor’s productivity plays in wage determination in the competitive labor market. If productivity increases, what happens to wages and why? b. What is meant by the term "compensating wage differentials?"
c. Why is the demand for labor called a "derived demand."