BUSINESS COLLEGE

Assume that two countries (Home and Foreign) each produce two goods (corn and wheat) under constant cost production. Home produces 0.5 ton of corn or 1 ton of wheat with a day of labor. Foreign produces 1 ton of corn and 0.5 ton of wheat. Without trade (in autarky), Home's daily production is 20 tons of wheat and 10 tons of corn. At which international price will Home's gains from trade be largest?

Answers

Answer 1

Answer:

Answer:

1/2 ton of wheat per ton of corn

Explanation:

Home produces 0.5 ton of corn or 1 ton of wheat with a day of labor:

Opportunity cost of producing a ton of corn = (1 ÷ 0.5)

= 2 tons of wheat

Opportunity cost of producing a ton of Wheat = (0.5 ÷ 1)

= 0.5 tons of corn

Foreign produces 1 ton of corn and 0.5 ton of wheat:

Opportunity cost of producing a ton of corn = (0.5 ÷ 1)

= 0.5 tons of wheat

Opportunity cost of producing a ton of Wheat = (1 ÷ 0.5)

= 2 tons of corn

Therefore,

Foreign has a comparative advantage in producing corn because of lower opportunity cost and Home has a comparative advantage in producing wheat.

So, home country will be importing corn from foreign. Hence, if the international price will be 0.5 tons of wheat per ton of corn then the home country will get the largest gains from the trade because it is willing to sacrifice 2 tons of wheat for a ton of corn.

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People want information communicated quickly and clearly. To make your writing more concise and understandable, avoid flabby expressions, long lead-ins, and unnecessary fillers.a. For the following sentence, choose the best revision.
1. I am sending you this letter to inform you that we have experienced an unexpected surprise within our expense sheet, but we are positively certain we will solve it.
A) We need to inform you that we have experienced an unexpected surprise with our expense sheet, but we are midway to an end result.
B) We have identified a problem with our expense sheet, but we will solve it.
C) I am sending you this letter to inform you that we have a problem with our expense sheet, but we are positively certain we have a solution.

Answers

Answer:

The best revision for the following sentence is:

B) We have identified a problem with our expense sheet, but we will solve it.

Explanation:

In e-mail, letters, messages, memos, and other business documents intended for a busy audience who appreciates getting the information they need quickly and easily, replacing a phrases with a word in a formal tone, detracting from adding meaning: "we have identified" instead of: "I am sending" or "we need to inform you", keeping the sentence just as it is with certain rhythm and concise.

Otherwise in option 1. I am sending you this letter to inform you that we have experienced an unexpected surprise within our expense sheet, but we are positively certain we will solve it.

The sentence has a redundant pair: "send" and "inform", it is “wordy,” and includes irrelevant “fillers” as "unexpected" that makes it lack of conciseness in the substantive information, not getting to the point promptly. I also includes passive voice which is not a grammatical error, but it often leads to using more words than necessary frustrating or confusing the audience; and it has prepositional phrases overuse: "that", within", "but" making this sentence clunky and unclear.

In option A) We need to inform you that we have experienced an unexpected surprise with our expense sheet, but we are midway to an end result.

The sentence has unnecessary modifiers: "unexpected" and "end", and passive voice again.

In option C) I am sending you this letter to inform you that we have a problem with our expense sheet, but we are positively certain we have a solution.

The sentence has unnecessary modifier: "positively".

An example of contractionary fiscal policy is: a. an increase in government expenditures, or an increase in taxes, or both.
b. a decrease in government expenditures, or a decrease in taxes,
c. or both. an increase in government expenditures, or a decrease in taxes, or both.
d. a decrease in government expenditures, or an increase in taxes, or both.
e. increasing government expenditures while holding taxes constant.

Answers

Final answer:

An example of contractionary fiscal policy is: d. a decrease in government expenditures, or an increase in taxes, or both.

Explanation:

Contractionary fiscal policy aims to reduce aggregate demand in an economy, which is to typically to combat inflation or cool down an overheating economy. It can be achieved through various means, including reducing government expenditures and increasing taxes.

Both actions decrease the overall amount of money circulating in the economy, which can lead to reduced consumer spending and business investment, helping to bring down inflationary pressures. Thus, generally combining a decrease in government expenditures with an increase in taxes can be an even more potent form of contractionary fiscal policy, as it addresses both the particular sides of the fiscal equation.

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The u. s. treasury issued a 10-year bond on november 16, 1998, paying 6.47% interest. thus, if you bought $600,000 worth of these bonds, you would receive $38,820 per year in interest for 10 years. at investor wishes to buy the rights to receive the interest on $600,000 worth of these bonds. the amount the investor is willing to pay is the present value of the interest payments, assuming a 6% rate of return. if we assume (incorrectly, but approximately) that the interest payments are made continuously, what will the investor pay?

Answers

The investor will pay $ 21,304.88to receive an annuity of $38,820 each year for 10 years at 6% interest compounded continuously.

Given :

Interest on $600,000 worth of bonds = $38,820 per year

No. of years = 10 years

Discount rate = 6%

Compounding interval = Continuous compounding ( as given in the question)

We use the following formula to arrive at the Present Value:

$PV = C /e^(rt)$

$PV = 38820 /2.71828^(0.06*10)$

$PV = 38820 /1.822118065$

PV = $ 21,304.88

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X will _______.

Answers

Answer:

X demand would rise by 8% ; Y demand would fall by 4%

Explanation:

Price Elasticity of Demand is the responsiveness in demand quantity, due to change in good's price

P.Ed = % change in demand / % change in own price

Cross Price Elasticity is the responsiveness in a good's demand quantity, due to change in other good's price

C.Ed = % change in demand (Y) / % change in other good's price (X)

Given {Good X Elasticities} : P.Ed = (-) 4 ; C.Ed = 2

Price of X decrease = 2%

P.Ed = 4 = % change in demand / 2

% change in demand of X = 2 x 4 = 8%

P.Ed absolute value ignoring negative has been taken due to law of demand price - demand inverse relationship already depicting it. So, 2% fall in price of X increases it's quantity demanded by 8%

C.Ed = 2 = % change in Y demand / 2

% change in Y demand = 2 x 2 = 4%

Cross Price Elasticity of demand is positive in case of substitute goods. These goods can be interchange-ably used to satisfy a particular want. Substitutes price & demand are directly related;- as price fall of a good makes it relatively cheap, increases its demand, decreases other good's demand. So, 2% decrease in good X price decreases good Y demand by 4%

The profit margin ratio is the only ratio that makes up ROE that can be negative (except in relatively rare cases). Describe how the interpretation of the Asset Turnover Ratio and the Financial Leverage Ratio change based on whether the Profit Margin Ratio is positive or negative.

Answers

Except under very exceptional circumstances, the only ratio that makes up ROE that can be negative is the profit margin ratio. As a result, the asset turnover ratio continues to be positive and shows the amount of sales produced for each dollar of assets owned by the organization.

What is profit margin ?

One of the often used profitability statistics to determine how profitable a business or line of business is is profit margin. It displays the proportion of sales that have generated profits. Simply put, the percentage value represents the amount of profit the company made on each dollar of sales. For instance, if a company states that it had a 35% profit margin during the most recent quarter.

Different profit margins come in different forms. However, in common usage, it typically refers to net profit margin, which is a company's bottom line after all other costs, such as taxes and one-time charges, have been deducted from revenue.

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Explanation:

The profit margin ratio is the only ratio that makes up ROE that can be negative (except in relatively rare cases). ... Therefore, Asset turnover ratio still represents the amount of sales that is generated for each dollar of assets the company owns and always is positive.

Wholemark is an Internet order business that sells one popular New Year greeting card once a year. The cost of the paper on which the card is printed is $0.40 per card, and the cost of printing is $0.10 per card. The company receives $3.75 per card sold. Since the cards have the current year printed on them, unsold cards have no salvage value. Their customers are from the four areas: Los Angeles, Santa Monica, Hollywood, and Pasadena. Based on past data, the number of customers from each of the four regions is normally distributed with mean 2,300 and standard deviation 200. (Assume these four are independent.)What is the optimal production quantity for the card?