What role should government play in a free market economy?

Answers

Answer 1

Answer: Economists, however, identify six major functions of governments in market economies. Governments provide the legal and social framework, maintain competition, provide public goods and services, redistribute income, correct for externalities, and stabilize the economy.

Answer 2

Answer:

Answer: Stabilize the economy

Explanation:

Related Questions

Last year, you earned a nominal rate of return of 6.92 percent on your bond investments. During that time, the inflation rate was 2.74 percent. How much did your purchasing power increase (real rate)
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The relevant production range for Challenger Trailers, Inc. is between 120,000 units and 190,000 units per month. If the company produces beyond 190,000 units per month:__________. A. the fixed costs and the variable cost per unit will not change B. the fixed costs may change, but the variable cost per unit will remain the same C. the fixed costs will remain the same, but the variable cost per unit may change D. both the fixed costs and the variable cost per unit may change

Answers

Answer: D. both the fixed costs and the variable cost per unit may change

Explanation:

It is said that Fixed costs do not change regardless of production level but this is not entirely true. Fixed costs usually do not change for a production range but if the range is passed, the fixed costs might then increase and a new fixed cost for the new relevant range will be charged.

Variable costs are variable because they change with production so if the company is producing more units, they will be incurring more variable costs.

In conclusion therefore, if the company produces more units than its relevant production range, it risks both fixed and variable costs changing.

A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. LDC Sales (units) 100,505 19,600 Labor (hours) 19,550 14,550 Raw materials (currency) $ 20,500 19,550 (FC) Capital equipment (hours) 58,600 4,550 *Foreign Currency unit a. a. Calculate partial labor and capital productivity figures for the parent and subsidiary. (Round your answers to 2 decimal places.)
b. Compute the multifactor productivity figures for labor and capital together. (Round your answers to 2 decimal places.)
c. Calculate raw material productivity figures (units/$ where $1

Answers

Answer:

Part A:

Labur Productivity:

For US=5.14, LDC=1.35

Capital Productivity:

For US=1.72 LDC=4.31

Part B:(Multi factor productivity)

For US=1.29 LDC=1.03

Part C: (Raw material productivity)

For US=4.90 LDC=10.02

Explanation:

Part A:

Labur Productivity:

For US:

$Partial Labor Productivity=(Sale(units))/(Labour(hours) \nPartial Labor Productivity=(100505)/(19550) \nPartial Labor Productivity=5.14$

For LDC:

$Partial Labor Productivity=(Sale(units))/(Labour(hours) \nPartial Labor Productivity=(19600)/(14550) \nPartial Labor Productivity=1.35$

Capital Productivity:

For US:

$Capital Productivity=(Sale(units))/(Capital Equipment) \nCapital Productivity=(100505)/(58600)\nCapital Productivity=1.72$

For LDC:

$Capital Productivity=(Sale(units))/(Capital Equipment) \nCapital Productivity=(19600)/(4550)\nCapital Productivity=4.31$

Part B:

For US:

$Multifactor Productivity=(Sales(units))/(labour(Hours) + Capital Equipment(hours))\n Multifactor Productivity=(100505)/(19550+58600) \nMultifactor Productivity=1.29$

For LDC:

$Multifactor Productivity=(Sales(units))/(labour(Hours) + Capital Equipment(hours))\n Multifactor Productivity=(19600)/(14550+4550) \nMultifactor Productivity=1.03$

Part C:

For US:

$Raw material productivity=(Sales(Hour))/(Raw Material) \n Raw material productivity=(100505)/(20500) \n Raw material productivity=4.90$

ForLDC:

Converting Raw material FC into $ (1$=10FC)

Raw Material =19550/10=$1955

$Raw material productivity=(Sales(Hour))/(Raw Material) \n Raw material productivity=(19600)/(1955) \n Raw material productivity=10.02$

Assume that Jose is indifferent between investing in a corporate bond that pays 10 percent interest and a stock with no growth potential that pays an 9.7 percent dividend yield. Assume that the tax rate on dividends is 15 percent. What is Jose's marginal tax rate?a. 47%.b. 37%.c. 32%.d. 15%.e. None of these.

Answers

Answer:

e. None of these.

Explanation:

Step 1. Given information.

Taxable Dividend Yield = 9.7%

Tax rate on Dividend yield=15%

Interest rate=10%

Let Tax rate on Interest=X

Step 2. Formulas needed to solve the exercise.

Interest rate * (1 - x) = taxable dividend yield ( 1 - tax rate on dividend yield)

Step 3. Calculation.

0.10*(1-x)=0.097*(1-0.15)

0.10-0.10x=0.08245

0.10x=0.01755

x=0.01755/0.10

=0.1755

=17.55%

Step 4. Solution.

e. None of these.

Two investment advisers are comparing performance. One averaged a 19% return and the other a 16% return. However, the beta of the first adviser was 1.5, while that of the second was 1.a. Can you tell which adviser was a better selector of individual stocks (aside from the issue of general movements in the market)?
First Investment Advisor
Second Investment Advisor
Cannot be determined

b. If the T-bill rate were 6% and the market return during the period were 14%, which adviser would be the superior stock selector?
First Investment Advisor
Second Investment Advisor
Cannot be determined

c. What if the T-bill rate were 3% and the market return 15%?
First Investment Advisor
Second Investment Advisor
Cannot be determined

Answers

Answer:

a. Cannot be determined

b. Second Investment Advisor

c. Second Investment Advisor

Explanation:

a. Since all the information is not given in the question so we are not able to give advise. As abnormal return is calculated from subtracting the expected return from the return. But no such information is provided in the question.

b. We know that

Abnormal return = Return - expected return

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 6% + 1.5 × (14% - 6%)

= 6% + 1.5 × 8%

= 6% + 12%

= 18%

So abnormal return = 19% - 18% = 1%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 6% + 1 × (14% - 6%)

= 6% + 1 × 8%

= 6% + 8%

= 14%

So abnormal return = 16% - 18% = 2%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

c. In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 3% + 1.5 × (15% - 3%)

= 3% + 1.5 × 12%

= 3% + 18%

= 21%

So abnormal return = 19% - 21% = -2%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 3% + 1 × (15% - 3%)

= 3% + 1 × 12%

= 3% + 12%

= 15%

So abnormal return = 16% - 15% = 1%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

According to Duffy-Deno (2003), when the price of broadband access capacity (the amount of information one can send over an Internet connection) increases 10%, commercial customers buy about 3.8% less capacity. What is the elasticity of demand for broadband access capacity for firms? Is demand at the current price inelastic?

Answers

Answer:

-Price elasticity of demand (PED )= 0.38

-The PED is less than one, therefore the demand is price inelastic.

Explanation:

Price elasticity of demand (PED) is the degree of responsiveness of quantity demanded to a unit change in the price of the product all other things being equal. This index measures the corresponding magnitude by which quantity demand will increase, for example, if the price reduces by a given %.

Price elasticity of demand Index is interpreted as follows:

if PED greater than 1, product is elastic

if PED less that 1, product is inelastic

PED is very useful in pricing policy. For example, a product that is price elastic will accrue more revenue if the seller reduces its price and vice versa

The price elasticity of demand for a product can be computed as follows:

PED = % change in qty DD/ % change in price

So we can compute the PED for Duffy-Deno as follows:

PED = 3.8%/10%

The PED is less than one, therefore the demand is price inelastic.

Final answer:

The elasticity of demand for broadband access capacity for firms is -0.38. Because the absolute value is less than 1, the demand is considered inelastic.

Explanation:

Elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, the price of broadband access increased by 10% and the quantity demanded decreased by 3.8%. This gives an elasticity of -3.8% / 10% = -0.38. Demand is considered inelastic if the absolute value is less than 1. Hence, the demand for broadband access capacity for firms is inelastic.

Learn more about Elasticity of Demand here:

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Chang Corp. has $375,000 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $550,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constant? Do not round your intermediate calculations.