Answer:
$222,640
Explanation:
The computation of the value of the house by considering the professional office is shown below:
= Recent appraisal on the house - real estate fees
= $242,000 - $19,360
= $222,640
We simply deduct the real estate fees amount from the recent appraisal amount so that the value of the house could come and the same is to be considered
The value i would place on the house when analyzing the option of using it as a professional office is $222,640
The computation of the value of the house by considering the professional office is to deduct the real estate fees amount from the recent appraisal amount so that the value of the house would be the difference.
= Recent appraisal on the house - real estate fees
= $242,000 - $19,360
= $222,640
Hence, the value i would place on the house when analyzing the option of using it as a professional office is $222,640
The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $6,884 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,600 and direct labor cost of $1,400. Therefore, the company's overhead application rate is:______
a. 111% of direct labor cost.
b. 186% of direct labor cost.
c. 206% of direct labor cost.
d. 49% of direct labor cost.
e. 54% of direct labor cost.
Answer:
d. 49% of direct labor cost.
Explanation:
Overhead Rate based on direct labor has cost of $6,884
Direct material costs $2,600
Direct labor costs $1,400
Overhead Cost based on direct labor cost = Direct Labor Costs * Percentage Rate
Percentage Rate= Overhead Cost / Direct Labor Costs
Percentage Rate = $6,884 /$1,400 = 4.917
This can be rechecked by multiplying the direct labor cost with the given rate.
So multiplying $1400*4.917= $6,884 which is the required amount.
Which factor will not shift the labor supply curve?A. a change in preferences and social normsB. changes in wealthC. changes in opportunitiesD. a change in the wage rate
Answer:
D. a change in the wage rate
Explanation:
A change in the wage rate would lead to a movement along the supply curve.
An increase in wages would increase the quantity supplied. This would lead to a movement up along the supply curve.
A decrease in wages would decrease the supply of labour. This would lead to a movement down along the supply curve
Inventory Valuation under Absorption Costing Amiens Company produced 20,000 units during its first year of operations and sold 18,900 at $17 per unit. The company chose practical activity—at 20,000 units—to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials $ 80,000 Direct labor 101,400 Variable overhead 15,600 Fixed overhead 54,600Required: 1. Calculate the unit cost for each of these four costs. Round your answers to the nearest cent. Direct Materials Cost $ Direct Labor Cost $ Variable Overhead Cost $ Fixed Overhead Cost $ 2. Calculate the cost of one unit of product under absorption costing. Round your answer to the nearest cent. $ 3. How many units are in ending inventory? $ 4. Calculate the cost of ending inventory under absorption costing. $
Answer:
Required 1
Direct Materials Cost = $4.00
Direct Labor Cost = $5.07
Variable Overhead Cost = $0.78
Fixed Overhead Cost = $2.73
Required 2
Unit Cost = $12.58
Required 3
Units in Ending Inventory = 1,100
Required 4
Cost of ending inventory = $13,838
Explanation:
Unit Cost Calculations :
Direct materials = $ 80,000 ÷ 20,000 units
= $4.00
Direct labor = $101,400 ÷ 20,000 units
= $5.07
Variable overhead = $15,600 ÷ 20,000 units
= $0.78
Fixed overhead = $54,600 ÷ 20,000 units
= $2.73
Unit Cost (Absorption Costing) = All Manufacturing Costs
= $4.00 + $5.07 + $0.78 + $2.73
= $12.58
Units in Ending Inventory = Opening Inventory Units + Production - Sales
= 0 + 20,000 units - 18,900 units
= 1,100
Cost of ending inventory = Unit Cost × Units in Ending Inventory
= $12.58 × 1,100
= $13,838
Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of $74,000 at age 65, the firm will pay the retiring professor $450 a month until death. If the professor’s remaining life expectancy is 15 years, what is the monthly interest rate on this annuity?
Answer: 0.10%
Explanation:
The following can be gotten from the question:
n = 15 years
We change it to months. Thus will be:
= 15 × 12
= 180
Present value of an annuity :
= A × {1- (1 +r ) -n ]/r}
74000 = 450 × [ 1- (1 +r) - 180]/r
r= 0.10%
Therefore, the monthly interest rate is 0.10%.
Which of the following is a drawback of Porter’s five forces model? Multiple Choice Managers cannot determine the changing speed of an industry or the rate of innovation. It fails to provide a basis for deriving implications for a firm’s strategic position within an industry. The model describes competition narrowly as a firm’s closest competitors. The model fails to consider that threat of substitutes can come from outside a given industry.
Answer: Managers cannot determine the changing speed of an industry or the rate of innovation.
Explanation:
A drawback of Porter’s five forces model is that managers cannot determine the changing speed of an industry or the rate of innovation.
With Porter's five-forces-plus-complements model, it is difficult for an economic entity to determine the rate if innovation in an organization or the changing speed of the industry and this means that the managers have to repeat their analysis constantly so as to have a picture of their industry that is more accurate.
what is the purpose of the accounting debit and credit system
Explanation:
to make sure that both are balanced
C 0
a.
Hank is a salaried plus commission employee. Hank has a monthly salary of $2.500 and earns 5.5% commission on all
sales. Which of the following expressions represents Hank's total earnings in one month if he has $6,300 in sales?
2,500 + (0.055)(6,300)
b. 2,500 + (5.5)(6,300)
c. (2,500) (5.5) + 6,300
d. (2,500) (0.055) + 6,300
Answer:
The answer is A
2,500 + (0.055)(6,300)
Explanation:
Answer:
A
Explanation:
Which two terms are associated directly with the way an annuity is funded?
A) Renewable or convertible.
B) Single payment or periodic payments.
C) Increasing or decreasing.
D) Level of flexible.
Answer:
D
Explanation:
Annuities can either be paid for as a lump sum (Single payment) or periodic payment.
Periodic payments can wither be fixed or variable
fixed payment is when a fixed amount is payed at a particular year. For example, $400 is paid at the beginning of every year.
Variable payment is when there is no structure in the amount or time the annuity is funded
In order to fund her retirement, Karen needs her portfolio to have an expected return of 13.5 percent per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock 3. If Stocks 1 and 2 have expected returns of 9 percent and 10 percent per year, respectively, then what is the minimum expected annual return for Stock 3 that is likely to enable Karen to achieve her investment requirement? (Round answer to 1 decimal place, e.g. 17.5%.)
Answer:
The return of stock C should be 25% for Karen to achieve her target.
Explanation:
The expected return on a portfolio is the weighted average of the individual stocks' returns that form up the portfolio. To calculate the expected return on the portfolio we use the following formula,
Portfolio return = wA * rA + wB * rB + ... + wN * rN
Where,
w is the weight of each stock in the portfolio r is the return of each stock
Let return of Stock C be x.
0.135 = 0.25 * 0.09 + 0.5 * 0.1 + 0.25 * x
0.135 = 0.0225 + 0.05 + 0.25x
0.135 - 0.0225 - 0.05 = 0.25x
0.0625 = 0.25x
x = 0.0625 / 0.25
x = 0.25 or 25%
The return of stock C should be 25% for Karen to achieve her target.
Today is June. Suppose you buy a futures contract for 42,000 gallons of RBOB gasoline delivered in December. The contract settles at $1.50 per gallon today. You decide to exit in August, when the contract settles at $1.45 per gallon. Calculate your payoff from holding the position between June and August
Answer:
The payoff from holding the position between June and August is $2,100 "loss"
Explanation:
Since I had gone long on the contract and it has gone down in value, I would be having a loss. The value of the loss will be:
= ($1.5 - $1.45) x 42,000 gallon of RBOB gasoline
= $0.05 * 42,000 gallon of RBOB gasoline
= $2,100 (Loss)
Jack performs maintenance on the manufacturing machinery, and Charlie performs maintenance on the office computers. Would their salaries be classified differently? A : Yes, Jack’s salary would be classified as direct labor, whereas Charlie’s salary would be classified as indirect labor. B : Yes, Jack’s salary would be classified as a product cost, whereas Charlie’s salary would be classified as a period cost. C : No, both salaries would be classified as indirect labor. D : No, both salaries would be classified as a product cost.
Answer:
B : Yes, Jack’s salary would be classified as a product cost, whereas Charlie’s salary would be classified as a period cost.
Explanation:
In determining the product cost, Jack's salary which forms part of the manufacturing overhead will be included in the total manufacturing costs whereas Charlie's salary will be regarded as a period cost. This makes option B the correct choice. The maintenance costs on manufacturing machinery and office computers are classified differently in a manufacturing setting because Jack's maintenance affects manufacturing indirectly while Charlie's maintenance affects the office administration directly.
Suppose you need $1 million dollars to start your dream business. Describe two ways you would generate the funds needed to start such a business. Next, discuss any risks or benefits you should be aware of when gathering these funds. Provide examples to support your response.
Answer:
Following are the two ways to generate the fund and start a new business:
Explanation:
Venture capitalist- It would be a type of equity finance in which venture capitalists will in particular aim for just a considerable amount of interest throughout the new startup. It enables you to get control of the mangers and try to get the funds from it by providing venture capital, that is diluting the interest in exchange for the funds necessary to begin the company. It will also add the knowledge on different issues, which is associated with this form of financing. It also ventures capitalists tend to intervene with leadership and try to control their company to harm the developer. It may also aim to manage the capital via a bank loan, in which it seeking to arrange funds by the use of cash, and these credits will have set loan repayment responsibilities even if it gains no profit, it is extremely risky and also has lower costs, because interest costs are mostly taxable income in design. This problem with both the taking of loans is because it has a fixed obligation and also poses a business liquidity position.Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,240,000 that is currently appraised at $1,440,000. The equipment originally cost $720,000 and is currently valued at $467,000. The inventory is valued on the balance sheet at $410,000 but has a market value of only one-half of that amount. The owner expects to collect 98 percent of the $225,200 in accounts receivable. The firm has $10,500 in cash and owes a total of $1,440,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?
Answer:
Net market value of firm = $903,196
Explanation:
Items to determine the Market value of the firm are as below
Item Amount
Current value of building $1,440,000
Current value of equipment $467,000
Market value of inventory $205,000
Cash in hand $10,500
98% of debtors $220,696
Less: Owings -$1,440,000
Net market value of firm $903,196
Kilgore Company experienced the following events during its first accounting period. (1) Issued common stock for $5,000 cash. (2) Earned $3,000 of cash revenue. (3) Paid a $4,000 cash to purchase land. (4) Paid cash dividends amounting to $400. (5) Paid $2,200 of cash expenses. The market value of the land at the end of the accounting period was $4,300. Based on this information the amount of total assets appearing on the year-end balance sheet is
Answer: $5400
Explanation:
An asset is a property or an item that is owned by an economic entity such as an individual or firm which has a value and can be used by its owner to meet obligations and liabilities.
Based on this information the amount of total assets appearing on the year-end balance sheet will be:
Cash Revenue - Cash expenses
= $5000 + $3000 - $4000 - $400 - $2200
= $1400
Land = $4000
Cash + Land
= $1400 + $4000
= $5400
Huggies is a popular brand of diapers that offers a variety of sizes and styles to fit babies based on weight, gender, and activity, such as swim diapers. Huggies devotes significant resources to conduct market research to understand customer needs and to ensure that its diaper products meet the needs of the customer. Rather than make just one diaper formulation, the products are highly customized and appeal to each customer's unique situation. This highlights one of the key differences between sales-oriented firms and marketing-oriented firms, which is _______.
Answer:
c. the organization's approach to marketing its products to specific customer segments rather than "everyone" or the average customer
Explanation:
Options includes: "a. the organization's primary goal to achieve profitability through sales volume , b. the organization's mission to produce the highest volume of products in a cost-efficient manner, c. the organization's approach to marketing its products to specific customer segments rather than "everyone" or the average customer , d. the organization's internal, sales-oriented focus
This highlights one of the key differences between sales-oriented firms and marketing-oriented firms, which is the organization's approach to marketing its products to specific customer segments rather than "everyone" or the average customer.
Sales oriented firm pursue the idea that the companies will produce products but will require effort from sales team to sell the product. They believe the success of the companies relies on the aggressiveness of the sales people.
Marketing oriented firm pursue the idea that the companies need to communicate the value proposition of the product. That if the value of the product can be successfully communicated, then the product will sell with considerable less effort from other departments.
Answer: c. the organization's approach to marketing its products to specific customer segments rather than "everyone" or the average customer.
During this stage of résumé review, employers use the résumé to guide interview questions: a. Stage 1 b. Stage 2 C. Stage 3
Answer:
the correct option is C
Explanation:
good luck!
During this stage of resume review, employers use the resume to guide interview questions as Stage 3. Thus, option (c) is correct.
What is resume?
The term “resume” is a formal document to present a job applicant with mention of specific details. The resume is a one- or two-page summary of a person's details, such as education, skills, and work experience.
There are divided into four categories of resumes, such as functional resume, combination resume, chronological resume, and targeted resume.
During the requirements process, resume review is divided into three stages, such as stage one: technology check; stage two: human screening; and stage three: interviewing.
A supervisor or hiring manager will now place the job applicant's resume in the “interview pile” for further consideration. This is the third stage of the resume evaluation process.
Therefore, option (c) is correct.
Learn more about on resume, here:
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The market for apartments was captured by a monopolist who charges high rents to some renters, leading many renters to complain to their local government. The city council in response decides to implement a price ceiling on apartments of $500. Demand in this market is represented by the
Answer:
70 units$700Explanation:
1. The demand curve is given and the price is given as well. Substitute the price ceiling into equation.
P = 1,200 - 10q
500 = 1,200 - 10q
q = (1,200 - 500 ) / 10
q = 70 units
2. If there was no price ceiling and 50 units, market price would be;
P = 1,200 - 10 * 50 apartments
P = $700
Three major segments of the transportation industry are motor carriers such as YRC Worldwide, railroads such as Union Pacific, and transportation logistics services such as C.H. Robinson Worldwide, Inc. Recent financial statement information for these three companies follows (in thousands): YRC Union Pacific C.H. Robinson Sales $4,832,400 $21,813,000 $13,476,084 Average total assets 1,939,800 53,486,000 3,199,348 a. Determine the asset turnover for all three companies. Round to one decimal place. YRC Union Pacific C.H. Robinson
Answer and Explanation:
The formula that is to be used to determine the asset turnover is shown below:
Asset turnover is
= Net sales ÷ Average total assets
For YRC
= $4,832,400 ÷ $1,939,800
= 2.5 times
For Union Pacific
= $21,813,000 ÷ $53,486,000
= 0.4 times
For C.H robinson
= $13,476,084 ÷ $3,199,348
= 4.2 times
We simply applied the above formula
1. Revenues = $27,000; Expenses = $18,000; Net income = ____________. 2. Increase in stockholders' equity = $17,000; Issuance of common stock = $11,000; Net income = $12,000; Dividends = ____________. 3. Assets = $24,000; Stockholders' equity = $15,000; Liabilities = ____________. 4. Total change in cash = $26,000; Net operating cash flows = $34,000; Net investing cash flows = ($17,000); Net financing cash flows = ____________.
Answer:
1. $9,000
2. $6,000
3. $9,000
4. -$25,000
Explanation:
Here, we are expected to calculate values for the terms using the values in the preceding term for each question;
1. Net Income
Mathematically, net income = Revenues - Expenses = 27,000 - 18,000 = $9,000
2. Dividends
Mathematically;
Change in stock holder’s equity = Issuance of common stock + Net Income - Dividends
Hence;
Dividends = Net Income + Issuance of Common Stock - Dividends
Dividends = 12,000 + 11,000 - 17,000 = 23,000 -17,000 = $6,000
3. Assets
Mathematically ;
Assets = Liabilities + Stockholder’s Equity
Thus;
Liabilities = Assets - Stockholder’s Equity
Liabilities = 24,000 -15,000 = $9,000
4. Net Operating Cash Flows;
Mathematically;
Net Financing cash flows = Total change in cash - ( Net operating cash flows + Net Investing Cash flows)
Net Financing cash flows = $26,000 - (34,000 + 17,000)
Net financing cash flows = 26,000 - 17,000 -34,000 = -$25,000
g Given the information below: ASSETS LIABILITIES Cash and cash equivalents $10,000 Current debts for the year $15,000 Other liquid assets $20,000 Other total liabilities $200,000 Investments $250,000 Fixed assets $300,000 INCOME DATA Annual after-tax income $75,000 Annual spending $67,000 The solvency ratio is closest to: A. 63% B. 33% C. 4% D. none of the above
Answer:
The solvency ratio is closest to: B. 33%.
Explanation:
The solvency ratio = After tax Net Operating Income ÷ Total Debt
Thus,
The solvency ratio = $75,000 ÷ ($15,000 + $200,000)
= 35.88%
Therefore this is closest to B. 33%.
Which of the following is one of the reasons that the supply curve for loanable funds is upward sloping? A lower real interest rate makes saving less appealing. A higher real interest rate makes borrowing less expensive. A lower real interest rate encourages domestic consumers to purchase foreign securities and discourages foreigners from purchasing domestic securities. A lower interest rate makes borrowing less expensive
Answer:
A lower real interest rate makes saving less appealing.
Explanation:
The lower the interest rate, the lower the amount saved and the higher the interest rate, the higher the amount of money saved. There is a positive relationship between interest rate and the supply of loanable funds. This is why the supply curve for loanable funds is upward sloping
The objective of tests of details of transactions performed as tests of controls is to A. Monitor the design and use of entity documents such as pre-numbered shipping forms. B. Determine whether internal controls have been implemented. C. Evaluate whether internal controls operated effectively. D. Detect material misstatements in the account balances of the financial statements.
Answer:
C. Evaluate whether internal controls operated effectively.
Explanation:
Given that, a test of details of the transaction is an activity or process carried out by auditors, which can be done together with the test of control. The purpose of the test of control is, however, to determine the effectiveness of internal control.
Hence, in this situation, the correct answer is option C: Evaluate whether internal controls operated effectively.
An investor in a limited partnership generating passive losses can offset these against:___________.
A. REIT dividends
B. income generated from direct investments in real estate
C. dividends received from blue chip corporations
D. capital gains generated from the sale of securities
Answer:
B. income generated from direct investments in real estate
Explanation:
Given that passive losses can only be offset by passive income, then from the available options, REIT otherwise known as Real Estate Investment Trust, the dividend is not categorized as passive income by the Internal Revenue Service, hence, option A is wrong.
Also, dividends received from blue-chip corporations is not a passive income, hence, option C is wrong.
At the same time, option D which is capital gains generated from the sale of securities is not a passive income either.
Therefore, option B, which is income generated from direct investments in real estate is a perfect example of passive income. Hence, the right answer.
Three phases of the management process are planning, directing, and controlling. Match the following descriptions to the proper phase. a. Process by which managers, given their assigned levels of responsibilities, run day-to- day operations. b. Isolating significant departures from plans for further investigation and possible remedial action. It may lead to a revision of future plans. c. Developing long-range courses of action to achieve goals. Phases:1. Planning 2. Directing 3. Controlling
Answer:
1. Directing.
2. Controlling.
3. Planning.
Explanation:
Management can be defined as the process of controlling or dealing with the affairs of an organization such as employees, policies etc in order to achieve set goals and objectives. The three (3) phases of the management process are planning, directing, and controlling.
a. Directing: process by which managers, given their assigned levels of responsibilities, run day-to- day operations.
b. Controlling: isolating significant departures from plans for further investigation and possible remedial action. It may lead to a revision of future plans.
c. Planning: developing long-range courses of action to achieve goals.
Nicole is a calendar-year taxpayer who accounts for her business using the cash method. On average, Nicole sends out bills for about 512,000 of her services at the first of each month. The bills are due by the end of the month, and typically 70 percent of the bills are paid on time and 98 percent are paid within 60 days.
a) Suppose that Nicole is expecting a 2 percent reduction in her marginal tax rate next year. Ignoring the time value of money, estimate the tax savings for Nicole if she postpones mailing of bills for December until January 1 of next year.
b) Describe how the time value of money affects your calculations.
c) Would this tax savings strategy create any additional business risks? Explain.
Answer:
a) I guess that Nicole bills $12,000 per month, not $512,000.
Assuming that the last time Nicole billed her customers was November, she was able to collect $11,760 before the year ended. I will also assume that the remaining $240 are uncollectible.
If Nicole postpones billing her customers during December, her taxable income as a cash basis taxpayer will decrease by $12,000 x 70% = $8,400
she will be able to save $8,400 x 2% = $168 in current taxes, but she will have to pay them next year anyways.
b) The time value of money should affect Nicole's calculations because she is saving the interests that could be earned by $168 in 1 year. We are not given any specific interest rate but we could use 6% as an example. Nicole will gain $168 x 6% = $10.08
But she will also lose potential interests earned on the $8,400 that she billed later. Using the same interest rate, 6%, she will lose $8,400 x 6% x 1/12 (only 1 month) = $42.
That means that the net result from this = $10.08 - $42 = -$31.92.
As you can see, Nicole is losing money. The higher the interest rate, the more money she will lose.
c) The risk of increasing uncollectible accounts will always exist. Nicole already has around 2% of uncollectible accounts, and combining two bills at one time might lead to a higher percentage of uncollectible accounts. Of course, this depends on her clients, but the risk will increase a little bit or a lot, but it will increase.
Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $325,000; Cash paid for rent, $37,000; Cash paid to employees for services rendered during the year, $117,000; Cash paid for utilities, $47,000. In addition, you determine that customers owed the company $57,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $1,700 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year.
Answer:
Explanation:
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Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $325,000; Cash paid for rent, $37,000; Cash paid to employees for services rendered during the year, $117,000; Cash paid for utilities, $47,000. In addition, you determine that customers owed the company $57,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $1,700 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year.
g Bonds of ABC Corp. are currently priced at $932. The bonds have a face value of $1,000. Coupon payments occur twice per year. The bonds have 12 years left until maturity. These bonds are: a. discount bonds. b. premium bonds. c. par bonds. d. money market securities. e. deluxe bonds.
Answer:
a. discount bonds
Explanation:
When the Price of the Bond is less than the par value (face value) of the bond, we say that the bonds are trading at a discount.
When the Price of the Bond is greater than the par value (face value) of the bond, we say that the bonds are trading at a premium.
In this case the price is $932 and the face value is $1,000, thus the bonds are discount bonds.
Ben is assigned by his employer to improve an ultrasonic range-finding device. While working on the improvement, he recognizes that a novel modification of the equipment might be applicable to military submarines, which, if successful, could be worth a lot of money to his employer. However, Ben is a pacifist, a person who opposes war of any kind, and does not want to be involved in military work. He does not develop the idea himself or mention it to anybody else in the company. He has signed an agreement that all inventions he produces on the job are the property of the company but does not believe the agreement is relevant to this situation. If Ben decides whether the potential military application would be used for offensive aims, or only used for defensive purposes, his issue is primarily:
Answer:
1. He has not developed the idea yet
2. His employer knows he his a pacifist so he has the delima is he ethically correct to not develop a product that can be used for warfare.
Explanation:
In this scenario Ben signed an agreement with his employer that all ideas he has developed on the job and while working with the company is a property of the company.
This is a common agreement that gives a company property rights over work developed by their employees.
However since Ben is a pacifist he has an ethical dilemma when he has an idea that can weaponize an ultrasonic range-finding device.
He is justifying his decision by saying the idea has not been developed yet and his employer will not expect him to develop such technology since he is a pacifist.
Every decision involves trade-offs because:________
there are always alternatives that we give when we choose one thing over another
Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor, Friday, is a fisherman, and he is willing to trade 2 fish for every 1 coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut. a. On a single figure, draw budget lines for trading with Friday and for trading with Kwame. (Put coconuts on the vertical axis.) b. What is the slope of the budget line from trading with Friday? c. What is the slope of the budget line from trading with Kwame? d. Which budget line features a larger set of attainable combinations of coconuts and fish? e. If you are going to trade coconuts for fish, would you rather trade with Friday or Kwame?
Answer:
a) see attached graph
b) slope = -1/2 = -0.5
c) slope = -1/3 = -.033
d) trading with Kwame (green line)
e) you should trade with Kwame since you can obtain more fish (up to 60 in total)
A desert island possessing exactly 20 coconuts is a different situation.
a) the graph observation.
b) slope = -1/2 = -0.5
c) slope = -1/3 = -.033
d) Friday and Kwame's budget lines have the same number of combinations of coconuts and fish. Kwame was the green line.
e) Kwame can obtain more fish as compared to Friday.
What is an island?
An island is any piece of land that is smaller than a continent and completely encircled by water. Islands can appear in rivers, lakes, seas, or oceans. The archipelago is the term for a collection of islands. The island is on the side of the ocean. The island is the body of land and the surrounding water.
A. ⇔ That for every coconut you give, Friday will give you 2 fish.
number of fish = 2 × the number of coconutsnumber of coconuts = number of fish / 2Fish (horizontal axis) Coconuts (vertical axis)
0 0
2 1
4 2
6 3
40 20
The range is from 0 to 20 coconuts, limiting the number of fish to even numbers between 0 and 40.
⇔ For every coconut you give, Kwame will give you 3 fish. Hence:
number of fish = 3 × the number of coconutsnumber of coconuts = number of fish / 3Fish (horizontal axis) Coconuts (vertical axis)
0 0
3 1
6 2
9 3
60 20
The range is from 0 to 20 coconuts, limiting the number of fish to even numbers between 0 and 60.
B. The slope is the trading rate:
slope = rise / run = Δy / Δx = 1 coconut / 2 fish
slope = -1/2 = -0.5
It simply means that will give 1 coconut per every 2 fish you receive from Friday.
C. Again, the slope is the trading rate:
slope = rise / run = Δy / Δx = 1 coconut / 3 fish
slope = -1/3 = -.033
It means that you will give 1 coconut per 3 fish that you receive from Kwame.
D. Friday and Kwame budget lines have the same number of combinations of coconuts and fish.
For Friday ratio is:
(0,0), (2,1), (4,2), (6, 3), ..... (40, 20), which are 21 combinations.For Kwame ratio is:
(0,0), (3,1), (6, 2), (9, 3), . . . (60, 20), which also are 21 combinations.E. Kwame can obtain more fish as compared to Friday.
As a result, the desert island is exactly 20 coconuts.
Learn more about the island, here:
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