A(n) entrepreneur is a person who assumes the chance of starting an enterprise.
An entrepreneur is a man or woman who creates a brand new enterprise, bearing maximum dangers and enjoying maximum rewards. The process of putting in an enterprise is known as entrepreneurship. The entrepreneur is commonly seen as an innovator, a supply of new thoughts, goods, services, and business/or procedures.
An entrepreneur is a man or woman who creates and grows a business thru their creative thoughts. marketers play key roles in producing earnings as they develop their businesses. An entrepreneur identifies a commercial want of their network, crafts an enterprise idea, and takes the lead role to begin their enterprise. entrepreneurs are critical to marketplace economies due to the fact they are able to act because the wheels of the monetary boom of us a. with the aid of developing new services and products, they stimulate new employment, which in the end affects the acceleration of economic development.
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two types of cars (deluxe and limited) were produced by a car manufacturer last year. quantities sold, price per unit, and labor hours follow. what is the labor productivity for each car? explain the problem(s) associated with the labor productivity. (answer in appendix e)
Labor Productivity in units/hours does not consider the price at which car is sold and the labor rate while the unit less labor productivity considers the both.
Unit less Labor Productivity:
For Deluxe Cars=133.333
For limited Cars=135.714
Labor Productivity in units/hour:
For Deluxe Cars=0.2 units/hour
For limited Cars=0.2 units/hour
The labor productivity measured in units/hours does not take into account the labor rate or the price at which a car is sold, but the unit-less labor productivity does. However, a manager, particularly a department manager, who understands units/hour better won't use the unit with lower labor productivity. High level managers employ labor productivity that is unit-less.
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What+is+the+portfolio+beta+if+75%+of+your+money+is+invested+in+the+market+portfolio,+and+the+remainder+is+invested+in+a+risk-free+asset?
Beta of the market potfolio is always 1 and the beta of risk free security is zero.
A market is a composition of systems, establishments, approaches, social relations or infrastructures whereby events have interaction in trade. even as parties might also change items and offerings through barter, most markets depend on sellers providing their items or services to customers in alternate for cash.
A marketplace is an area where consumers and sellers can meet to facilitate the exchange or transaction of goods and services. Markets may be physical like a retail outlet, or virtual like an e-store. other examples include unlawful markets, auction markets, and monetary markets.
Hence if he invest 75% of portfolio in market porfiolio weighted beta will be 75% of 1 =.75 beta
Balance 25% is invested in risk-free security hence weighted beta will be 25%*0 =beta 0
Therefore porfolio beta = = .75 (1) + .25 (0) = .75
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This question is incomplete. Look below for the proper question.
What is the portfolio beta if 75% of your money is invested in the market portfolio, and the remainder is invested in a risk-free asset?
cotton is a normal good. all else equal, when the economy went into recessionary periods during the early 1800s, the demand for cotton
Cotton is a normal good. all else equal, when the economy went into recessionary periods during the early 1800s, the demand for cotton decreased, decreasing producer surplus in the market for cotton.
What is demand in an economy?Demand refers to the quantity of consumers who are willing and able to buy the products at different and various prices during a given period of time.
Demand is an economic concept that refers to the amount of products or services that consumers wish to purchase at any given price level.
Basically, demand of a product get affected by number of factors such as price, consumer income, consumer confidence, and changes in taste and fashion etc.
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what is the equilibrium wage and equilibrium quantity of workers that will be hired in this particular labor market? suppose the government imposes a minimum wage in this market at $4 per hour. what would happen in this market as a result of the new minimum wage? suppose that the government decides to increase the minimum wage to $10 (a $6 increase). what would happen in this market as a result of the increase in the minimum wage?
Imagine that the market equilibrium wage is $4 per hour, but the government now passes legislation stating that all firms must pay at least $5 per hour.
What is legislation ?The act of enrolling, enacting, or promulgating law by a legislature, parliament, or comparable governing body is known as legislation. Before becoming law, a piece of legislation may be referred to as a bill.
However, while it is still being considered, it may simply be referred to as "legislation" to separate it from other activity. Legislation can be used to control, allow, outlaw, supply (funds), sanction, grant, declare, or impose restrictions. A legislative act's jurisdiction may allow an executive or administrative body to compare it to a non-legislative act.
Identification of a specific problem in a thorough manner is necessary for legislation to be designed or amended.
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Budgeting that involves decisions such as whether to buy or lease equipment or build a new factory is referred to as:__________
Capital budgeting is the process of deciding whether to purchase, lease, or construct new facilities as part of a budget.
Capital budgeting is the process a corporation use to evaluate potential large projects or investments. Construction of a new factory or a major investment in an outside endeavor are examples of projects that would require capital budgeting before they are authorized or refused.
In order to determine if the predicted returns will meet a sufficient target benchmark, a corporation may assess the lifetime cash inflows and outflows of a proposed project as part of capital planning. It's also known as investment assessment when capital budgeting is used.
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Something that is purchased without much thought before the purchase is known as a _____.
The answer is convenience
Convenient methods, products, and services are those that are designed to make things easier to access, save resources (such time, effort[1], and energy], and lessen aggravation. A labor-saving tool, service, or material that simplifies or accelerates a process compared to a conventional approach is referred to as a modern convenience. Convenience is a relative term that varies with situation. As an illustration, cars were formerly seen as a convenience but are now accepted as a standard feature of life.
The word is a relative one based on the comforts that a person or group previously had access to because of disparities in lifestyles around the world.
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inputs, transformational processes, outputs, and feedback are all considered part of which if the following: group of answer choices management
Within the systems viewpoint, these four things are considered parts of a system
Input, Transformational processes, Feedback, Outputs
What is meant by System Components ?
A process, software, utility, or other element of the operating system of a computer that aids in managing various computer systems is referred to as a system component. A system component is not anything an end-user directly interacts with when using a computer, despite being comparable to a computer program.
A computer operating system is made up of a number of system components, each of which performs a distinct role. They enable the operating system and computer to operate correctly and effectively when used together.
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we can imagine the financial manager doing several things on behalf of the firm’s stockholders. for example, the manager might do the following:
On behalf of the company's stockholders, we can envision the finance manager doing a number of actions. By investing in actual assets with favorable NPVs, the management could, for instance: a. Make shareholders as affluent as feasible. b. Adjust the company's investment strategy so that stockholders can follow a specific spending pattern. b. Select high- or low-risk assets in accordance with the risk preferences of shareholders. d. Assist in balancing shareholders' bank accounts. Shareholders will, however, only vote in favour of one of these objectives in healthy capital markets.
Putting money to work for a while in a project or endeavor with the goal of generating a profit is what is generally meant by the term "investing" (i.e., profits that exceed the amount of the initial investment). It is the act of distributing assets, typically capital (i.e., money), with the hope of producing income, profits, or gains.
One can engage (directly or indirectly) in a variety of activities, such as employing capital to launch a business stockholders or buying assets like real estate in the hopes of earning rental income or resale it at a profit.
The money utilized for investing is put to work, which makes it different from saving in that there is an implied risk that the associated project(s) may fail and have negative consequences.
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What+is+the+approximate+future+value+of+an+annuity+after+10+years+with+payments+each+period+of+$200,+and+an+interest+rate+of+6%?a. $1,257.59b. $2,515.58c. $2,636.16d. $3,187.48
$2,636.16 is the approximate future value of an annuity after 10 years with payments each period of $200, and an interest rate of 6%.
The worth of a current asset at some point in the future based on an estimated rate of growth is known as future value (FV). For investors and financial planners, the future value is crucial because they use it to predict how much an investment made now will be worth in the future.
Future value is the amount of money that, with time and an interest rate, is invested now and will eventually become.
The sum of the initial principal amount and the interest accrued on that principal amount at the end of the period is the future value simple interest formula.
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a t bill quote sheet has 90 day t bill quotes with a 5.32 ask and a 5.26 bid. if the bill has 10000 face value an investor could sell this bill for
Tbill quote sheet has 90 day t bill quotes with a 5.32 ask and a 5.26 bid. if the bill has 10000 face value an investor could sell this bill for 5.26 Treasury notes, sometimes known as T-bills, are short-term investments that maturity within a year or less of the date of issuance. Treasury pays the par value of T-bills when they mature for a price that is less than or equal to their par value (face value).
Government treasury bills can be procured by individuals at a discount to the face value of the security and are redeemed at their nominal value, thereby allowing investors to pocket the difference. For example, a 91-day treasury bill with a face value of Rs. 120 can be bought at a discounted price of Rs. 118.40.
Treasury bills can be kept until they mature or sold before that time. Transfer the note to a bank, broker, or dealer first, and then ask them to sell it on your behalf if you want to sell a Treasury note that is stored in Treasury Direct or Legacy Treasury Direct.
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An optimum number of overlearning opportunities is approximately_____% of the number of trials required for acquisition of the behavior
An optimum number of overlearning opportunities is approximately 50% of the number of trials required for acquisition of the behavior. The correct answer is option(a).
The act of practicing a skill even after you are no longer improving it is known as "overlearning." Despite appearing to have mastered the talent, you keep practicing at the same level of difficulty. According to a recent study, this additional practice might be a useful approach to help retain your hard-earned talents.
Overlearning speeds up the second phase, recall, by cutting the first phase, learning and comprehension, short. If you're in charge of training new hires, make sure your program addresses overlearning. Overlearning is the practice of a skill or repeated study of a subject to improve performance and memory. Because the neural mechanisms involved become more effective and recall speed increases during rehearsal, performance is improved beyond the first learning stage.
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Relish has a chain of outlets that sells baked products. relish requires all its employees to complete a month's training before they can work in the kitchen. this is an example of a?
As Relish has a chain of outlets that sells baked products, when he requires all its employees to complete a month's training before they can work in the kitchen, this is an example of a company policy.
What is a company policy?It is also known as an organization regulation. This refers to the guideline and rulebook for employers to establish formal expectations and standards for employee health and safety, accountability, best practices and processes within a company.
Therefore, as Relish has a chain of outlets that sells baked products, when he requires all its employees to complete a month's training before they can work in the kitchen, this is an example of a company policy.
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A watch uses the decay of tritium to energize its glowing dial. what fraction of the tritium remains 20 years after the watch was created?
The fraction of the tritium remains 20 years after the watch was created will be-
a) A Helium nucleus with two protons and one neutron
b) 0.324 of the original amount
a) Tritium decays into helium, which has two protons and one neutron, from a triton, which has one proton and two neutrons, by emitting an electron and an antineutrino.
The formula for the Tritium's decay constant is derived from
t1/2 = 0.693/k
where
t₁/2 is the half life = 12.3 yrs
k is the decay constant = ?
substituting, we have
12.3 = 0.693/k
k = 0.693/12.3 = 0.0563
The fraction that will remain after 20 years can be calculated from
N = N₁ekt
where
N is the final remaining amount of Tritium after 20 years
No is the original amount of Tritium
k is the decay constant = 0.0563
t is the time = 20 years
Equation can be re-written as
N/No = e kl
where
N/No is the fraction of the tritium that will be remaining after 20 years.
substituting values, we have
N/No = e 0.0563+20
N/No -1.126
N/No= 0.324 of the original amount
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the producer or supplier will bear more of the burden of a tax than the consumer if demand is which of the following
The burden of a tax will fall more on producers than on consumers when demand is more elastic than supply. Consumers will share one-third of the tax burden and producers will suffer two-thirds of the tax burden, for instance, if demand is twice as elastic as supply.
The relative price elasticity of supply and demand determines the tax incidence. The majority of the tax burden falls on consumers when supply is more elastic than demand. The majority of the tax burden falls on the producers when demand is more elastic than supply consumers The less elastic the demand and supply are, the higher the tax revenue.
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In the victoria chemical case, the preliminary engineering costs of gbp500,000 spent over the preceding nine months on efficiency and design studies of the renovation is an example of:_________
Within the victoria chemical case, the initial engineering costs of gbp500,000 spent over the preceding nine months on performance and design studies of the renovation is an example: NPV
Renovation is the method of improving a damaged, broken, or previous structure. Renovations are typically either industrial or residential. moreover, renovation can discuss by making something new, or bringing something again to life and might apply in social contexts. the act or method of repairing, renewing, or restoring to true condition: The project will consist of indoor and exterior renovation and rehabilitation to improve the college's infrastructure.
The roots of maintenance talk to renovation and doing something once more — it's from the Latin re- for "again" and ovary which means that, "make new.” A rundown building is in want of preservation, or a website it is being redesigned is underneath renovation. After protection, things look new and improved.
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Individuals and groups that buy the goods and services an organization produces are called _____.
Answer:
customers
Explanation:
because they are the one who buy goods
Who tends to issue junk bonds? a. financially troubled firms. b. foreign governments. c. local governments in the united states. d. the federal reserve.
Foreign governments tends to issue junk bonds. Junk bonds are bonds that have a higher default risk than most corporate and government obligations. In exchange for purchasing a bond, investors receive interest payments as well as the return of invested principal.
Junk bonds are bonds issued by corporations that are financially suffering and have a significant chance of defaulting or failing to make their interest payments or repaying investors' Foreign principal. Investors are compensated for the higher risk with higher interest rates, which is why trash bonds are also known as high-yield bonds. Junk bonds are sometimes known as high-yield bonds.
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luzadis company makes furniture using the latest automated technology. the company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. the predetermined overhead rate was based on a cost formula that estimates $592,000 of total manufacturing overhead for an estimated activity level of 74,000 machine-hours.
1) The underapplied overhead is $15,000.
2) The Journal entry to close underapplied overhead to Cost of Goods Sold is as follows:
Journal Entry:Debit Cost of goods sold $15,000
Credit Factory overhead (underapplied) $15,000
3) The Journal entry to close underapplied overhead to the following accounts is as follows:
Journal Entry:Debit Work in process $1,050
Debit Finished goods $2,850
Debit Cost of goods sold $11,100
Credit Factory overhead (underapplied) $15,000
Data and Calculations:Estimated total manufacturing overhead = $592,000
Estimated activity level = 74,000
Predetermined overhead rate = $8 ($592,000/74,000)
Applied Overhead = $536,000 (67,000 x $8)
Manufacturing overhead cost $551,000
Underapplied overhead = $15,000
Actual Machine-hours 67,000
Manufacturing overhead cost $551,000
Inventories at year-end:
Raw materials Work in process $ 13,000
Work in process (includes overhead applied of $37,520) $ 139,300
Finished goods (includes overhead applied of $101,840)$ 378,100
Cost of goods sold (includes overhead applied of $396, 640) $1,472,600
Allocation of underapplied overhead:Work in process (includes overhead applied of $37,520)
Finished goods (includes overhead applied of $101,840)
Cost of goods sold (includes overhead applied of $396,640)
Total applied overhead = $536,000
Work in process = $1,050 ($37,520/$536,000 x 15,000)
Finished goods = $2,850 ($101,840/$536,000 x 15,000)
Cost of goods sold = $11,100 ($396,640/$536,000 x 15,000)
Thus, the underapplied overhead is $15,000.
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Question Completion:What is the predetermined overhead rate?
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year Machine-hours Manufacturing overhead cost Inventories at year-end: 67,000 $551,000 Raw materials Work in process (includes overhead applied of $37,520) Finished goods (includes overhead applied of $101,840) $ 13,000 $ 139,300 $ 378,100 s 1,472,600 Cost of goods sold (includes overhead applied of $396, 640)
Required
1. Compute the underapplied or overapplied overhead.
2. Assume that the company closes any underapplied or overapplied overhead to Cost of Goods Sold. Prepare the appropriate journal entry.
3. Assume that the company allocates any underapplied or overapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the appropriate journal entry.
In the united states, fire departments respond to an average of _________ fire calls annually
In the United States of America, the fire department responds to an average of 2 million fire calls on an annual basis. Therefore, the option B holds true.
What is the significance of a fire department?A fire department can be referred to or considered as the department for rescue against accidental fire being caused in a public building or a house of any kind. There are about 2 million cases of fires in the United States of America on an annual basis.
Therefore, the option B holds true and states regarding the significance of a fire department.
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The missing options to the incomplete question have been added below for better reference.
A. 1 million
b. 2 million
C. 5 million
D. 10 million
Writing a policy is not always as easy as it seems. however, the prudent security manager always scours available resources for __________ that may be adapted to the organization.
Writing a policy is not always as easy as it seems. However, the prudent security manager always scours available resources for example that may be adapted to the organization.
The policy is a planned set of principles designed to guide actions and attain rational outcomes. A policy is a statement of intent that is put into action as a method or practice. A governance body inside an organization often adopts policies.Business policies are the guidelines that an organization develops to control its behavior. Business policy also addresses the acquisition of resources necessary to meet corporate goals.A business policy is a set of guidelines established by the company's owner or leadership. Some policies are specified by regulations, such as federal privacy rules, whilst others are created by business leadership to ensure that particular standards are met.Thus the answer in the blank will be policy.
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Candle box inc. is going to elect six board members next month. betty brown owns 17.4 percent of the total shares outstanding. how confident can she be of having one of her candidate friends elected under the cumulative voting rule? will her friend be elected for certain if the voting procedure is changed to the staggering rule, under which shareholders vote on two board members at a time?
Betty's friend chance be of being elected under the cumulative rule is high whereas her chances when the staggering rule is adopted are very slim
What is cumulative voting rule?
Cumulative voting rule is a rule that applies to the process of voting in board members in corporations that allow stockholders to vote proportionately to the number of shares they hold, in essence, a stockholder with 1,000 shares of the company can cast 1,000 votes toward any single issue or candidate.
% required to vote in her candidate=1/(1+N)
1 refers to her candidate
N=number of board members to be elected=6
% required to vote in her candidate=1/(1+6)=14.3%
The fact that Betty has 17.4% shareholding in the company, which is greater than the required shareholding of 14.3% required to ensure her candidate success means that her friend will be elected
% required for staggering rule=1/(1+N)
1 refers to her candidate
N=number of candidates that can be elected at a time=2
% required for staggering rule=1/(1+2)=33.3%
33.3% shareholding is needed to ensure her candidate success under the staggering rule, hence, her friend may not likely be elected.
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For $10,000, you can purchase a 5-year annuity that will pay $4,914 per year at the end of the next 5 years. what rate of return are you earning on your $10,000 investment?
Rate of return = 40%.
Here we have to calculate the rate of return on a investment of $10000 today which gives us $4914 each year for next 5 years. So we need to calculate the rate at which the present value of cash inflows in future will be equal to the cash outflow today. This can be solved as follows -
Number of periods = 5
Present value = - 10000
Payment per period = 4914
Future value = 0
Rate = 40.00%
The once a year Rate of return is the percentage exchange inside the fee of an funding. as an example: in case you expect you earn a 10% annual charge of return, you then are assuming that the cost of your investment will boom by using 10% every 12 months.
The simple Rate of return is the incremental quantity of net earnings expected from a prospective funding possibility, divided via the funding in it.
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what if an investor wants to buy 1,000 shares of apple at the market price, but the nbbo ask price of $100.02 is for only 200 shares? the first 200 shares will be sold at $100.02 after which a new nbbo price will be calculated. all shares will be sold at $100.02. the nbbo price will be recalculated and all shares will be sold for the same price. the nbbo price will be ignored and the ask price will be accepted. the nbbo price will be ignored and the highest bid accepted.
The investor would consider buying the first 200 shares at National Best Bid and Offer(NBBO) ask price rather than market price because NBBO gets the lowest ask price across all the stock exchanges.
Since it is already mentioned that first 200 share ask price is $100.02 they are sold first and then a new price is calculated for the remaining 800 shares(1000-200) by NBBO.
The National Best Bid and Offer (NBBO) is a quote that summarizes the highest bid price and lowest ask price for a security across all exchanges or trading venues that are open for business.
The NBBO displays the best (lowest) ask price and best (highest) bid price that users can access across various exchanges.
Brokers are required by the SEC's Regulation NMS to guarantee their customers at least the NBBO stated price at the time of a trade.
Security Information Processors (SIP) compute and distribute the NBBO
Although it guarantees that every investor receives the best pricing when placing trades, NBBO might not always represent the most recent data, leading to trades that do not correspond to investor price expectations.
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Lena, an engineer for an oil company, is interested in working overseas at this stage of her life because she knows that foreign work experience demonstrates ________ to potential employers.
Lena, an engineer for an oil company, is interested in working overseas at this stage of her life because she knows that foreign work experience demonstrates independence, resourcefulness, and entrepreneurship to potential employers.
SMEs and entrepreneurship can be impacted by globalization in a variety of ways. The report that follows is a nice illustration of this. The Swedish Foundation for Small Business Research (FSF) has solicited opinions on what globalization means from these viewpoints from a number of top worldwide and national scholars in the fields of innovation, entrepreneurship, and SMEs. The creation or extraction of economic value is referred to as entrepreneurship. According to this definition, entrepreneurship is considered as transformation that typically involves greater risk than is typical when beginning a business and may also involve values other than just financial ones.
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In the u.s., all companies involved in international flows of capital must file reports, which are ultimately compiled by the?
In US all companies involved in international flows of capital must file report which is compiles by the Department of the Treasury.
The Department of the Treasury (USDT) is the federal government of the United States' national treasury and finance department, as well as an executive department. The department is in charge of the Bureau of Engraving and Printing as well as the United States Mint. These two agencies are in charge of printing all paper currency and coins, while the Treasury is in charge of distributing them in the domestic fiscal system. The US Department of Treasury collects all federal taxes through the Internal Revenue Service, manages U.S. government debt instruments, licenses and supervises banks and thrift institutions, and provides fiscal policy advice to the legislative and executive branches.
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In the buying center, ryan answers the phones, receives and opens the mail, and monitors the incoming email. He sorts through all the sales solicitations and forwards the most interesting ones to his boss. Which role is he playing in this decision-making unit?.
Answer:
A.) Gatekeeper
Lecture page 46. A) Gatekeepers are the people who keep information out and let information in to the buying center. This is exactly what Ryan does by sorting through the sales solicitations. B) Ryan does not make any decisions in the buying center. C) The purchasing agent is the person who actually does the buying. This is not part of Ryan's job. D) The user is someone who is actually going to use the equipment that is purchased. There is no mention of Ryan using any purchased goods in this question. E) Gopher is not one of the roles in the buying center.
Explanation:
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a company produces reuseable water bottles. their technology allows one worker to produce 10 water bottles in an hour. hiring a second worker would allow them to produce 16 total water bottles in an hour and three workers can produce 18 total water bottles. what is the marginal benefit of hiring the second worker?
The marginal benefit of hiring the second worker is 6 units.
Marginal gain is the maximum amount a patron will pay for one extra exact or service. Marginal gain usually decreases as intake increases. The marginal price of production is the change in value for making one extra right or incremental unit of the carrier.
In economics, utility is the pride or advantage derived by using ingesting a product. The marginal software of an amazing provider describes how an awful lot of satisfaction or delight is received by customers because of the growth or decrease in intake via one unit. There are three varieties of marginal software.
The marginal product of n the worker =total output of n workers - the total output of n-1 workers
MP(n)=TP(n)-TP(n-1)
MP(2)=16-10=6 units
The marginal benefit of hiring the second worker is 6 units
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which of the following could be "breakthrough opportunities" for a candy company? (check all that apply.)
The factor that could be "breakthrough opportunities" for a candy company are:
a patent on the formulaan opportunity to purchase a well known brand of candy barWhat is breakthrough opportunities?Opportunities can be described as the one that is been by innovative firms that is developed hard-to-imitate marketing strategies which can make the company to be very profitable for a long time.
For organization to experience break through then they must be able to plan and have a set goals which will be worked towards to and at the end of a particular period, they can experience great profit.
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CHECK THE COMPLETE QUESTION:
which of the following could be "breakthrough opportunities" for a candy company?
a patent on th formula
an opportunity to purchase a well known brand of candy bar
could a decline in the production of current ""consumption goods"" lead to higher economic growth in the future? explain why or why not? message
When an economy is able to generate more, it expands. The ability to create a given amount of capital, labor, raw materials, and technology determines how much can be produced. Economic growth results from policies that promote the accumulation of any of these.
An increase in production capacity is what is meant by economic growth. Economic growth is therefore anything that raises that potential.
An economy with more physical capital can generate more than an economy with less physical capital, all else being equal. More capital investment results in greater economic growth because savings and investment increase the stock of available capital.
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the annual demand for an item is 10,000 units. the cost to process an order is $75 and the annual inventory holding cost is 20% of item cost. what is the optimal order quantity, given the following price breaks for purchasing the item? what price should the firm pay per unit? what is the total annual cost at the optimal behavior?
The price should the firm pay per unit is
Total annual purchasing, holding, and setup costs = $19,575.00.
Inventory cost reduction is an important supply-chain management strategy.
Inventory is an asset account that requires a large cash outlay, and inventory spending decisions can reduce the amount of cash available for other purposes.
Increasing the inventory balance by $10,000, for example, means that less cash is available to operate the business each month. This is referred to as an opportunity cost. Holding costs are the expenses incurred when inventory remains unsold. These costs, along with ordering and shortage costs, are a component of total inventory costs.
A company's holding costs include the cost of damaged or spoiled goods, as well as the cost of storage space, labor, and insurance.
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