The line item, equipment, on the balance sheet results from a(n) Investing activity.
In financial accounting, a stability sheet is a precis of the monetary balances of an individual or agency, whether or not it be a sole proprietorship, a business partnership, an agency, private restrained enterprise or other organization which includes government or not-for-earnings entity.
A balance sheet is an economic document designed to speak precisely how a good deal a company or corporation is really worth—its so-known as “ebook value.” The stability sheet achieves this by way of listing out and tallying up all of an employer's assets, liabilities, and proprietors' fairness as of a specific date, also known as the “reporting
A balance Sheet is the financial declaration of an organization which includes property, liabilities, equity capital, overall debt, etc. at the quit of the economic year
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What does research tell us about the impact of ricardian equivalence effects on the economy?
Paying for government expenses using current taxes or future taxes (as well as existing deficits) will have comparable effects on the state of the economy as a whole, according to the economic theory known as Ricardian equivalence.
What is Ricardian equivalence?Government deficit spending is equivalent to spending from current taxes, according to the Ricardian equivalence.In order to pay projected future taxes, taxpayers will set money aside, which tends to offset the macroeconomic effects of increasing government spending.This hypothesis has often been seen as undermining the Keynesian premise that deficit spending can boost economic performance, especially in the near run.This theory was developed by David Ricardo in the early 19th century and later built upon by Harvard professor Robert Barro. Thus, the Barro-Ricardo equivalence proposition, often known as Ricardian equivalence, is frequently used.To know more about Ricardian equivalence visit:
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The effect of an increase in the money supply on the rate of inflation micro or macro.
The effect of an increase in the money supply on the rate of inflation micro or macro is a macroeconomic issue.
In economics, delivery is the amount of a useful resource that corporations, producers, laborers, providers of monetary belongings, or other economic retailers are willing and able to offer to the marketplace or to a character. deliver may be in produced goods, labour time, uncooked substances, or some other scarce or precious object.
Supply is a fundamental financial idea that describes the full amount of a specific correct or provider that is to be had to consumers. supply can relate to the amount available at a selected price or the amount available throughout a number charges if displayed on a graph.
Supply in economics is defined as the whole quantity of a given service or product a supplier gives to customers at a given duration and a given price degree.
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If a partner is contributing attributes to a partnership such as an established clientele or a particular expertise, what two methods can be used to record the contribution? describe each method.
If a companion is contributing attributes to a partnership along with a longtime clientele or particular information, methods may be used to document the contribution:
The two methods with a view to be used are:
Bonus technique
The goodwill technique
The definition of a method is a device or a manner of doing something. An example of a way is an instructor's way of cracking an egg in a cooking elegance. noun.
Definition of methods: a process or manner for reaching an item: consisting of. a systematic method, method, or mode of inquiry hired by way of or right to a specific subject or art. a systematic plan accompanied in supplying material for instruction the lecture method. The utilization Saturation and mistakes (USE) method is a technique for studying the overall performance of any machine. It directs the construction of a checklist, which for server analysis may be used for speedy identifying resource bottlenecks or errors.
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customer service is important because it gives a positive impression to present and future clientele and keeps customers willing to come back again.
Answer:True
Explanation: cus im on schoology
Customer service is crucial because it creates a great impression for current and prospective clients, keeps consumers wanting to return, and makes customers feel that they are the top priority.
What is service?
The term service refers to the intangible form. The services are the exchange of the money. The expert person are the provided the skills for the another person as the main motive to earn money.
Customer service is critical since it generates a pleasant impression and helps to build the brand's image. The customer is certain to return. The first priority is to make the consumer happy.
As a result, the customer service more important aforementioned.
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Whihc form of business organization offers the greatest opportunity to raise capital?
Corporations offer the greatest opportunity to raise capital.
What are Corporations?A corporation is a legitimate entity that exists independently of its owners. Many of the same legal rights and obligations that apply to individuals also apply to businesses.
They have legal authority to make agreements, lend and borrow money, file lawsuits, hire staff, possess property, and pay taxes. While a corporation's exact legal definition varies from one jurisdiction to the next, restricted liability is always its most crucial feature. As a result, shareholders are not individually responsible for the debts of the business but may share in the gains through dividends and stock appreciation.
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If you do really well on a test, you credit your preparation, but if you do poorly, you blame the noise in the classroom. this is an example of which attribution error?
If you perform exceptionally well on a test, you attribute it to your preparation; if you perform poorly, you attribute it to the commotion in the classroom. This is an illustration of an attribution error caused by a self-serving bias.
Self-Serving Bias: The self-serving bias occurs when we attribute positive outcomes to our own acts or character while attributing adverse outcomes to external factors unrelated to our character. Self-serving prejudice has long captured the attention of scholars everywhere.
Attribution Error: The basic attribution fallacy or error is the tendency for someone to attribute another person's behavior to their personality or character while attributing their own to external circumstances they have no control over.
If you do really well on a test, you credit your preparation, but if you do poorly, you blame the noise in the classroom. This is an example of a Self-Serving Bias as an attribution error.
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the president of an auto parts merchant, deal corp., wrote to boyd, offering to sell the deal factory site for $300,000. the site is comprised of approximately 20 acres of land and a few abandoned building. the written offer was signed by deal's president and sent on june 5. the offer was received by boyd on june 9. the offer stated that it would remain open until december 20. the offer:
Its good until December 20, although Deal may be revoked it at any point prior to that day if Boyd has not agreed to it.
What is Revoke?Recalling or revoking something causes it to be nullified: revoke a will. 2: to deliver or ring back. To break the rules of a card game by failing to follow suit when one is able. revoke.
When you revoke something, you formally cancel it, as when you take away your sister's title as "coolest sibling" since she frequently shares amusing photos of you from your younger years with her friends.
Formally stating that something is no longer in force: The authorities have officially reversed their initial decision to permit development in this rural area. substitute; repeal.
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If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, the amount of manufacturing margin that would be reported on the variable costing income statement is:_________
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, the amount of manufacturing margin that would be reported on the variable costing income statement is 140,000.
The manufacturing margin is the difference between sales revenue and the variable cost of goods sold. It is calculated at variable cost.
The average producer gross manufacturing margin ranges between 25 and 35%. However, items with higher prices, such as RVs, cars, and even homes, only increase in price by 10-15%.
divide your gross profit by your sales. Multiply the total by 100 and voila, you get your margin percentage. The margin formula measures how much you keep in each dollar of sales after your expenses are paid. The higher the profit, the higher the percentage of revenue you keep on the sale.
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for each of the following scenarios, indicate whether the individual made a correct choice or an incorrect choice when preparing a budget. correct choice incorrect choice nathan is a sales rep who, based on last year, averaged $2,200 of monthly commission before taxes. he should include this in his budget. stella was just notified that her contribution to the company’s health plan is increasing by 3.5%. it’s a company expense, so stella doesn’t include it in her budget. as sam was reconciling his checkbook, he realized that he incurred $13.25 last month for atm withdrawals. he looked back at the last six months and realized that he averaged the same amount each month. this is an unexpected expense and shouldn’t be listed in his budget. every year the wus buy a big item or take a trip with a single annual bonus barb receives. they included this in their budget.
The correct choice is (d) Every year the Wus buy a big item or take a trip with a single annual bonus Barb receives. They included this in their budget.
Businesses use budgets to track revenue and spending in sufficient depth to make operational choices. Budgets are often oriented toward the future. Both income and cost are based on forecasts and predictions for the periods they cover. Because of this, businesses frequently develop both short-term (monthly or quarterly) and long-term (year) budgets, with the short-term budget being routinely modified to keep the long-term budget on course. The majority of companies additionally create a "actual budget" or "actual report" to compare projections with reality after the budgetary term. An organization may use this to identify where their budgeting process went wrong and make corrections going forward.
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Many economists suggest that absent legal mechanisms of discrimination, the wage paid to whites and blacks will converge because?
Many economists suggest that absent legal mechanisms of discrimination, the wage paid to whites and blacks will converge because it will be in the interest of profit minded employers to hire blacks, thus bidding up their wages.
A wage is the sum of money that an employer pays an employee for work that was completed within a certain time frame. The minimum wage, prevailing rate, annual bonuses, and remunerative rewards like prizes and tip payments are a few examples of wage payments.
The costs associated with operating a business include wages. No matter how profitable the business is, it has a duty to the employee.
Payment by wage contrasts with salaried work, where the employer pays an agreed-upon sum at regular intervals (such as once a week or once a month) regardless of the number of hours worked, with commission, where pay is contingent on individual performance, and with compensation based on the performance of the company as a whole.
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indicate where each item should be presented in the statement of cash flows using these four major classifications
Heading under which each item should be presented in a cash flow statement are a) Payment of interest on notes payable. OPERATING (b) Exchange of land for patent. NON CASH (c) Sale of building at book value. INVESTMENT (d) Payment of dividends. FINANCING (e) Depreciation. OPERATING
More about cash flow statement:
A financial document called the cash flow statement (CFS) outlines the inflow and outflow of a company's cash and cash equivalents (CCE). The CFS gauges how effectively a business manages its cash position, or how successfully it generates cash to cover its debt payments and finance its operating costs.
Data on the cash flows from the company's operations is provided in the section on cash flows from operating activities. The list of cash flows from investing operations includes cash flows from the acquisition and disposition of noncurrent (long-term) assets including investments and property, plant, and equipment.
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How long will it take to achieve payback on the initial $2,000,000 tqm investment?
It take to achieve payback on the initial $2,000,000 tqm investment- Hence, It would take 14 months to achieve payback on initial $2,000,000 TQM investment
Option "2" ------ 14 Months
Given data
Investing in TQM = $2,000,000
Minimum increase in demand = 3.0 %
Last year’s sales = $163,508,343
As per the given data next year sales is increased by 3.0%. So, 3.0% of last year sales
=> 0.03 * $163,508,343 = $4,905,250.29 ~= $4,905,250
Revenue added to the bottom line = 34.1% of increased demand
=> 0.341 * $4,905,250 = $1,672,690.25~= $1,672,690
Payback on the initial $2,000,000 TQM investment can be achieved in a period can be calculated using the formula
=> (Investment in TQM / Revenue added to the bottom line) * 12
=> ($2,000,000 / $1,672,690)*12 = 14.34 ~= 14 Months
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Yvonne knows her firm must look at everything it does from a consumer's point of view. one major difficulty is that consumers' __________ change(s) over time. group of answer choices
Yvonne knows her firm must look at everything it does from a consumer's point of view. one major difficulty is that consumers' ethnic background change(s) over time.
Ethnic group
An ethnic group, also known as an ethnicity, is a collection of individuals who identify as one another based on characteristics that set them apart from other groups. These characteristics may include shared traditions, ancestry, language, history, society, culture, nation, or manners of treatment in their local community. Ethnicity is distinct from the related idea of races, while the terms are occasionally used synonymously, especially in contexts of ethnic nationalism.
Ethnicity can be seen as either a societally imposed or an inherited construct. A person's ethnic identity is typically determined by their shared cultural background, ancestry, origin myth, history, country, language, or dialect, symbolic systems[citation needed] including religion, mythology, and ritual, food, attire, or physical characteristics.
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tuart corporation estimated its overhead costs would be $23,700 per month except for january when it pays the $116,580 annual insurance premium on the manufacturing facility. accordingly, the january overhead costs were expected to be $140,280 ($116,580 $23,700). the company expected to use 7,700 direct labor hours per month except during july, august, and september when the company expected 9,500 hours of direct labor each month to build inventories for high demand that normally occurs during the christmas season. the company’s actual direct labor hours were the same as the estimated hours. the company made 3,850 units of product in each month except july, august, and september, in which it produced 4,750 units each month. direct labor costs were $24.40 per unit, and direct materials costs were $10.90 per unit.
The predetermined overhead rate is $4.1, the Total allocated overhead cost for January is ($31570), and March($31570), August ($44650), Cost per unit for January, March, and August is (43.80, 43.80, 45.00), Selling price per unit for January, March, and August is (64.30, 64.30, 65.50)
A predetermined overhead price, also known as a plant-extensive overhead fee, is a calculation used to determine how much of the entire production overhead cost might be attributed to every unit of product synthetic. The price is decided by dividing the constant overhead price by the estimated quantity of direct labor hours.
Predetermined overhead rate = total overhead / total labor hours
Total overhead = ( 23700 * 12 ) + 116580 = $400980
Predetermined overhead rate = ( 7700 * 9 ) + ( 9500 * 3 ) = 97800
Predetermined overhead rate = 400980 / 97800 = $4.1
Total overhead allocated cost:
January = 7700 * 4.1 = $31570
March = 7700 * 4.1 = $31570
August = 9500 * 4.1 = $44650
Cost per unit of January, March, and August
January March August
Direct material per unit 10.90 10.90 10.90
Direct labor per unit 24.70 24.70 24.70
Overhead per unit 8.20 8.20 9.40
Cost per unit 43.80 43.80 45.00
January ( 31570/3850 = 8.2 ), March ( 31570/3850 = 8.2 ), August ( 44650/3850 = 9.4 )
Selling price for the product assuming the gross margin to be 20.50
January March August
Cost per unit 43.80 43.80 45.00
Gross margin per unit 20.50 20.50 20.50
Selling price per unit 64.30 64.30 65.50
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What is the connection between incentives and consumer sovereignty in a free market economy?.
Consumer sovereignty refers to the ability of consumers to decide what they will purchase, giving them influence over what is produced by encouraging businesses to provide high-quality goods and services.
Why does the free market allow for consumer sovereignty?
The importance of consumer sovereignty Because it guarantees that consumers have the freedom to make their own decisions, consumer sovereignty is a crucial component of our economy and society. As a result, products can be sold on a free market at prices set by supply and demand.
When businesses invite consumers to test products or hear pitches for new ideas, this is an example of consumer sovereignty in action. It grants consumers control over the decision-making process before goods are produced.
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check my work country y is country x's sole trading partner. which of the following would increase the current account of country x? a. country x imposes tariffs on imports from country y, and country y retaliates by imposing an identical tax on imports from country x. b. the currency of country y depreciates against the currency of country x. c. the currency of country x depreciates against the currency of country y. d. the central banks of country x and country y reduce the money supply to increase interest rates.'
So the option c(The currency of Country X depreciates against the currency of Country Y) is the correct answer.
Currency:
A currency is a standardised type of money that is used or circulated as a means of trade, such as banknotes and coins. A currency, in a broader sense, is a system of money in regular use within a given setting over time, particularly for citizens in a nation state. Currencies can be used as a store of value and are traded between nations in foreign exchange markets, which determine the relative worth of the various currencies.
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Students will write a three-page essay about themselves, and their families! This essay can include detailed family history, sharing any struggles that their family has faced. Students should also include their own background, school interests, activities, work, etc., (About 375 words)
In writing an essay you must consider the structure of the essay, Hence, the structure of the essay should be considered;
The Introduction The bodyThe conclusionFor this essay concentrate on yourself and write about what makes you you.
This is further explained below.
What is family?Generally, A family is a group of two or more people who are connected by blood, marriage, or adoption and who live together; all of these people are regarded as belonging to the same family.
In conclusion, Write about yourself as well as the unique features of your family, detailed family history, sharing any struggles that your family has faced.
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Under the common law, individuals can be charged with receiving stolen property. true or false
It is true that, under the common law, individuals can be charged with receiving stolen property but after considering the situation.
Receiving stolen property is defined as receiving stolen property with the intent to permanently deprive the property's owner of possession. In order for a defendant to be convicted, the property received by the defendant must be stolen. If it was not stolen, the defendant did not commit the crime and therefore cannot be convicted.
Furthermore, the defendant must actually receive the property. This does not, however, imply that the defendant must have personal possession of the property. Even if the defendant only has indirect control over the property, he can be convicted.
Furthermore, the defendant must be aware that the goods he is receiving are stolen. He cannot be convicted if he is unaware that they are stolen. Please keep in mind that in order to be convicted, the defendant does not need to have firsthand knowledge that the goods are stolen. In fact, the prosecution can obtain a conviction if circumstantial evidence shows that the defendant was aware the goods were stolen.
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Age diversity at work is the inclusion of employees of all age groups in the workplace. select one:
a. true
b. false
It holds completely true that the age diversity at work is the inclusion of employees of all age groups in the place of a work environment. Therefore, the option A holds true.
What is the significance of age diversity?Age diversity can be referred to or considered as the diversity found in a group or an organization on the basis of status of age of people who are a part of such organization. Age diversity is differentiated on the basis of types of age groups present in a close-knitted environment.
Therefore, the option A holds true and states regarding the significance of age diversity.
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Enterprises can acquire the latest business apps and digital services as they are needed and without large upfront investments by switching from owning it resources to?
Enterprises can acquire the latest business apps and digital services as they are needed and without large upfront investments by switching from owning IT resources to Cloud Computing.
What is Cloud Computing?Delivering various services over the Internet is known as cloud computing. These resources include equipment and software, such as servers, databases, networking, and software for data storage.
With cloud-based storage, files can be saved to a remote database as opposed to being kept on a proprietary hard drive or local storage device. A computer or other electronic device may access data and the software needed to run it as long as it can access the internet.
Many factors make cloud computing a popular choice for individuals and companies, including cost savings, enhanced productivity, speed and efficiency, performance, and security.
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an e-business revenue model that involves users paying a fee for using protected intellectual property is called .
an e-business revenue model that involves users paying a fee for using protected intellectual property is called licensing.
What is E-business?
The conduct of online business procedures on the web, internet, extranet, or a mix of these is known as e-business (electronic business). The purchasing and selling of goods and services, customer service, payment processing, management of the production and supply chains, collaboration with business partners, information sharing, operation of automated employee services, and hiring of personnel are some examples of these customer-, internal-, and management-focused business processes. E-business and e-commerce are related, but e-business includes much more than just online shopping. Functions and services include everything from creating intranets and extranets to having application service providers deliver e-services online. Businesses use e-business to do joint research, work together on sales promotions, and purchase components and supplies from other businesses.
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Libor is generally _______________ the fed funds rate because foreign bank deposits are generally ________________ than domestic bank deposits.
LIBOR is generally greater than the Fed funds rate because foreign bank deposits are generally more risky than domestic bank deposits.
What is LIBOR?The top London-area banks' estimates are used to generate the average interest rate known as the London Inter-Bank Offered Rate. Each bank makes an estimate of the fees it would incur if it borrowed money from other banks. The average rate that results is commonly referred to as Libor or LIBOR.
It should be noted that LIBOR is generally greater than the Fed funds rate because foreign bank deposits are generally more risky than domestic bank deposits.
Therefore, the correct option is D.
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LIBOR is generally ________ the Fed funds rate because foreign bank deposits are generally ________ than domestic bank deposits.
A) greater than; less risky
B) less than; more risky
C) the same as; equally risk
D) greater than; more risky
for each of the scenarios, calculate the surplus and indicate if it is a producer surplus or a consumer surplus.
The answer is Producer Surplus.
Where is producer surplus?A measure of producer welfare is producer surplus. On a graph, it is shown as the region below the equilibrium price and above the supply curve.By deducting total marginal costs from total revenue, producer surplus is calculated. It can also be calculated based on each sold item by deducting the item's marginal cost from its income. Total Revenue - Total Marginal Costs equals Producer Surplus.The difference between what a consumer is willing to pay and what they actually spent for a product is referred to as the consumer surplus. The difference between the market price and the lowest price a producer will accept to create a good is known as the producer surplus.For each scenario, calculate the surplus and indicate if it is a producer or consumer surplus.
Alice has a
Consumer surplus
Surplus 35-30=$5
Nicole has a
Producer surplus
Surplus=500-500=0
Claire has a
Producer Surplus
Surplus=125-100=$25
Roy has a
Consumer Surplus
Surplus=2.50-2.75=-0.25
Consumer Surplus is the difference between what the consumer is willing to pay and what they actually pay. Consumer surplus can be negative in some cases.
Consumer surplus= Willingness to Pay - Price Actually Paid
Producer surplus is the difference between what producers are willing and able to sell and the price that they actually receive.
Producer Surplus=Price received- Willingness to accept.
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Which type of business has owners that share the debts and the profits but avoid the expense of incorporation?
Answer:
Its Corperation.
Explanation:
Just took the quiz
samantha works as an intern at a marketing firm. she always shows up for work later than she is expected to butdelivers her assignments as per her deadlines. she is cordial with her colleagues. she always tries her best to learn new skills even though she does not show up for work regularly.
There are two sentences in this paragraph that suggest a bad work habit.
1.She consistently arrives at work later than expected but completes her assignments on time. Samantha not only arrives late to work, but she does so on a regular basis. This is an example of a bad work habit, as being on time is one of an employee's responsibilities. If she is not punished, this sends a negative message to her coworkers. This can result in disorganization and lost production.
2.Even though she does not regularly attend work, she always makes an effort to learn new skills. Again, showing up for work is required, unless your company has a flexible work schedule that allows people to work from home or set their own working hours. That does not appear to be the case in Samantha's case, and thus this is a bad habit.
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matilda is really excited. today she found out that her company, a.k. auto repair, is changing their performance review system to include self-reviews from individuals. matilda thinks the new review process will have a big impact on at the company, and she is excited to see the company include in their policies.
Matilda is really excited. today she found out that her company, a.k. auto repair, is changing their performance review system to include self-reviews from individuals. Mathilda thinks the new review process will have a big impact on procedural justice, and she is excited to see the company include organizational justice in their policies.
What is meant by procedural justice?The term procedural justice is one that has to do with the ways that the police and all the other members of the authorities would have to interact with the members of the public. The goal is so that it would be able to shape the perception that the public would have of the police force.
What is meant by organizational justice?The organizational justice are the perceptions of fairness is the term that has to do with the treatment of individuals that would be internal to the social responsibility of the particular entities that are known to be external to the particular business.
Hence the given answers to this question that can be used to fill in the blanks are:
procedural justiceorganizational justiceRead more on procedural justice here:
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dake corporation's relevant range of activity is 4,500 units to 8,500 units. when it produces and sells 6,500 units, its average costs per unit are as follows: average cost per unit direct materials $ 6.40 direct labor $ 3.50 variable manufacturing overhead $ 2.00 fixed manufacturing overhead $ 2.20 fixed selling expense $ 0.90 fixed administrative expense $ 0.60 sales commissions $ 0.70 variable administrative expense $ 0.60 if 5,500 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
The total amount of indirect manufacturing cost incurred is closest to $25,300
What are Indirect Manufacturing Costs?Production expenses that can't be immediately linked to a produced unit are referred to as indirect manufacturing costs. These expenses include, for instance, those for supplies, depreciation, utilities, production supervisor salaries, and equipment maintenance. Indirect manufacturing expenses are gathered into a pool of overhead costs for financial reporting and distributed according to the quantity of units produced during a reporting period; this process results in some capitalization of these costs into the inventory asset.Managerial accountants are required to record these expenses in an account and then divide them among the products generated. These expenses are a significant portion of the overall production costs, to put it briefly.Total Indirect Manufacturing Overhead = Depreciation + Repairs and Maintenance + Office Electricity Expense + Salaries + Factory supplies
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Which of these is not an advantage of outsourcing? part 2
a. cost savings
b. accessing outside technology
c. potential creation of future competition
d. gaining outside expertise
Outsourcing let you leverage know-how and abilities at the side of your whole deliver chain. Hence accessing outside technology.
Outsourcing can also help to make your business greater flexible and agile, able to adapt to changing market conditions and challenges at the same time as imparting cost financial savings and service degree enhancements.
Ousourcngalso taps to fice the composition inside the current market, but, growing fire competition I, not an advantage of the obscuring, therefore, the covet option.
Many people are towards outsourcing because it creates many jobs in other places, which reasons fewer jobs inside the u.s.. With unemployment rising already, outsourcing just increases unemployment even more. however, there are folks that guide outsourcing.
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If an activity whose normal duration is 13 days can be shortened to 10 days for an added cost of $1,500, what is the crash cost per period?
The crash cost per period is $500.
What is crash cost per period?
The difference in expenses divided by the difference in times equals the crash cost per period (crash and normal). The cost of a crash per period is thought to be linear between normal and a crash. So that the smallest cost values on the critical path can be taken into account for time reduction first, the crash cost per period needs to be established.
How is the daily crash cost determined?
Cost Slope = (Crash cost-Normal cost)/Crashing typically results in a rise in the cost of those activities that are built under the crash program (Normal time-Crash time). You require Crash cost (CC), Normal cost (NC), Normal time (NT), and Crash time to compute Crashing (CT).
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a. which state has the comparative advantage in producing cheese? (click to select) b. which state has the comparative advantage in producing cherries? (click to select) c. if both states decided to trade with each other, which of the following is a range of terms of trade that would benefit both wisconsin and california (1 ton of cheese
a. California has the comparative advantage in producing cheese.
b. Wisconsin has a comparative advantage in cherry production.
c. This is the area of profitable trade since the opportunity cost of manufacturing cheese in Wisconsin and California, respectively, is 3 tons and 0.50 tons.
20 tons of cheese or 10 tons of cherries may be produced in California using all available resources (or anything in between).Therefore, 10/20 or 0.50 tons of cherries would have to be sacrificed in order to produce 1 ton of cheese.
The potential cost of producing 1 ton of cherries is also equal to 20/10, or 2 tons of cheese.Like Wisconsin, which can produce either 24 tons of cherries or 8 tons of cheese (or anything in between).1 ton of cheese is produced at a cost of 3 tons of cherries or 24/8.The potential cost of producing 1 ton of cherries is 8/24, or 0.33 tons of cheese.The cost of the next best option is what is known as opportunity cost. In order to produce cheese, clearly California just has to give up 0.5 tons of cherries but Wisconsin needs to give up 3 tons. In order to produce cheese, California has a lower opportunity cost or comparative advantage.
Additionally, Wisconsin's cost of cherry production is lower than California's because there is a difference in the amount of cheese that must be sacrificed: 0.33 tons in Wisconsin against 2 tons in California.
The range of terms of trade is equal to the difference between the two opportunity costs of manufacturing 1 tone of cheese in each nation. This is the area of profitable trade since the opportunity cost of manufacturing cheese in Wisconsin and California, respectively, is 3 tons and 0.50 tons.
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