Answer:
Debit Credit
Note receivable 3,000
Accounts receivable 3,000
Explanation:
In this case the Wainwright company is receiving an asset in the form of note receivable, and we will debit note receivable by 3,000 as an asset is increasing by 3,000 and whenever an asset increases we make a debit entry by the same amount.
Also Wainwright company is receiving this note as a settlement to its account receivable, which means that one of it's asset is decreasing by 3000, and whenever an asset decreases we make a credit entry by the same amount, so in this case we will credit accounts receivable by 3000.
According to the __________, companies go through long, simple periods of environmental stability, followed by short, complex periods of dynamic, fundamental environmental change, finishing with a return to environmental stability.
Further research by the car wax manufacturer indicated that the proposed product would yield a 10 percent return on the firm’s investment. The car wax manufacturer required a minimum of a 15 percent return to further consider the product. The proposed new product was analyzed on the basis of which new-product planning technique?
Answer:
The correct answer is Business analysis.
Explanation:
Business analysis is the set of methods and techniques used to work as a link between the stackeholders, in order to understand the structure, policies and operations of an organization and recommend solutions that allow the organization to achieve its objectives (IIBA: International Institute of Business Analysis).
Business analysis involves understanding how organizations work to carry out their purposes, and defining the capabilities that an organization requires to provide products and services to external stakeholders. It includes the definition of the objectives of the organization, how those objectives are connected to specific objectives, which determine the lines of action that an organization has to take to achieve those goals and objectives, and define how the different organizational units and stakeholders inside and outside that organization interacts.
Preferred stock issued in exchange for land would be reported in the statement of cash flows in
Answer:
The correct answer is a separate schedule.
Explanation:
They are called preferred shares because they have priority over common shares in the payment of dividends or upon settlement, although they are subordinated to the payment of bonds or obligations. Their conditions are negotiated directly between the issuing entity -bank- and the Investor or shareholder. They are a high financial risk asset that can give high bank interest or large losses .
Preferential securities generally do not have the right to vote, but may have priority over common shares in the payment of dividends and upon settlement. Preferential securities may have a dividend that is paid before any dividend that is being paid to common shareholders. Preferential values may have the characteristic of convertibility into common shares. In bankruptcy, preferential investors will be paid with assets before common shareholders and after bankrupt creditors. The conditions of the preferential values are established in a “Certificate of Designation”.
Which leader behavior is most appropriate for a group of employees who are working together for the first time and are eager to begin but lack the experience and confidence needed to perform their roles?
a. Telling
b. Selling
c. Encouraging
d. Participating
e. Delegating
Answer:
Encouraging
Explanation:
Encouraging the new one is always be the best option to direct for positive roles. Encouraging is the best part of the result which motivates subordinates or even higher official to put out best from them.
It should be the duty of the leader of project to motivate or encourage their juniors or subordinates when they joined for the first time. at this time they need some positive words and emotion from the higher official so that they can put their efforts in positive direction.
Seng is a single mother struggling to raise her family with a low income. In 2006, the Pension Protection Act was passed. This act will not help Seng, because, like 68% of working age Americans, she:
a. can’t afford to contribute her part of this matching retirement plan.
b. doesn’t know that the act was passed.
c. spends too much on cheap consumer goods.
d. doesn’t have an employer-sponsored pension or retirement plan.
Answer:
d. doesn’t have an employer-sponsored pension or retirement plan.
Explanation:
The Pension Protection Act provides for the benefit of employees, which is through their own and employer contributions.
This is a policy to provide benefit at times when the person turns old or is not physically fit to perform any job and this, provides pension in terms of money.
Here, if Seng being a single mother is not eligible for this, means that she did not had any employer who could sponsor her for such plan.
As this pension plan had to be sponsored by the employer Seng might did not had any employer.
Skinner rejected ____ as a valid personality characteristic extinction reinforcements self-control traits
Answer: All of the answers
Peggy is the revenue manager at a 1500 room hotel. For next Friday Peggy's PMs shows 300 check-outs, 900 stayovers, 250 transient arrivals and a 200-room group block that begins a three stay on that day. What is Peggy's current rooms available for sale for next Friday?A. 150B. 250C. 450D. 650
Answer:
option (A) 150
Explanation:
Data provided in the question:
Number of rooms in the hotel = 1500
Number of checkouts = 300
Number of stayovers = 900
Number of transient arrivals = 250
Group block that begins a three stay on that day = 200
Now,
Rooms available for next Friday
= Total number of rooms - ( stayovers + transient arrivals + group block)
= 1500 - ( 900 + 250 + 200)
= 150
Hence,
the correct answer is option (A) 150
Peggy currently has 150 rooms available for sale for next Friday at her 1500 room hotel after accounting for stayovers, group block reservations, and transient arrivals. The correct answer is option A: 150.
Explanation:To calculate Peggy's rooms available for sale for next Friday at her 1500 room hotel, we need to consider the given scenarios for that day:
300 check-outs900 stayovers250 transient arrivals200-room group blockWe start with the total rooms (1500) and subtract the rooms that will not be available for sale:
900 stayovers (these rooms are already occupied and not available for new guests)200-room group block (these rooms have been reserved for a group and are not available for new reservations)This results in 400 rooms (1500 total rooms - 900 stayovers - 200 blocked rooms). However, we still need to account for the 250 transient arrivals, which further reduces the number of rooms available for sale. After subtracting these arrivals, we are left with: 400 rooms - 250 transient arrivals = 150 rooms available for sale.
Lyric Company issued a 90-day zero-interest-bearing note with a face amount of $3,000. The present value of the note is $2,855. The journal entry to record the issuance of the note will include
Answer:
Cash.........................Dr $2,855
Discount on notes payable $145
Notes payable $3,000
(Notes issued at discount)
Explanation:
Zero interest note, as the name suggests are issued with no interest charged on amount due. As such, notes are issued at a price that is lesser than face value. Difference between face value and present value of note represent discount on notes payable.
Journal entry to record issue of notes payable:
Particulars Debit Credit
Cash $2,855
Discount on notes payable $145
Notes payable $3,000
(Notes issued at discount)
Cash is debited with present value of note of $2,855 as notes are issued less than face value.
RGB Company uses the percentage of receivables method for recording Uncollectible Accounts Expense. The accounts receivable balance is $100,000 at year-end and the total credit sales were $800,000. Management estimates that 4% of receivables will be uncollectible.
What adjusting entry will have to be made if the Allowance for Uncollectible Accounts has a credit balance of $800 before adjustment?
Answer:
The adjusting entry will be:
Dr Doubtful Debt expenses $3,200
Cr Allowance for doubtful Debt $3,200
(to record the estimated allowance for doubtful debt at the end of the period)
Explanation:
The balance of Allowance for Doubtful Debt is estimated at 4% of receivables which is calculated as: 100,000 x 4% = $4,000.
Because the balance of Allowance for Doubtful Debt is $800 (credit) before adjustment entry, an entry is needed to rise the balance of Allowance for Doubtful Debt from $800 to $4,000, or Credit $3,200 to Allowance for Doubtful Debt.
As a result, Doubtful Debt expenses will be debited for $3,200 while Allowance for doubtful Debt will be credited for $3,200.
Sales at a fast-food restaurant average $6,000 per day. The restaurant decided to introduce an advertising campaign to increase daily sales. In order to determine the effectiveness of the advertising campaign, a sample of 49 day's sales were taken. The sample showed an average daily sales of $6,300. From past history, the restaurant knew that its population standard deviation is about $1,000. If the level of significance is 0.01, do the sales increased as a result of the advertising campaign?
Answer:
Yes
Explanation:
The 0.01 percent of the deviation plus the 0.01 percent of the sales average is not enough to get to the $6,300 daily, which means that the factor of the increase sales is the advertising campaign.
MC 07 Countries A, B, and C are at a particular... Countries A, B, and C are at a particular level of economic integration. All these countries enjoy reduced or eliminated internal tariffs on trade between them and have added a common external tariff on products imported from countries outside the union. If these countries remove all restrictions on the free flow of capital and labor among themselves, they represent a Multiple Choice free trade area. common market. political union. preferential trade area.
Answer:
common market
Explanation:
We are not told anything about the political status of contries A, B and C, so we should assume that they lack political unity, therefore they are forming only a common market.
A common market is defined by a group of countries that impose few or no duties to common trade between them, but impose common tariffs on external trade.
The European Union started as a common market during the 1960s and 1970s known as the European Economic Community. Then it evolved into a political union. Another example would be the Mercosur in South America.
Holtzman Clothiers’s stock currently sells for $38.00 a share. It just paid a dividend of $2.00 a share (i.e., D(0) = $2.00). The dividend is expected to grow at a constant rate of 5% a year. What stock price is expected 1 year from now? What is required rate of return?
Answer:
Price in one year is $39.9
Required rate of return is 10.53%
Explanation:
Given:
Selling price of stock (P0) = $38
Dividend (D0) = $2
Growth rate = 5%
Stock price after a year = 38 × (1+0.05)
= $39.9
Stock price expected 1 year from now is $39.9
Using Gordon's constant dividend model to compute required rate of return:
r = [tex]\frac{D1}{P0} +g[/tex]
D1 = D0 (1+0.05)
= 2 × 1.05
= $2.1
Substitute the values in the above formula:
r = [tex]\frac{2.1}{38} +0.05[/tex]
= 0.1053 or 10.53%
The expected stock price of Holtzman Clothiers 1 year from now is $40.10. The required rate of return for holding this stock is 10.24%.
Explanation:The question pertains to two main concepts: expected stock price in the future and required rate of return. Firstly, to calculate the expected stock price 1 year from now, you need to account for the growth in the dividends. Given that the dividends of Holtzman Clothiers are growing at 5% per year, the dividend 1 year from now, D(1), will be $2.00*(1+5%) = $2.10. This represents the dividends that will be paid out next year. If you incorporate this into the current stock price, the expected stock price 1 year from now thus becomes $38 + $2.10 = $40.10.
Secondly, the required rate of return would be the sum of the dividend yield and the capital gains yield. Considering that the dividend payout is $2.10 and the expected stock price is $40.10, the dividend yield is $2.10 / $40.10 = 5.24%. As the dividends are growing at 5%, this is also the capital gains yield. So, the required rate of return for an investor would be 5.24% + 5% = 10.24%. This means an investor requires a return of 10.24% to hold Holtzman Clothiers's stock.
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If an activity generates a positive externality, the government can increase total economic surplus by ______the activity, and if an activity generates a negative externality, the government can increase total economicsurplus by ______ the activity.
A.taxing; banning
B.subsidizing; banning
C.subsidizing; taxing
D.publicizing; taxing
Answer:
C.subsidizing; taxing
Explanation:
When an activity generates positive externality, the benefits to third parties not involved in production or consumption exceeds the costs. Government can encourage the production of goods that provide positive externality by subsidizing production. Production activities that can generate postive externality is research and development.
When an activity generates negative externality, the benefits to third parties not involved in production or consumption is less than the cost. Government discourage production of goods that generate negative externality by taxation to increase cost of production.
A period marked by rising unemployment and high inflation is called a
Answer:
Stagflation
Explanation:
Stagflation is a period of slow economic growth, rising unemployment rate and high inflation rate.
Stagflation was first noticed in the US in the 1970s.
Stagflation is usually caused by an increase in money supply and a simultaneous decrease in money supply.
In December 2000, currency was $340 billion, traveler's checks were $4 billion; checkable deposits owned by individuals and businesses were $450 billion, saving deposits were $1,900 billion, time deposits were $1,000 billion; and money market funds were $900 billion. What was the M1 in December 2000?
Answer:
M1 = $454 billion
Explanation:
given data
currency = $340 billion
traveler's checks = $4 billion
individuals and businesses = $450 billion
saving deposits = $1,900 billion
time deposits = $1,000 billion
money market funds = $900 billion
to find out
What was the M1 in December 2000
solution
we get here M1 in December that is
M1 = traveler's checks + check deposits .....................1
put here value we get
M1 = $4 billion + $450 billion
M1 = $454 billion
The M1 money supply in December 2000 was $794 billion, calculated by adding together currency ($340 billion), traveler's checks ($4 billion), and checkable deposits ($450 billion).
The M1 money supply includes the most liquid components of the money supply: currency, traveler's checks, and checkable deposits. Based on the information given for December 2000, we can calculate M1 by adding currency ($340 billion), traveler's checks ($4 billion), and checkable deposits ($450 billion).
Here is the calculation for M1 in December 2000:
Currency: $340 billion
Traveler's checks: $4 billion
Checkable deposits: $450 billion
Adding these together:
M1 = Currency + Traveler's checks + Checkable deposits
M1 = $340 billion + $4 billion + $450 billion
M1 = $794 billion
Therefore, the M1 money supply in December 2000 was $794 billion.
The change in retained earnings is affected by which of the following?
Select one:_________
a. Payment of dividends and common stock.
b. Net income and common stock.
c. Net income and payment of dividends.
d. Net income and paid-in capital.
Answer:
c. Net income and payment of dividends.
Explanation:
The statement of stockholder's equity comprises common stock and retained earnings. The ending balance after adjustment shown in the attached spreadsheet.
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
And, the ending balance of the common stock = Beginning balance of common stock + issued shares
Hence, the appropriate option is c.
Retained earnings are affected by the net income and the payment of dividends. Net income can increase retained earnings, while payment of dividends decreases retained earnings.
Explanation:The change in retained earnings is affected by both net income and the payment of dividends. Option c is the correct choice. Retained earnings refer to the net income that a company keeps after it has paid dividends to its investors. When a company generates net income, it has a choice: it can either distribute these earnings to the shareholders in the form of dividends or retain them within the company. The money that is kept or 'retained' in the business then becomes part of the 'retained earnings'. Conversely, when a company pays dividends, it decreases its retained earnings.
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Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba’s annual total revenue is_______. a. $12,000. b. $32,000. c. $20,000. d. $8,000.
Answer:
Bubba’s annual total revenue is c. $20,000
Explanation:
Revenue is the total amount that comes from sales, regardless of cost.
Bubba catches 4,000 pounds and sell them for $5 per pound, so the total amount (revenue) he receives from selling them is 4,000 * 5 = $20,000
Note: The information about the $3 cost is not necessary to calculate revenue
An example of a frictionally unemployed individual is a. Sylvia, who quit her job to spend more time with her children b. Rod, the lifeguard, who cannot find a job because the temperature is too low in October c. Ileana, a college student who quits her job to return to school d. Steve, an individual does not have skills to keep his job as an aerospace engineer e. Samantha, who quits her job to look for better one
Frictional unemployment refers to the time period between jobs when a worker is searching for, or transitioning from one job to another. The best example in the list given is Samantha, who quit her job and is searching for a better one.
Explanation:The subject of your question pertains to frictional unemployment, which is associated with individuals who are temporarily unemployed, either because they are switching jobs or are searching for a job for the first time. Considering the examples given, the textbook example of a frictionally unemployed individual would be option E, Samantha, who has quit her job to look for a better one. This action leads to a period of unemployment during her job search, even though there are jobs available for her skills. In this case, the friction is caused by the time it takes to match job seekers with job openings.
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Frictionally unemployed individuals are those in the phase of transitioning between jobs or actively seeking new ones. In the provided examples, the frictionally unemployed person is Samantha, who has quit her job to find a better one. This situation is a normal part of the workforce dynamics in a market economy.
Explanation:In economics, an individual is considered frictionally unemployed when they are transitioning between jobs or are in the process of searching for a new job. In the examples given, the frictionally unemployed individual would be Samantha, who quits her job to look for a better one. She is voluntarily leaving her job and actively seeking new employment, which is inherent to the concept of frictional unemployment. However, this is not a bad thing. Given the varying dynamics of the market economy where companies often experience changes, it is essential for individuals to find jobs that match their skills and preferences, not just acquire the first job available.
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Furniture Shine is introducing an improved version of its existing wax targeted to owners of antiques. The firm has decided to leave the original wax in the mix aimed towards residential owners. Furniture Shine is employing a _____ product strategy.
Answer:
modified product - multiple markets
Explanation:
This type of strategy consists of offering different products, which are modified versions of some exiting product, to new markets.
In this case, the improved version of the wood wax is a modified version of the old wood wax, and is going to be targeted to a new and specific market (antique owners), while the original version is still going to be targeted at the current market.
Which statement below best answers the economic question How to produce? A. Marco's products sell at prices ranging between $2 and $125. B. Marco sells his products at art shows, online, and by word of mouth. C. Marco uses locally harvested wood from a sustainable tree farm to make his products. D. Marco works as an independent artisan, crafting wooden figurines, toys, and games.
Answer: Marco uses locally harvested wood from a sustainable tree farm to make his products.
Explanation: According to economics before production a manufacturer needs to ask himself some critical questions, which are:
-What to produce
-Where to produce
-How to produce
How to produce is a question a producer should ask, regarding how the producer would go about production: the raw materials needed and the steps taken to produce the product.
Answer:
C. Marco uses locally harvested wood from a sustainable tree farm to make his products.
Explanation:
Foods International is developing a new gluten-free, chili-flavored pretzel. The marketing strategy for the product has already been developed and presented to top management. Several prototypes were also formulated by the company's R&D team. The final prototype is now being tested rigorously to ensure that it passes FDA standards. Once approved, the next step will most likely be ________.
A) test marketingB) portfolio analysisC) commercializationD) internal marketingE) business analysis
Answer:
Letter A is correct. Test marketing.
Explanation:
Test marketing should be performed immediately after approval of the final product. This is an important tool for the organization to assess the compliance and viability of a new product when it is launched in a competitive market and real consumers.
There are several ways to conduct a marketing test. In one of them, the organization can make the product or marketing campaign available to a limited base of consumers aware or not of their participation to evaluate their answers and questions about the new product.
Once a product, like Foods International's gluten-free, chili-flavored pretzel, passes FDA testing, the company would typically move to the commercialization stage. This involves mass production, implementation of marketing strategies, and customer support roll-out.
Explanation:
The phase that Foods International would most likely move onto after successfully passing FDA testing would be C) Commercialization. Commercialization refers to the process of introducing a new product or production method into the market. Here, the gluten-free, chili-flavored pretzel would be manufactured in large quantities and the company would implement its marketing plan. This would include distribution, promotion, sales, and customer support. The goal during this stage is to maximize market share and achieve a return on the investments made during the product development phases. Test marketing, portfolio analysis, and business analysis would have typically occurred earlier in the product development process.
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1. The first digit in the account number 520 means that the account is in the
(A) expense division of the general ledger.
(B) revenue division of the general ledger.
(C) liability division of the general ledger.
(D) asset division of the general ledger.
Answer:
A) expense division of the general ledger
Explanation:
expense division of the general ledger
The first digit in the account number 520 typically indicates that the account belongs to the asset division of the general ledger, following common accounting practices. However, these conventions may vary with different accounting systems.
Explanation:In accounting, account numbers are often used to categorize different types of accounts in the company's general ledger. Understanding the fundamental structure of these account numbers can help keep the accounts organized. As for the student's query about the number 520 and its first digit signifying, the answer to this is (D) asset division of the general ledger.
This is basing on a commonly used numbering standard for the general ledger, where asset accounts are classified under numbers starting with 1 or 5, while liabilities are with 2, equity shares with 3, revenues with 4, and expenses with 6 or 7. However, remember that these standards may vary depending on the company's accounting system.
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Which of the following modes of cargo transport can be characterized as being inexpensive, very slow and inflexible, and good for transporting very heavy, very bulky, and containerized cargo?
Answer:
water carrier transports
Explanation:
Based on the information provided within the question it can be said that the mode of transportation that is characterized exactly as is described in the question are water carrier transports. These are giant ships that transport shipping containers filled with all sorts of goods through different naval routes. Since they can take a wide variety of containers at any given moment it makes them the cheapest and safest option.
Key practices in the partnering approach to managing contracted relationships include ch12 Select one:_______a. Structured communicationsb. Risk being transferred to the other party.c. Independent project teamsd. Single project contractinge. Access to each other's organizational resources
Answer:
The correct answer is access to each other's organisational resources
Explanation:
There are numerous aspects of partnering approach in managing relationship. The significant advantage of this approach is that it helps to create an environment in which two parties can work along and start a healthy relationship where they can easily access organisational resources of each other. This approach helps firms and organisations to grow.
Key practices in the partnering approach to managing contracted relationships typically include: Structured communications. A is correct.
In the partnering approach, structured communications are essential to ensure that all parties involved in the contract have open and transparent channels for communication. This helps to build trust, facilitate collaboration, and address any issues or concerns that may arise throughout the duration of the contract.
"Structured communications" is a key practice in the partnering approach to managing contracted relationships. It involves establishing clear and effective channels for communication between all parties involved in the contract. This includes regular meetings, progress updates, feedback sessions, and formal communication protocols to ensure that information is shared efficiently and effectively. Structured communications help build trust, foster collaboration, and mitigate misunderstandings or conflicts that may arise during the contract period.
Alex's Furniture Mart produces and sells tables in a perfectly competitive market. When Alex's Furniture Mart produces and sells 250 tables, its marginal cost is equal to $200, and AVC is rising. If the market price of tables is equal to $150, Alex's Furniture Mart should:
a. raise the price of its tables
b. increase its level of table production
c. continue producing 250 tables
e. decrease its level of table production
Answer:
e. decrease its level of table production
Explanation:
MC = 200.
Market price = 150 which cannot be changed by any firm.
MC is greater than price = MR then in order to maximise profit MR has to be equal to marginal cost
MC has to be decreases to $150 which is possible only when it reduces output.
As a manager at IceCold Foods, Oscar is responsible for the firm's S'Cream brand of ice cream. He recently approved a proposal to test market new ice cream flavors. He is also considering the possibility of lowering the price of the ice cream and initiating a new advertising campaign. Oscar serves as a(1) product development manager.(2) brand manager.(3) target market manager.(4) commercialization manager.
Answer:
(2) brand manager
Explanation:
Based on the information provided within the question it can be said that Oscar is serving as a brand manager at iceCold Foods. This role focuses on managing the company's products, services and product lines in order for them to perform well and be accepted and liked by their customers. This includes approving new products as well as managing prices like what Oscar is doing.
If a company has been found guilty of using _______________________________________, it means it reduced prices below cost in order to drive competitors out of the market, and then increased prices once competitors had left the market.
Answer: Predatory pricing
Explanation: In simple words, predatory pricing refers to the pricing strategy under which an organisation tries to create a certain level of monopoly by reducing their prices with the objective of demolishing competitors.
Such kind of pricing is generally seen in monopolistic competition where the products offered by competitors are close substitutes. Wall mart is one of the prime examples of an entity using such strategy.
Firms practicing this strategy usually have strong funds and are capable of operating business for a specified period at lower profits.
In 2018, Uriah received the following interest payments:
a) Interest of $300 on an overpayment of 2017 Federal income taxes
b) Interest of $400 from his bank certificate of deposit.
c) Interest of $1,000 on municipal bonds
d) Interest of $1,500 on US savings bonds (Series HH)
What amount, if any, should Uriah report as taxable interest income on his 2018 individual income tax return?
a. $0
b. $700
c. $2,200
d. $3,200
e. None of the above
Answer:
C) $2,200
Explanation:
Interest generated by municipal bonds is not taxed by the federal or state governments. While interest generated by US Securities is not taxed by the state governments, but it is taxed by the federal government. The interest generated by her certificate of deposit is taxed as well as the interest earned by the overpayment of prior federal taxes.
$300 + $400 + $1,500 = $2,200
Some people want healthy cereal that will help them lose weight or possibly prevent certain kinds of cancer. Some want presweetened cereal. Some want fruits and nuts in their cereal. Some people want whole wheat cereal while others want rice cereal. There are some who like hot cereal and others who like to eat their cereal right out of the box. The diversity of consumers for cereal is an example of ________.
Answer:
Market fragmentation
Explanation:
A commercial center where there is no organization that can apply enough impact to move the business a specific way. The market comprises of a few little to medium-sized organizations that contend with one another and huge endeavors.
Fragmented market prompts a littler client base, which makes it simpler for organizations to focus on their end purchasers all the more viably. Instead of squandering promoting assets on an enormous group of spectators, organizations can focus on their showcasing exercises on a littler however progressively pertinent crowd.
Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies split the market and earn $50 million each. If they both advertise, they again split the market, but profits are lower by $10 million since each company must bear the cost of advertising. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $60 million while the company that does not advertise earns only $30 million.
If these two companies collude and agree upon the best joint strategy,
a.neither company will advertise.
b.both companies will advertise.
c.PM Inc. will advertise but Brown Inc. will not.
d.Brown Inc. will advertise but PM Inc. will not.
Answer: (A)
If both companies collude and agree on the best joint strategy, then neither of them will advertise.
Explanation:
If PM Inc. and Brown Inc. agree on a strategy that is best for both of them, then they would decide not to advertise as this line of action will earn them both $50 million, which is higher than they stand to earn if they both advertise.
Final answer:
The best joint strategy for the two colluding monopolistic competitors, PM Inc. and Brown Inc., is to not advertise, enabling them to avoid advertising costs and maintain equal market shares, thereby maximizing profits.
Explanation:
The scenario provided with PM Inc. and Brown Inc. represents a classic example of a game theory problem involving collusion and advertising strategies among monopolistic competitors. If both companies collude, the best joint strategy would be for neither company to advertise.
This would maximize their profits as advertising costs would be eliminated without affecting their market share; both companies would retain $50 million. However, monopolistic competition theory suggests that advertising can affect demand elasticity or shift demand curves. Yet in this particular case, the expenditures on advertisement by both firms would simply neutralize each other's efforts, maintaining the status quo and leading to reduced profits.