Answer:
Compare actual and budgeted results at virtually any level of production.
Explanation:
Budget is an estimation of financial plan and operational expenses of an organization with a period. Budget helps to prepare what will be spent by an organization and measured against actual performance at the end of the financial period.
Flexible budget is a budget designed to adjust to changes in level of current revenue. It compares the actual and budgeted results or performance at every level of production.
Management often uses flexible budget to address both areas that were successful and not succesful in past performance. It is used to prepare for the worst or best case situation.
Example of flexible budget is when management identify and analyze cost(Fixed and Variable cost) which affects revenue and expenses. Fixed cost which is fixed at every output level and variable cost which varies with the output level.
The purpose of the flexible budget is to compare actual and budgeted results at virtually any level of production. It allows management to assess performance, identify variances, and make necessary adjustments.
Explanation:The purpose of the flexible budget is to compare actual and budgeted results at virtually any level of production. A flexible budget is created by breaking down fixed and variable costs, allowing management to assess their performance based on different levels of production. With a flexible budget, managers can identify any variances between the actual and budgeted amounts and take necessary actions to achieve their goals.
For example, let's say a company sets a budget for producing 1,000 units of a product. However, the actual production reaches only 800 units due to unexpected circumstances. By comparing the actual costs with the budgeted costs at this level, management can identify if there are any discrepancies and make adjustments accordingly.
The flexibility of the budget allows management to make informed decisions based on the current production level and adjust their approach to meet their goals effectively. It provides them with the opportunity to analyze and control costs more accurately, ensuring the efficient allocation of resources.
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Multiple Choice Question 50 When manufacturing overhead costs are assigned to production in a process cost system, they are debited to a Work in Process account. the Finished Goods Inventory account. Cost of Goods Sold. a Manufacturing Overhead account.
Answer:
they are debited to a Work in Process account
Explanation:
The journal entry to record the assignment of manufacturing overhead costs to production in a process cost system is done as follows:
Work - In Process (debit)
Overheads (credit)
Each parcel of land in a new development is selling for $15,000 and the total project revenue is estimated to be $5,000,000. The project lender has stated that the loan should be paid off when 80% of the total project revenue has been earned. The total loan amount is $3,500,000. What is the release price for each parcel?
Answer:
The release price for each parcel is $13,215.
Explanation:
Release price for each parcel = [3500000/(5000000*80%)]*15000
= $13,215
Therefore, The release price for each parcel is $13,215.
In April of 2004, as Peter Flores prepared for a meeting with Cynthia Wu, the manager of Salem Data Services, he was pleased with the positive contributions that Data Services had made to the Net Income and other financial metrics of Salem Telephone for the previous year ended December 31, 2003. True/ False?
Answer:
False
Explanation:
Due to regulatory issues, Salem Data Services was established as a separate entity from Salem Telephone. Salem Telephone decided to start Salem Data Services in order to find additional sources of revenue and profits. Because of its relationship with Salem Telephone, Salem Data Services was able to avoid many costs an independent company would have had
Inez believes that makeup is the most important part of her wardrobe. She spends considerable time comparing the prices, skin tones, and color options available at various cosmetics counters in department stores. For Inez, makeup is a convenience product.
A. True
B. False
Answer:
B. False
Explanation:
Convenience products refer to those products whose purchase is very convenient or comfortable and requires little time and efforts of the buyers. Such products are frequently purchased by the buyers. Examples of such products would be soaps and detergents, sugar and magazines, etc.
Shopping products on the other hand, are those products that are purchased less frequently and often require comparison between other available alternatives and variants. Such products demand time and efforts on the part of the consumer. Examples are clothing, electronic items such as smartphones, shoes, etc.
In the given case, Inez assigns high importance to her makeup. Thus it is evident, she's particular about her make up items and would spend a considerable time in deciding and selecting a particular make up item.
As is stated, she is particular about colors, prices, skin tones and other factors, make up would classify as a shopping product.
Price discrimination requires that different customers have different levels of price sensitivity and that:A. the cost of production is different for every customer. B. marginal costs are falling. C. supply is contant. D. customers cannot resell the product amongst themselves.
Answer:
Customers cannot resell the product amongst themselves.
Explanation:
Price discrimination can be defined as a pricing strategy which involves selling a particular product at different prices. It can also be described as how organizations charge each customer different amount of prices for the same good or service, this is typically based on how much a particular customer is ready to pay for the product.
The following are the requirements for price discrimination:
- Organizations must prevent the resale of the product by separating the market.
- Seller should ensure to control the supply of the product.
- Price elasticity must be different.
Nora contracts to work for ABC Investments during June for $2,500. On May 31, ABC cancels the contract. Nora refuses to accept a similar job with first State Bank, which would pay $2,000. Nora files a suit against ABC. As compensatory damages, Nora can recover:________.
a. $2500
b. $2000
c. $500
d. nothing
Answer:
c. $500
Explanation:
A contract is an agreement by two or more parties to perform a.certain activity within a given time.
When contract are breached, the beneficiary has the right to gain back the amount promised.
If the beneficiary can get another option, the other party is obligated to pay the balance.
On this instance Nora had the chance to get a new job at $2,000 salary the balance is $2,500 - $2,000= $500. Since she rejected the job she is responsible for that loss.
However ABC is still liable to pay the balance of $500
Nora can recover $500 as compensatory damages from ABC Investments, representing the difference between her contract with ABC and the salary offered by First State Bank, which she refused.
Explanation:Nora can recover compensatory damages for the loss she suffered due to ABC Investments canceling the contract. Under the duty to mitigate damages, the plaintiff must take reasonable steps to minimize their loss. Since Nora refused to accept a similar job at First State Bank, which was offering $2,000, she did not fulfill this duty completely. The difference between the original contract price and the salary of the new job offer represents the amount she could recover, which is $500 ($2,500-$2,000). Therefore, the correct answer is option C: $500.
The affirmative action process demands all of the following EXCEPT ________.
a. analysis of the demographics of the current company workforce.
b. survey of the relevant labor market to determine its demographics.
c. comparison of the current company workforce with the available labor market.
d. hiring of people in underrepresented classes, regardless of qualifications.
Answer: D. hiring of people in underrepresented classes, regardless of qualifications.
Explanation: Employment using quota as a criteria and hiring people without regards to qualification just because they are from under represented class, is not an affirmative action and will lead to mediocrity.
Hiring should be based on analysis of demographics of the current company workforce, survey of the relevant labor market and comparison of the current company workforce and workforce available in the labor market.
Answer:
d. hiring of people in underrepresented classes, regardless of qualifications.
Explanation:
The affirmative action process demands analysis of the demographics of the current company workforce, survey of the relevant labor market to determine its demographics and comparison of the current company workforce with the available labor market.
However, it is counterproductive to hire people in underrepresented classes, regardless of qualifications.
Which of the following is an example of nondiversifiable risk? (a) Risk resulting from a general decline in the stock market (b) Risk resulting from a news release that management has committed fraud (c) Risk resulting from an explosion in a grain elevator owned by Continental (d) Risk resulting from an impending lawsuit against the company
Answer:
(a) Risk resulting from a general decline in the stock market
Explanation:
A non-diversified risk is an investment asset or a bond a real estate stocks that can be reduced or eliminated by addition of an asset that diversifies the investments. It can be also referred to as a market or a systematic risk and can be understood as an investment risk that are unavoidable lie natural disasters, wars or epidemics. Some factors responsible of this are changes in the foreign investment policy and alteration of taxes, social-economic measured and global security threats.Non- diversifiable risk is defined as a risk that cannot be eliminated by having larger portfolio. It can also be referred as market or systematic risk. It is beyond the control of the entity and cannot be mitigated.
Hence Risk resulting from a general decline in the stock market is an example of non-diversifiable risk.
Characteristics of non-diversifiable risk: This risk is common to whole class of asset or liabilities. They influence whole market.They are beyond the control of the entity and the management.They are result of economic changes that cannot be ratified through increasing portfolio.
Therefore the example of non-diversifiable risk is risk resulting from a general decline in the stock market .
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The idea that it is necessary to sell the ideas to others in the organization so that innovations will be commercialized is the rationale behind the use of: a. product champions. b. strategic leadership. c. cross-functional teams. d. joint ventures.
Answer:
A. Product champions
Explanation:
The product champion is a person that sees a product's value and then creates the product in a systematic way. The product champion makes decision makers invest, sell or promote the product. He keeps the product in the minds of consumers.
The Product champions brings entrepreneurial ideas, he identifies the suitable markets for the product, he helps in finding those resources that would support the business.
Answer:
A) product champions.
Explanation:
In marketing, a product champion is the first person that is able to see the potential success of a new product or service and tries to convince potential investors or department heads. The product champion is the individual that promotes the products or service within the organization. Sometimes great products are lost because they do not have a product champion.
E.g. Microsoft's tablet was launched many years before the iPad, and if you compare it to existing technology in 2000 it was revolutionary. But its launch was very timid and soon Microsoft abandoned the project. Later Steve Jobs introduced the iPad and it was an immediate success. Microsoft's tablet obviously didn't have a product champion that pushed for its massive release, while Steve Jobs was the iPad's champion.
the Federal Reserve wishes to decrease the money supply by $100 billion in order to reduce the possibility of high inflation in the years to come. Assuming a reserve requirement of 10 percent & that banks hold no excess reserves and the Fed wanted to use open market operations, would the Fed buy or sell bonds and how many bonds should the Fed buy or sell?
Answer:
the Fed should sell $10 billion in securities
Explanation:
intended goal is to decrease money supply by $100 billion
banks' required reserve ratio = 10%
money multiplier = 1 / reserve ratio = 1 / 10% = 10
the Fed should sell $10 billion in securities
total effect = -$10 billion x 10 (money multiplier) = -$100 billion
When the Fed sells securities, it is absorbing money, so it reduces the monetary base and money supply of the economy.
Which of the following is true of performance appraisal? Group of answer choices Performance management is a part of performance appraisal. Performance appraisal refers to the entire series of activities designed to ensure that the organization gets the performance it needs from its employees. Performance appraisal is the process of determining how well employees do their jobs relative to a standard and communicating that information to them. Performance appraisal is the same as performance management.
Answer:
The correct option is Performance appraisal is the process of determining how well employees do their jobs relative to a standard and communicating that information to them.
Explanation:
Performance Appraisal is the systematic evaluation of the performance of employees when compared to a set standard, and to understand the abilities of an employee in order to enhance further growth and development. What this means is that a performance appraisal entails a regular review of an employee's job performance and overall contribution to a company.
Companies usually make use performance appraisals to give employees a feedback on their work and they also use it to justify pay increases and bonuses, as well as for making decisions to terminate employment.
Performance appraisals can be carried out at any time, but in order to ensure uniformity, companies tend to carry out annual, semi-annual or quarterly performance appraisals.
The statement that becomes true regarding the performance appraisal is the process of determining how well employees do their jobs relative to a standard and communicating that information to them
The information regarding the performance appraisal is as follows:
It improves the employees performance & productivity. In the needs of the development should be determined. It should be conducted in prescribed time so that the process should be considered effective and beneficial.Therefore, the above statement is correct.
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Defining the business needs for the project, assessing its importance to the company, and determining whether the project is actually feasible are all part of which phase of the system development life cycle (SDLC)?
a. analysis
b. design
c. planning
d. development
Answer:
C. Planning
Explanation:
In the planning phase, project goals are determined and a high-level plan for the intended project is established. Planning is the most fundamental and critical organizational phase. The three primary activities involved in the planning phase are as follows:
1. Identification of the system for development
2.Feasibility assessment
3.Creation of project plan
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Torino Company has 2,800 shares of $50 par value, 6.5% cumulative and nonparticipating preferred stock and 28,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $8,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is?
Answer:
The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is $10,200.
Explanation:
In order to calculate the cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is , we have to make the following calculations.
First, we have to calculate the Annual preferred dividend = (2800*50*6.5%) = $9,100
Hence, First year preferred dividend = $9,100-$8,000 = $1,100
Finally, if we make $1,100+$9,100 = $10,200 and so this will be the cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders.
According to the criterion of _____, a selected segment must be large enough to warrant developing and maintaining a special marketing mix. Serving the specific needs of this segment must be commercially viable, even if the number of potential customers is small.
Answer:
Substantiality.
Explanation:
Market segmentation is one of the important marketing strategies to divide the entire market into small segments in order to implement a better technique to satisfy the consumer need with specific products and schemes. There are four basic criteria for useful segmentation of the market:
Accessibility.Actionability.Substantiality.Responsiveness.Substantiality: This criterion of segmentation express the notion that the target market must be large enough to be profitable as a small segment can not justify the investment.
Similarly in the given case, it talks about the substantiality criteria of segmentation as it says a selected segment must be large enough to warrant developing and maintaining a special marketing mix.
Using the Internet, some firms are now employing software that uses pricing algorithms to constantly adjust their online prices in response to what rivals are charging for similar products.
This is making it easier for the firms to _________.
Answer: collude tacitly in their pricing schemes.
Explanation:
Pricing Algorithm is done when requested prices for items that are for sales are automatically set in order to maximize the seller's profit. Firms are employing various softwares that uses pricing algorithm to adjust their online prices to respond to what their competitors charge for similar product.
This makes it easier for the firm "to collude tacitly in their pricing scheme".
Ford Motor Company is introducing consumers to its new car with the help of an advertisement campaign. This introductory campaign most likely aims to affect the ________ stage of buyer-readiness. A. conviction B. liking C. preference D. awareness E. insistence
Answer:
D. awareness
Explanation:
Buyer readiness stages are the combination of stages through which consumer passes by before making final purchase of goods and services. There are six different stages of buyer readiness:
Awareness.Knowledge.Initial interest.Preference.Conviction.Purchase.Awareness is the stage, where the consumer has very little or no information about the product and it´s usage, in this case, Marketer or company has to launch an advertising campaign to spread awareness about the product. Similarly, in the given case Ford motor has launched an advertisement campaign to introduce their product to the consumer or to spread awareness about the product.
What ethical theory looks at the present in assessing the impact of alternate sentences, focusing less on the act committed and more on the character of the person who committed it and how a sentence would work to achieve moral virtue?
Answer:
Virtue ethics
Explanation:
Virtue ethics are defined as normative ethical theories which is centered around virtues of the mind, character, and a total sense of honesty.
Antidilutive securities __________.
a. include stock options and warrants whose exercise price is less than the average market price of common stock
b. are those whose inclusion in earnings per share computations would cause basic earnings per share to exceed diluted earnings per share
c. should be ignored in all earnings per share calculations should be included in the computation of diluted earnings per share but not basic earnings per share
d. should be ignored in all earnings per share calculations.
Answer:
The answer is D.
Explanation:
The financial instruments that are not in the form of equity or common stock, but when converted into equity or common stock will increase earnings per share are known as Antidilutive securities. Examples are convertible preferred stock, convertible debt instruments, warrants etc.
Antidilutive securities are not included in the calculation of earnings per share.
The __________ method of estimating bad debts uses both past and current receivables information to estimate the allowance amount. Specifically, each receivable is classified by how long it is past its due date. aging of receivables percentage of receivables percentage of sales
Answer:
aging of receivables
Explanation:
Based on the scenario being described within the question it can be said that the method that is being mentioned is known as aging of receivables. This is report that includes a list of unpaid customer invoices and unused credit memos of various different date ranges, both from the past and some from the current dates.
The aging of receivables method uses both past and present receivables data to estimate the allowance for bad debts by categorizing receivables based on the length of time overdue and applying different percentages to each category to estimate bad debts.
Explanation:The method of estimating bad debts that uses both past and current receivables information to estimate the allowance amount, and involves classifying each receivable by how long it is past its due date, is known as the aging of receivables method. This method is a meticulous approach that reviews all outstanding invoices and categorizes them based on the length of time they have been overdue. For instance, a common categorization might be 0-30 days, 31-60 days, 61-90 days, and over 90 days past due. More weight is usually given to the receivables that are more delinquent, under the presumption that the longer an account receivable is overdue, the less likely it is to be collected.
To implement the aging of receivables method, a business will apply a different percentage to each category of receivables to determine the estimated amount of bad debts. The percentages used are often based on historical data, such as that provided by the Federal Reserve Bank of New York, like in the referenced figure titled 'Percent of Balance 90+ Days Delinquent by Loan Type'.
According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise.
A. 2 to 5 percent of sales
B. 30 to 50 percent of sales
C. 2 to 5 percent of profits
D. 30 to 50 percent of profits
E. 5 to 7 percent of profits
Answer:
A. 2 to 5 percent of sales
Explanation:
According to the text, management contracts usually stipulate that a fee of 2 to 5 percent of sales be paid to the firm providing the management expertise.
Answer:
A. 2 to 5 percent of sales
Explanation:
Proper management is necessary for the success of any company, therefore, it is important to applaud firms who provide management expertise at different levels. This is because it is their responsibility that all organizational goals are met.
A commitment from the organization in the form of sales percentage is given to the firm providing management expertise. According to the text, a fee of 2 to 5 percent of sales is paid to the firm providing management expertise.
Contractionary fiscal policy to prevent real gdp from rising above potential real gdp would cause the inflation rate to be ________ and real gdp to be ________.
Answer:
Contractionary fiscal policy to prevent real gdp from rising above potential real gdp would cause the inflation rate to be LOWER and real gdp to be LOWER.
Explanation:
A government engages in contractionary fiscal policy when it decreases spending or increases taxes. This is done to lower the economy's inflation rate, but it also decreases aggregate income which will decrease aggregate supply, resulting in a lower real gross domestic product.
A contractionary fiscal policy, like reducing government spending or increasing taxes, will lower the inflation rate and bring real GDP closer to its potential when the economy is operating above potential GDP. The policy reduces aggregate demand, lowering inflation and causing minimal changes to the real GDP.
Explanation:The question asked is, 'What would be the impact of a contractionary fiscal policy utilized to prevent real GDP from rising above potential real GDP on inflation rate and real GDP?' Contractionary fiscal policy refers to government measures, such as decreasing government spending or increasing taxes, to reduce economic growth and control inflation. Applied to an economy operating above potential GDP, characterized by low unemployment and rising inflation, contractionary fiscal policy could help bring the economy back to equilibrium.
As a result of using contractionary fiscal policy to prevent real GDP from rising above potential real GDP, the inflation rate would be lower and the real GDP would be closer to its potential. This happens as the reduction in government spending or increase in taxes decreases aggregate demand, applying downward pressure on price levels (thereby lowering inflation) while causing very little reduction in output or rise in unemployment (thus real GDP is closer to potential).
Fiscal policy can contribute in pushing aggregate demand beyond potential GDP, leading to inflation. When the rising percentage of debt to GDP creates uncertainty in global markets, the government might resort to inflationary tactics to reduce real debt's real value. Thus, effectively, if the government has borrowed at a fixed interest rate, resulting inflation above that rate allows the government to repay its debt effectively at a negative real interest rate. Therefore, applying a contractionary fiscal policy can help stabilize the economy by reducing inflation and pulling real GDP closer to its potential value.
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A serious risk factor associated with the operation of a nuclear power plant is the production of
Answer: radioisotopes with long half-lives
Explanation:
A serious risk factor that is associated with operating a nuclear power plant is the production of radioisotopes that has long half-lives.
Scientists consider radiosotopes that has long half lives as dangerous to humans because they can cause cancer, radiation sickness, etc.
Bensen Co. paid a dividend of $5.25 on its common stock yesterday. The company's dividends are expected to grow at a constant rate of 8.5% for the next two years. The stock is expected to sell for $35 at the end of year 2. The required rate of return on this stock is 15.5%. You observe a market price of $78.50 for the stock. Should you purchase this stock?
Answer:
No, because you will lose money
Explanation:
The current stock price is $78.50
it will yield $5.70 and $6.18 in dividends in the next two years. In two years you can expect to sell the stock at $35, so the cash flows will be:
initial -$78.50
CF1 = $5.70
CF2 = $6.18 + $35 = $41.18
discount rate = 15.5%
NPV = -$78.50 + $5.70/1.155 + $41.18/1.155² = -$78.50 + $4.94 + $30.87 = -$42.69
Since the NPV is negative, it is a bad investment
Anglo-American markets is a term used to describe business markets in:
North, Central, and South America.
the United States, Canada, and Western Europe.
the United States, United Kingdom, Canada, Australia and New Zealand.
the United States, France, Britain, and Germany.
Answer:
the United States, United Kingdom, Canada, Australia and New Zealand.
Explanation:
Anglo-American markets is a term used to describe business markets in the United States, United Kingdom, Canada, Australia and New Zealand.
In the Anglo-American model of corporate governance, the primary goal of management is to maximize shareholder wealth.
Choosing Your Target Market The communication process begins with selecting a target audience -- the group with whom Take-A-Ride will be communicating. Which target market would be the most likely to find the bike-share program valuable, and thus be the most profitable for the firm?1. Charleston college students2. Tourists3. Charleston resident
Answer:
tourists
Explanation:
Based on the scenario being described within the question it can be said that the target market that would best find this valuable would be tourists. This is because tourists are there to visit and want to view and experience things that they normally wouldn't otherwise, and a bike-share program will allow them to experience such things without having to purchase an actual bike which they have no use for afterwards.
Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification? a. The company has to achieve coordination between business units. b. The company has narrow organizational competencies. c. The company has superior strategic management and organizational design. d. The company has no bureaucratic costs that arise from the number of businesses in its portfolio. e. The company has no difficulty in keeping its corporate managers informed about the complexities of each business.
Answer:
c. The company has superior strategic management and organizational design
Explanation:
Strategic management refers to developing and implementing such strategies that lead to judicious and optimal use of an organizational resources, utilizing strengths and minimizing weaknesses and ensuring that all organizational activities work in synchronization towards attainment of long term organizational goals.
Organizational design refers to alignment of an organizational structure which comprises of organizational hierarchy, departments, reporting responsibilties, level of delegation, etc with organizational objectives, with focus upon efficiency and effectivenenss.
Diversification refers to expansion by a business by adding new products to it's existing portfolio and exploring new markets.
Under Unrelated diversification, the products added to the existing product line are entirely different, unrelated and offered in new markets where previously such business had no product offerings.
An unrelated diversification is a risky form of diversification as it involves unpredictability and unfamilarity w.r.t market response and requires high degree of innovation.
Such form of diversification is usually resorted to by those companies who possess superior strategic management, an adaptable organizational design and high degree of product innovation.
It may be appropriate for a real estate professional to utilize different approaches for estimating the market value of a property depending upon the particular property type and use. Which of the following approaches would be most applicable when valuing an owner-occupied residential house.income approachdepositiondevalue
Answer:
income approach
Explanation:
Base on the scenario been described in the question, we can say that the approach the real estate professional used and is most applicable when valuing an owner-occupied residential house is income approach
The income approach, or the income capitalization approach, is a type of real estate appraisal method that allows investors to estimate the value of a property based on the income the property generates to them. It’s used by taking the net operating income (NOI) of the rent collected by the investors and dividing it by the capitalization rate. Which will give us the income approach
Accounting principles are "generally accepted" only when I. an authoritative accounting rule-making body has established it in an official pronouncement. II. a given practice has been accepted as appropriate because of its universal application. A.I only.B.II only.C.I or II.D.Neither I nor II.
Answer:
C.I or II.
Explanation:
The accounting principles are generally adopted and accepted when the authority's rule-making body is established. The financial accounting standard board issues these standards set of principles and have been adopted by the US securities and exchange commission and is set up by the American institute of certified public accountants. This was later o replaced by the accounting principle board of 1959. And in 1973 the board was replaced by the financial accounting standard board under the supervision of the financial accounting board. With the advisory council serving as an input.Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in Japan are $10 per hour. Production costs would be lower in the United States as compared to Japan if
U.S. labor productivity equaled 40 units per hour and Japan's 15 units per hour.
Answer:
True
Explanation:
This simply means that the US would be at an advantage over Japan if in the U.S, labor productivity level of a worker equaled 40 units per hour while in Japan it is 15 units per hour.
Since a company overall performance is determine usually by wotkers production capacity, the US workers would be producing more in an hour for the company at reduced cost than Japanese workers.
Final answer:
Production costs in the U.S. would be lower than in Japan because U.S. workers are more productive, producing more units per hour even with higher wages, resulting in a lower cost per unit produced.
Explanation:
To understand the comparison between labor costs in the United States and Japan, we need to look at the productivity level of labor in both countries in relation to their wages. Labor productivity is a measure of the output per worker per hour. With American labor productivity at 40 units per hour and a wage rate of $20, the cost to produce one unit in the U.S. is $0.50. In Japan, with labor productivity at 15 units per hour and a wage rate of $10, the cost to produce one unit is approximately $0.67.
In this scenario, despite the higher wages in the U.S., the American labor force is more cost-efficient because they produce more units per dollar spent on wages. This illustrates how higher productivity can more than offset higher wages when determining production costs. Therefore, production costs would indeed be lower in the U.S. if we consider only the given productivity rates and wage levels.
Assume you are going to lunch and have a choice of two meals. The first meal would give an increase in marginal utility of 100 with a $25 price. The second meal would give you an increase of only 10 with a $2 price. The third meal will give you an increase of 50 with a $5 price. Which meal should you logically choose ?
Answer:
Meal 3 = 50 utils / $5 = 10 utils per dollar spent
Explanation:
Logically, the meal with highest utility per Dollar spent would be the priority for me. So here:
Meal 1 = 100 utils / $25 = 4 utils per dollar spent
Meal 2 = 10 utils / $2 = 5 utils per dollar spent
Meal 3 = 50 utils / $5 = 10 utils per dollar spent
As meal 3 has highest utility per dollar spent, it will generate higher value for me. So I will opt meal 3.