Answer:
The correct answer is option D.
Explanation:
A product market deals with goods and services. In a product market goods and services are supplied by firms and businesses and purchased by households.
The households in exchange pay businesses and firms which is known as consumer spending for households.
A product market is concerned with the flow of finished goods and services, it does not involve trade in raw materials and other intermediate goods.
In product markets, goods and services flow from firms to households. Households provide factors such as land, labor, and capital to firms, which in return produce goods and services that flow back to the households.
Explanation:The correct answer is D. Goods and services flow from firms to households. In a traditional economic model, households provide factors such as land, labor, capital, and entrepreneurial ability to firms. In return, firms use these factors to produce goods and services, which are then supplied back to the households in the product market. This is known as the flow of goods and services. An example could be a household providing their labor (considered a factor) to a company, and in return, the company pays them with money, which the household uses to buy goods and services from the company.
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Chris Co. has three segments - Surfing, Mountain Biking, and Fly Fishing. The Surfing segment is currently producing 1000 units annually. The units sell for $500 each. The cost of each unit is $400. The Surfing segment spends $110,000 on product design each year. The segment also is allocating $100,000 of annual facility-level costs. Calculate the avoidable cost of Chris Co. were to eliminate the Surfing segment.
Answer:
The tennis department relevant costs (avoidable costs) are variable manufacturing costs ($400,000) and product design ($110,000).
Explanation:
First of all Chris Co. should eliminate its surfing department (since it is not profitable) only if it can use their production facilities to make something else that does generate profit or just sell that facility.
surfing department net profit = $500,000 - $610,000 = -$110,000 or $110,000 net loss
The department's major loss comes from the allocation of $100,000 in facility level costs, but these costs are not relevant or avoidable. Relevant costs are costs that can be avoided by making a business decision like closing a business department.
Dora Inc. reported the following on the company's cash flow statement: Sales $3,500,000 Net cash flow from operating activities 350,000 Net cash flow used for investing activities (100,000) Net cash flow used for financing activities (200,000) Free cash flow 290,000 What is the ratio of free cash flow to sales? a.8.3% b.1.4% c.10.0% d.12.0%
Answer:
option a. 8.3%
Explanation:
Data provided in the question:
Sales = $3,500,000
Net cash flow from operating activities = $350,000
Net cash flow used for investing activities = $100,000
Net cash flow used for financing activities = $200,000
Free cash flow = $290,000
Now,
The Free Cash Flow to Sales Ratio = [ Free Cash Flow ÷ Sales ] × 100 %
= [ $290,000 ÷ $3,500,000 ] × 100 %
= 8.3%
Hence,
The correct answer is option a. 8.3%
Brian wants to purchase a new computer and go to the Caribbean for spring break. The computer is priced at $1,299, and the vacation is priced at $750. He has only $1,537 in his checking account, so he cannot afford to purchase both. After much thought, Brian buys the computer and writes a check for $1,299.
Answer:
Role of Money is given below as Unit of Account , Store of value and Medium of Exchange
Explanation:
given data
computer priced = $1,299
vacation priced = $750
his checking account = $1,537
to find out
Role of Money
solution
here Brian is easily determine price difference that the computer priced is more than the price of the vacation = Unit of Account
as money being the standardize measure price of 2 unit
and
Brian checking account is $1,537 this is = Store of value
as money is stored in his account, that can be used later for any purpose
and
as Brian write check is $1,299 so it is = Medium of Exchange
as money is used to exchange with the computer
Despite its name, Choco Central is located in a small shopping center far from customers. However, the company enjoys outstanding business because satisfied customers share their enjoyable experiences at Choco Central with their friends and relatives. Choco Central apparently benefits from positive
a) trade advertising.
b) word of mouth.
c) sales promotion.
d) public relations.
Answer:
Word of mouth.
Explanation:
Word of mouth publicity or marketing strategy is very reliable and essential to grow. It is free of cost publicity where consumer spread company´s brand name with the experience they had. Here, each customer could bring hundred of customers if had positive experience with the goods and services of the company. This publicity have a power of getting many loyal customers as experienced customer put their credibility on line. It also help the company to penetrate in the market and grow their market share. To encourage customer, companies also come up with different campaign or promotion plan for loyal customers.
Choco Central benefits from word of mouth, as satisfied customers recommend the store to others due to their positive experiences. This unpaid form of promotion is very powerful, leading to repeat business and the ability to charge higher prices based on a strong reputation.
Explanation:Choco Central enjoys outstanding business even though it is located far from customers. This success is due to satisfied customers sharing their enjoyable experiences with friends and relatives, which is an example of word of mouth. Word of mouth advertising is when pleased customers act as advocates for a business purely based on their positive experiences, so they recommend the business to others.
Firms cherish having repeat customers and good reputations because this leads to customers trusting in their products and services. An excellent reputation reduces worries about poor-quality products. As a result, well-reputed firms can charge higher prices compared to those with less established reputations, as customers have greater assurance in the quality they will receive.
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Sears department stores used to plant employees in competitors’ stores to perform research and analysis. Recently the company implemented a system that can search competitor websites and provide comparisons of price, promotions, and availability and the system is saving time, money, and resources. What type of system did Sears implement?A. shopping algorithm.B. shopping network.C. shopping logic.D. shopping bot.
Answer:
D) shopping bot
Explanation:
A shopping bot is a software that compares the price of online products or services. Usually consumers use shopping bots to search the prices of products or services on several online stores and try to find the lowest possible price for the same product. Sear will probably use the shopping bot to compare if their own prices are higher or lower than their competition.
What is fiat money?
A. money issued by financial intermediaries, such as banks, but not the central bank
B. money that has value independent of its use as money
C. an asset that has the ability to be easily converted into the medium of exchange
D. money that is authorized by a central bank and that does not have to be exchanged for gold or some other commodity money
a) - money issued by the financial intermediaries such as banks but not the central bank
Fiat money is currency that a government has declared to be legal tender. It is not backed by a physical commodity, but rather the faith and credit of the issuing government.
Fiat money is a type of currency that a government declares to be legal tender, despite it not being backed by a physical commodity, such as gold or silver. It has value primarily because the government maintains its validity for the payment of taxes and requires it to be accepted as a form of payment within the country. Essentially, the value of fiat money is derived from the faith and credit of the economy's government rather than any material worth.
Fiat money is useful as a medium of exchange because it is stable, generally accepted, and convenient. However, because it is not linked to a physical reserve, it is subject to inflation and changes in public confidence. This is evident in the statement printed on each U.S. bill: "This note is legal tender for all debts, public and private."
Davy's reduction in productivity after not receiving a raise demonstrates that there is low _____________ between performance and outcomes and that he holds a strong __________ on outcomes, such as raises.A. Valence, InstrumentalityB. Instrumentality, ValenceC. Expectancy, InstrumentalityD. Expectancy, ValenceE. Valence, Expectancy
Answer:
The correct answer is B. Instrumentality, Valence.
Explanation:
Víctor Vroom's motivational model has been studied and improved over time by other authors such as Porter and Lawler.
The Vroom model is based on three assumptions:
The forces within individuals and those present in their work situation combine to motivate and determine behavior. Individuals make conscious decisions about their behavior. The selection of a particular course of action depends on the expectation that certain behavior of one or more desired results rather than undesirable results.The author of this theory explains that motivation is the result of multiplying three factors:
Valencia: It demonstrates the level of desire of a person to reach a certain goal or objective. This level of desire varies from person to person and in each of them it can vary over time, being conditioned by the experience of each individual. The range of values that valence can admit in this mathematical equation is between –1 and 1. When a person does not want to reach a certain result (eg being fired from their job) the value adopted is –1, when the result is Indifferent (Ex. Compensation in money) the value is 0 and when the person intends to reach the objective (Ex. Obtain a promotion) its value will be +1 Expectation: It is represented by the person's conviction that the effort placed in their work will produce the desired effect. Its value varies between 0 and 1 since the expectation is the probability of occurrence of the desired result. Expectations depend largely on the perception that the person has of himself, if the person considers that he has the necessary capacity to achieve the objective, he will be assigned a high expectation, otherwise he will be assigned a low expectation. Instrumentality: It is represented by the judgment made by the person that once the work is done, the organization values it and receives its reward. The instrumentality value will be between 0 and 1.Flexible exchange rates and responses to changes in foreign macroeconomic policy. Suppose there is an expansionary fiscal policy in the foreign country that increases Y*, and at the same time the foreign central bank raises i* .
(a) In an IS-LM-IP diagram (IP for the interest parity relation), show the effects of the increase in foreign output Y* and the increase in the foreign interest rate i* , on domestic domestic output Y and the exchange rate (E), when the domestic central bank leaves the policy interest rate unchanged. Briefly explain in words.
(b) In an IS-LM-IP diagram, show the effects of the increase in Y* and the increase in i* on the domestic output (Y ) and the exchange rate (E), when the domestic central bank matches the increase in the foreign interest rate with an equal increase in the do-mestic interest rate. Briefly explain in words
(c) In an IS-LM-IP diagram, show the required domestic monetary policy following the increase in Y* and the increase in i* , if the goal of domestic monetary policy is to leave domestic output Y unchanged. Briefly explain in words. When might such a policy be necessary?
Answer:
The answer is letter C.
Explanation:
In an IS-LM-IP diagram, show the required domestic monetary policy following the increase in Y* and the increase in i* , if the goal of domestic monetary policy is to leave domestic output Y unchanged. Briefly explain in words. When might such a policy be necessary?
IS-LM-BP-Model was formulated by Mundell and Fleming. They were both economists and they created two kinds of analysis in the IS-LM-BP model according to the exchange rate regimes fixed or flexible. Point above/ below the BP curve is trade surplus/ deficit.
Foreign central bank rases i, interest rate differential reduces, exchange rate depreciates, trade balance improves, IS shifts rightwards, point above BP curve, so ,income rises because of expansionary fiscal policy also, excess demand for money , interest rate, rises, investiment decreases, income decreases.
An attempt to reduce inflation requires _____________ fiscal policy, which causes real GDP to _________ and the price level to __________.
Answer:
Explanation:
TO CONTRACT in order to pay more taxes and spend less money to avoid a price hike. DECREASE, if people spend less money the GDP is affected because of the purchases and the price level obviously prives FALL.
If substantial batch-level or product-level costs exist, then overhead allocation based on a measure of volume such as direct labor-hours alone:
a. must be used for external financial reporting since activity-based costing cannot be used for external reporting purposes
b. will systematically over cost high-volume products and under cost low-volume products
c. is a key aspect of the activity-based costing model
d. will systematically over cost low-volume products and under cost high-volume products
Answer:
b. will systematically over cost high-volume products and under cost low-volume products
Explanation:
if we have a substantial batch level or product level cost exist thenthe overhead allocationshould be on the basis of direct labor hours because it will helpfully charge actual cost of overhead to that department as per actual labor hours used for that and it willa also help to overcost high volume products and undercost low volume products.
Trilane Systems is a small business. Its owner, Myra, is also its only employee. She handles the business's operations herself and is responsible for all of the business's income and losses. In the context of the legal forms of business, Trilane Systems is aA. Subchapter S Corporation.B. limited liability partnership.C. general partnership.D. sole proprietorship.
Answer: Option D
Explanation: In simple words, sole proprietorship refers to the business forms under which a single individuals operates the business and is personally liable for the debts of the firm as it will not be considered as a separate legal entity.
These businessmen usually operate in a small level with very little capital. Such structure is considered to be the easiest among all other structures.
In the given case, Myra is the owner as well as only employee of the organisation, hence we can conclude that she is operating a sole proprietorship.
Trilane Systems, run only by its owner Myra, is a sole proprietorship, where she is liable for all business activities and finances.
In the context of the legal forms of business, Trilane Systems, managed solely by Myra, where she is responsible for all operations, income, and losses, is best classified as a sole proprietorship. This form of business organization is characterized by a single owner who is personally liable for the business's debts and entitlements to all profits. Unlike a partnership or a corporation, a sole proprietorship does not have a separate legal entity distinct from its owner, and any business or personal assets may be at risk to cover debts.
On December 31, 2017, a company sells a plant asset that originally cost $375,000, receiving cash of $125,000. The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded. The company should recognize a:
Answer:
A loss of $100,000.00
Explanation:
Plants details:
Original cost price: $375,000.00
Depreciation to date : $ 150,000.00
Selling price: $ 125,000.00
Calculating the book value:
=original price-depreciation
=$375,000.00-$150,000.00
=$225,000
Calculating profit and loss
= Selling price -book value
=$125,000- $ 225,000
=($100,000.00)
A loss of $100,000.00
Most companies today want their salespeople to _______, which means demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company.A. practice value sellingB. use a transaction-oriented sales approachC. close salesD. cut prices to make the saleE. capture short-term business
Answer:
Letter A is correct. Practice value selling.
Explanation:
A value selling is characterized by strategies and techniques that a skilled sales team uses to maximize sales and results.
To selling value rather than price, the seller must demonstrate to the customer the added benefits of the product, influencing their perception of value creation, with a focus on results and benefits the customer will have after purchasing their product.
Jenna’s supervisor was lamenting the fact that their company could not simultaneously meet the needs of their existing customer base (primarily consumers over the age of forty) and make inroads to the growing youth market. Jenna, on the other hand, came up with a plan for doing both, an example of
Answer:
the S-T-P approach (market segmentation)
Explanation:
Segmenting, targeting, positioning is a well-known marketing model applicable when addressing a diverse customer base. It is synonymous with market segmentation.
In order for Jenna's plan to be effective, it has to tackle each target group specifically, according to their own characteristics, preferences and habits. That way, the company can tailor their marketing efforts towards each target group respectively.
Every time Tim goes to bat in his baseball game, he rubs the charm on the necklace that his professional baseball player uncle gave him. This charm has never failed to help him get a good hit. The charm has become part of Tim's extended self .
A. True.
B. False
Answer:
The correct answer is True.
Explanation:
The notion of the Extended Self includes what I am and what is mine, this second aspect implies that we feel some control over the objects we possess or with which we relate; Within both categories we could then include body parts, pets, other people (such as our parents or friends), property, money, ideas, values, beliefs, objects, elements of our environment, among others.
A monopoly is most likely to emerge in a market when
Answer: there is only one producer of a commodity
Explanation: In simple words, monopoly refers to a market structure in which there is only one participant in the market who is making available the commodity to the customers.
Monopoly can arise from a number of factors such as patents rights, new invention etc. Sometimes the govt. of a country finds it suitable to handle a particular industry for the national benefit such as defense.
Although monopolist is the single producer but still he or she cannot charge any price as the rule of price and demand is applies to monopoly also.
The exchange rate is A) the price of one currency relative to gold. B) the value of a currency relative to inflation. C) the change in the value of money over time. D) the price of one currency relative to another.
Answer:
D. the price of one currency relative to another
Explanation:
An exchange rate is the value of one nation's currency versus the currency of another nation or economic zone
Suppose a country that had balanced trade began to run a trade deficit. At the same time, consumption as a share of GDP increased but the investment share did not. Do you think there was an increase in capital deepening?
A. Yes, because the trade deficit can be used to purchase more capital.
B. Yes, because investment must have fueled the trade deficit.
C. No, because the country initially had balanced trade.
D. No, because consumption, not investment, has fueled the trade deficit
Answer:
D. No, because consumption, not investment, has fueled the trade deficit
Explanation:
Capital deepening requires an increase in the amount of capital in proportion to labor. To increase the amount of capital, investments are required.
In this example, investment as a percentage of GDP has not increased, while consumption has, but consumption does not directly increase capital.
A u.s. treasury bond is a______________.
a. store of value and common medium of exchange.
b. store of value, but not a common medium of exchange.
c. a common medium of exchange, but not a store of value.
d. neither a store of value nor a common medium of exchange.
Answer:
The correct answer is B
Explanation:
The US treasury bond is the bond which is a debt securities that have a maturity of more than 10 years but less than the 30 years. It pays the fixed interest rate each year.
It has a store of value which means an asset that maintains the value without depreciating it, but not the common medium of the exchange.
Find the accumulated value of an investment of $ 10 comma 000 for 3 years at an interest rate of 6 % if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously.
Answer:
a) $11,940.52
b) $11,956.18
c) $11,966.81
d) $11,910.16
Explanation:
Given:
Investment amount = $10,000
Time = 3 years
Interest rate = 6%
Now,
Amount = [tex]P\times(1+\frac{r}{n})^{nt}[/tex]
A = total amount
P = principal or amount of money deposited,
r = annual interest rate
n = number of times compounded per year
t = time in years
Thus,
a) compounded semiannually
n = 2
[tex]Amount = \$10,000\times(1+\frac{0.06}{2})^{2\times3}[/tex]
Amount = $10000 × 1.03⁶
or
Amount = $11,940.52
b) compounded quarterly
n = 4
[tex]Amount = \$10,000\times(1+\frac{0.06}{4})^{4\times3}[/tex]
Amount = $10000 × 1.015¹²
or
Amount = $11,956.18
c) compounded monthly
n = 12
[tex]Amount = \$10,000\times(1+\frac{0.06}{12})^{12\times3}[/tex]
Amount = $10000 × 1.00536³⁶
or
Amount = $11,966.81
d) compounded continuously
n = 12
[tex]Amount = \$10,000\times(1+\frac{0.06}{1})^{1\times3}[/tex]
Amount = $10000 × 1.06³
or
Amount = $11,910.16
All of the following are benefits of new product development to a firm except:
a. reducing the costs of production
b. satisfying the changing needs of current and new customers
c. avoiding market saturation from products that have been on the market for a long time
d. creating diversification and reducing risk
e. keeping up in a market with short product life cycles where sales come mostly from new products
Answer: Reducing the cost of production.
Explanation:
Creating a new product by a company have several benefits such as helping the company to diversify, satisfying the changing needs of customers, shifting away from an already over produced item in the market.
Creating a new product does not ensure a reduction in cost of production. This is so because some products cost more to produce than others.
All of the listed options are benefits of new product development to a firm. Thus, (a, b, c, d, and e) are correct options.
Explanation:All of the listed options are benefits of new product development to a firm. Let's go through each option:
Reducing the costs of production: Developing new products can lead to more efficient production processes and cost savings.Satisfying the changing needs of current and new customers: By introducing new products, firms can meet the evolving demands of their existing customer base and attract new customers.Avoiding market saturation from products that have been on the market for a long time: Continuously developing new products can help firms stay competitive and prevent their offerings from becoming outdated.Creating diversification and reducing risk: Introducing new products allows firms to diversify their product portfolio, reducing the reliance on a single product or market.Keeping up in a market with short product life cycles where sales come mostly from new products: Developing new products is crucial in industries with rapid product turnover, where sales heavily depend on fresh offerings.In summary, all the options mentioned (a, b, c, d, and e) are indeed benefits of new product development to a firm.
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After studying the differences between groups and teams, Devon realizes that she and the people she works with every day fall somewhere between the two. She and her coworkers might be described as being __________.a. semiautonomousb. self-directedc. management directedd. undirected
Answer:
a. semi-autonomous
Explanation:
Semi autonomous has a dictionary meaning that states being independent to some defined extent.
In the given instance also Devon thinks that her colleagues or coworkers are somewhere between the two categories, that is up to a certain extent they are really independent in their views. While on the other hand, at some situations their views depend on the things like views of coworkers.
Thus, using the term that the coworkers are semi autonomous is correct as to the concern they can exercise their own powers in half way.
When people buy stocks/bonds we call this _____ and it _____ count in gdp.
Answer:
The correct answer: financial investment; not included.
Explanation:
The bonds and stocks securities or financial instruments. The investment in these instruments is called a financial investment.
The value of these financial investments derived from sell and purchase of stocks/bonds is not included in GDP as it does not involve any production.
The GDP of an economy measures the value of production of final goods and services in an economy.
When people buy stocks or bonds, it is considered financial investment and does not count in GDP.
Explanation:When people buy stocks or bonds, we call this financial investment and it does not count in GDP. GDP, or Gross Domestic Product, measures the total value of all final goods and services produced within a country's borders. Financial investments like stocks and bonds represent ownership in companies or debt obligations, and while they play a crucial role in the economy, they are not considered part of GDP because they do not directly contribute to the production of goods and services.
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Members of the European Monetary Union A. adopt a common currency called the euro. B. float their domestic currency exchange rate with both the euro and the rest of the world. C. can continue to use their own domestic currency but are required to hold a stipulated amount of a common currency. D. cannot hold reserves of the common currency.
Answer:
A. adopt a common currency called the euro
Explanation:
A monetary union:
1. adopts a common currency called the euro
2. hold reserves in the common currency
3. Monetary policy is jointly determined
You are involved in an Information Systems project. The project's scope has widened, but there is no change in cost, quality, and user expectations. This will result in an increase in time taken to complete the project. True or false?
Answer:
True
Explanation:
Project scope deals with the specific requirements or tasks necessary to complete the project. Scope is important to manage on any project, because if you can’t control the scope of the project, you’re not likely to deliver it on time. Also should the scope get widened it will result in time taken to complete the project.
Every project is faced with the triple constraint, which are the time, scope and cost.
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Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far?
A. Level 5
B. Level 4
C. Level 3
D. Level 2
Answer:
B) Level 4
Explanation:
Level 4 Leadership:
At this level the organization's leaders must be able to transition from producers to developers. Producers are able to make things happen while developers are able to develop the potential of their subordinates. Leaders must channel their efforts towards fulfilling the organization's objectives. Usually successful leaders are able to reach this level, but very few go beyond it.
The public relations activity that involves enhancement of communication between investor-owned companies and their shareholders, the financial community (for example, banks, annuity groups, and investment firms), and the public is known as:_______
Answer:
financial public relations
Explanation:
Financial public relations -
It helps to build the financial reputation of the company .
The focus is to transmit the truthful and transparent culture of the organisation , it achieves the high degree of the credibility with the society .
hence , from the question ,
The correct term for the given statement is financial public relations .
What are the three conditions for a market to be perfectly competitive? For a market to be perfectly competitive
Answer:
There are three conditions for an formation of a perfectly competitive market which are:
- There are many buyers and sellers participating in the market in the way that one buyer or seller or a group of buyers or sellers can not decide the price/ production level of a product or service in the market.
- All firms in the market produce and sell homogeneous product/service, that is, product/service sold in the market are non-differentiated.
- Firms should be able to get into or leaving the market easily if they want so. That is, there should be no barrier to enter or to exit the market.
Explanation:
There are three conditions for a market to be perfectly competitive, namely a large number of buyers and sellers, homogenous products, and perfect knowledge.
Perfect competition is a situation in which numerous small firms compete against each other in order to sell goods or services to many small buyers.
This situation can only occur if specific conditions are met, which are listed below:
Large number of buyers and sellers - the existence of a large number of sellers and buyers implies that no single buyer or seller may significantly influence the market's equilibrium price.
Homogeneous goods - it means the products are identical, meaning they are perfect substitutes for each other.Perfect knowledge - All the participants in the market should have perfect information about the products they are dealing with.
Perfect competition is a situation in which numerous small firms compete against each other in order to sell goods or services to many small buyers. This situation can only occur if specific conditions are met. There are three conditions for a market to be perfectly competitive, namely a large number of buyers and sellers, homogenous products, and perfect knowledge.
The first condition is a large number of buyers and sellers. The existence of a large number of sellers and buyers implies that no single buyer or seller may significantly influence the market's equilibrium price. This is because they are price takers, which means they have to accept the market price that is determined by supply and demand forces. The second condition is homogenous goods.
It means the products are identical, meaning they are perfect substitutes for each other. The consumers cannot differentiate between products based on their quality, brand, or any other feature, and are willing to pay the same price for the same product. The third condition is perfect knowledge.
All the participants in the market should have perfect information about the products they are dealing with. They should be aware of the quality, price, and availability of the product. This condition ensures that the market is transparent, and all participants are making informed decisions.
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"Competitive advantage of nations" is a phrase coined by Joseph Stiglitz, identifying a nation as having a cluster of similar producers which gives the nation a special advantage over other countries.
True / False.
Answer:
False
Explanation:
The authors who first mentioned this concept were the classics, Adam Smith and David Ricardo especially, and it was David Ricardo the first economist in developing a whole theory about international trading and competitive and comparative advantages among nations, recently Michael Porter has developed a similar theory called the Porter's diamond in which he determines the factors that make countries more competitive and through which they achieve business success, he wrote a book called "the competitive advantage of nations".
John owns a number of hot dog stands in New York City. He hires workers to sell hot dogs at his stands. Which of the following events will lead to a decrease in John's demand for hot dog vendors?a. Hollywood glamorization of a new movie about a hot dog vendor leads hundreds of high-school students in New York City to apply for a job at John's.b. The price of hot dogs falls.c. The local hot dog vendors form a union increasing hot dog vendor wages.d. The demand curve for hot dogs shifts to the right.
Answer:
The correct answer is option b.
Explanation:
John owns hot dog stands that sell hot dogs in New York City. He employs vendors to sell hot dogs at these stands.
A decrease in the price of hot dogs will reduce the revenue and profits earned by John. So John will hire fewer workers for his stands to reduce costs.
This will cause John's demand for hot dog vendors to decline.
Final answer:
The event that will decrease John's demand for hot dog vendors is the formation of a union that increases vendor wages, as higher wages mean higher costs for employers, thus reducing demand for labor.
Explanation:
The event that will lead to a decrease in John's demand for hot dog vendors is option C: The local hot dog vendors form a union increasing hot dog vendor wages. This is because when wages increase, the cost of hiring workers rises, which in turn reduces the quantity of labor demanded by employers.
If we refer to the principles of supply and demand, and the ways they interact with market conditions, you can see this reflected in several instances:
The opening of new nightclubs would impact demand for other entertainment, such as movie tickets, which is an example of the substitution effect wherein consumers have more entertainment choices.
Tax elimination for local entertainment businesses can increase the supply of movies (or any other good) due to lower operating costs.
The increase in the price of a substitute good (like hot dogs) would generally increase demand for the good in question (hamburgers). Conversely, if the price of a complements good (like hamburger buns) increases, it would make the total cost of the end product (burger with a bun) more expensive, potentially reducing demand for both goods.
However, in the question at hand about John's hot dog stands, the increase in worker wages is the direct factor leading to a decrease in demand for workers, independent of these other market factors.