When the level of output, marginal cost is $1 and average variable cost is $1.50. The firm should "produce no output units".
<h3>What is purely competitive market?</h3>
Perfect competition refers to a fictitious market structure. If there is perfect competition, there are no monopolies.
The following characteristics of this kind of structure are crucial:
- All enterprises sell the same product, which is a homogeneous or commodity good.
- Every business is a price taker, meaning that they have no control over the market price for their goods.
- Market share has no bearing on price adjustments.
- The product being supplied and the pricing each business is seeking with in past, present, or future are all completely or perfectly known to buyers.
- Resources such as labor and capital are totally movable.
- There are no fees for businesses to enter or exit the market.
Each genuine market can be categorized as imperfect since they all occur beyond the level of the ideal competition model.
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Globalization is the word used to describe the growing interdependence of the world's economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information
Answer:
Opportunity costs are defined as the additional costs or benefits lost from choosing one activity or investment over another alternative. It is a relative concept because you cannot be 100% sure that the other investments or activities would have yielded a specific gain.
For example, when you calculate the economic cost of starting your own business, you consider your current salary as an opportunity cost. But what happens if you get fired (or the company closes), your opportunity cost would have been $0? Or how can you exactly measure your future salaries? Maybe in a couple of years you get promoted to manager, or maybe not?
The same applies to economies, since the opportunity cost of producing certain tradable goods is not always fixed, it might decrease or increase due to productivity or efficiency changes. But in order to calculate or determine we must include the most probable option.
In microeconomics, a strictly convex production possibilities frontier function must include a combination of both goods. In strict convexity, the second derivative f''(x) ˃ 0, so the PFF curve cannot be straight, it must have a slope.
When we calculate the opportunity costs of PPF, we usually try to determine which product has the lowest opportunity cost, but that is not an interior solution because both goods are not being produced (the curve is not strictly convex). On a strictly convex curve, as you approach the extremes the opportunity cost of producing one good is high, but on the center the opportunity cost is much lower.
Answer:
a. 4 years and 4.22 years
b. -$31,350 and $27,615
c. Project Nuts
Explanation:
a. The formula to compute the payback period is shown below:
= Initial investment ÷ Net cash flow
For project soup, it would be
= $600,000 ÷ $150,000
= 4 years
For project nuts, it would be
= $900,000 ÷ $213,000
= 4.22 years
b. The computation of the Net present value is shown below
= Present value of all yearly cash inflows after applying discount factor - initial investment
For project soup, it would be
= $568,650 - $600,000
= -$31,350
The present value is computed below:
= Annual cash flow × pvifa for 5 years at 10%
= $150,000 × 3.791
= $568,650
For project nuts, it would be
= $927,615 - $900,000
= $27,615
The present value is computed below:
= Annual cash flow × pvifa for 6 years at 10%
= $213,000 × 4.355
= $927,615
Kindly refer pvifa table
c. The project Nuts should be accepted as it has positive net present value.
The amount should Fafnir report as intangible asset - franchise is -
Purchase value of Franchise = $ 50,000
Life of Franchise = 10 years
Salvage value = $ 0 ( not given)
Since, no other methods of amortization are specifically mentioned, straight line method will be used.
Book value of Franchise = Purchase price - Amortization expenses
Book value of Franchise = $ 50,000 - [ ( $ 50,000 - $ 0) / 10 Years ]
Straight-line depreciation = ( Purchase price - Salvage value) / Number of years
Book value of Franchise = $ 50,000 - $ 5,000 = $ 45,000
The amount should Fafnir report as intangible asset - franchise is = $ 45,000
