If price exceeds the minimum of average variable cost, then comparing marginal revenue to marginal cost indicates how much additional profit is generated by the last unit of production and tells a firm whether it should increase output, decrease output or remain at the present level of output.

True

False

If the firm’s marginal cost is equal to its marginal revenue at the firm’s existing level of production, then the firm should maintain its current level of production to maximize profit.

True

False

Question text

A profit maximizing firm in a competitive market faces a price of $20 for its product. Its average variable cost is $15 and its average fixed cost is $8 at the quantity where marginal cost equals marginal revenue. In the short run, the firm will shut down and incur the total loss of its fixed costs.

True

False

A market is competitive if firms are price takers and goods offered for sale are essentially identical or largely the same for the firms.  

true

False

1. A multi-plant monopolist will maximize profits where

a. the marginal revenue in each plant is equal to the marginal cost in this plant

b. the marginal revenue of monopoly is equal to the marginal cost of each plant

c. average cost is at its minimum in both plants

d. none of the above

BLC Ltd. has revenue of £500 million and sells all of its goods on credit to a variety of different wholesale customers. At the moment the company offers a standard credit period of 30 days. However, 70% of its customers (by revenue) take an average of 70 days to pay, while the other 30% of customers (by revenue) pay within 30 days. The company is considering offering a 2% discount for payment within 30 days and estimates that 80% of customers (by revenue) will take up this offer (including those that already pay within 30 days). The Managing Director has asked the credit controller if the cost of this new policy would be worth offering. The company has a £80 million overdraft facility that it regularly uses to the full limit due to the lateness of payment and the cost of this overdraft facility is 15% per annum. The credit controller also estimates that bad debt level of 2% of revenue would be halved to 1% of revenue as a result of this new policy. Required Calculate the approximate equivalent annual percentage cost of a discount of 2%, which reduces the time taken by credit customers to pay from 70 days to 30 days. Calculate the value of trade receivables under the existing scheme and the proposed scheme at the year-end. Evaluate the benefits and costs of the scheme and explain with reasons whether the company should go ahead and offer the discount. You should also consider other factors in this decision. (Hint: You need to work out the cost of the discount compared to the interest on the overdraft saved and bad debt reduction.)

1-) On December​ 31, 2018 the balance in Energy Exploration​ Company's Unearned Revenue account was a credit of​ $10,000. In​ January, 2019, the company received an advance payment of​ $11,000 from a new customer for services to be performed. By January​ 31, adjustments were made to recognize​ $6,000 of the revenue that had been earned during January. What was the balance in Unearned Revenue on January​ 31, 2019?

A.

​$11,000 debit

B.

​$6,000 credit

C.

​$10,000 credit

D.

​$15,000 credit

2 )-

Which of the following statements is true of a trial​ balance?

A.

A trial balance is prepared after the balance sheet.

B.

A trial balance shows the total amounts of assets and​ liabilities, but not equity.

C.

A trial balance has the same format as a balance sheet.

D.

A trial balance presents data in debit and credit format.

3-)

On June​ 1, Edison, Inc. borrowed​ $21,000 on a

oneminus−year

Note Payable with an interest rate of​ 10% per year. It will repay the principal and interest at the end of the

oneminus−year

period. The company makes accrual adjustments at the end of each month. The company should record interest expense of​ $2,100 on June 30.

Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the following table.

(a) Assume there are 200 firms with the same marginal-revenue-product schedules for this particular type of labor. Compute the total or market demand for this labor by completing column 1 in the table below.

Labor Quantity (200 firms):

(b) What will be the equilibrium wage rate and how many workers will be hired?

     Wage Rate: $

     Quantity:

workers

(c) What will be the marginal labor cost and wage rate for the individual firm?

     Marginal Labor Cost: $

    Wage Rate: $

(d) How many workers will the firm employ?

workers

(e) How would the imposition of a $15 minimum wage rate change the total amountof labor hired in this market?
(Increase/Decrease)

by

workers

When can a firm lower prices and still increase revenue?

a. when the elasticity of demand is equal to unity b. when the demand curve is horizontal c. when the demand curve is vertical d. when the demand is inelastic e. when the demand is elastic

Which of the following statements describes the proper matching of revenue and expenses?

Multiple Choice

• Insurance premiums cover specific periods and are charged to expense when they are paid.

• The cost of a building is recorded as an asset. Depreciation expense is recognized over the periods in which the asset is expected to help earn revenues for the business.

• General office salaries are recorded as assets when they are incurred because they benefit future periods.

• Manufacturing costs are identified with specific products and are charged to cost of goods sold when the manufacturing process is complete.