Which of the following would shift the supply curve for roses to the right? a. Valentine’s Day is approaching, and everyone want
1 answer:
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Answer:
Year Nominal wage Real wage Price level Inflation rate
1 $7 $5 140 Nil
2 $9 $6 150 7.14 %
3 $12 $7.5 160 6.67 %
Explanation:
Note: The table for the question is attached as picture
Price level in Year 1 = (Nominal wage in year 1/Real wage in year 1) * 100
Price level in Year 1 = ($7.00 / $5.00) * 100
Price level in Year 1 = 1.4 * 100
Price level in Year 1 = 140
Real wage in Year 2 = (Nominal wage in year 2 / Price level in year 2) * 100.
Real wage in Year 2 = ($9.00 / 150.00) * 100
Real wage in Year 2 = $6
Nominal wage in Year 3 = (Real wage in Year 3 * Price level in Year 3) / 100.
Nominal wage in Year 3 = ($7.50 * 160) / 100
Nominal wage in Year 3 = $1,200 / 100
Nominal wage in Year 3 = $12
Inflation rate in Year 2 = (Price level in Year 2 - Price level in Year 1) / Price level in Year 1.
Inflation rate in Year 2 = (150 - 140) / 140
Inflation rate in Year 2 = 10 / 140
Inflation rate in Year 2 = 0.0714
Inflation rate in Year 2 = 7.14 %
Inflation rate in Year 3 = (Price level in Year 3 - Price level in Year 2) / Price level in Year 2.
Inflation rate in Year 3 = (160 - 150) / 150
Inflation rate in Year 3 = 10 / 150
Inflation rate in Year 3 = 0.0667
Inflation rate in Year 3 = 6.67%.
Answer:
(a) Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
(b) The firm's quick ratio after Nelson has raised the maximum amount of short-term funds is 1.34
Explanation:
Current assets = $1,750,000
Current liabilities = $700,000
Initial inventory level = $490,000
Current ratio = Current assets ÷ Current liabilities
= $1,750,000 ÷ $700,000 = 2.5
1.9 = (Current assets + ) ÷ (Current liabilities +
)
1.9 = ($1,750,000 + ) ÷ ($700,000 +
)
1.9 × ($700,000 + ) = ($1,750,000 +
)
$1,330,000 + = $1,750,000 +
= $1,750,000 - $1,330,000
= $466,666.67
Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
Quick ratio = (Current assets - Inventories) ÷ Current liabilities
= $937,500 ÷ $700,000
= 1.34