Answer:
a. For both restaurants to abide by the cartel’s agreement.
Explanation:
These type of agreements unite companies that have common interests or are in a similar industry to form an association.
Answer:
Appropriation available for spending = 37000
Explanation:
In the appropriations ledger, the amount available for spending at any moment is the total appropriation minus expenditures plus outstanding encumbrances.
100000 - 35000 - 28000 = 37000
Answer: $35,000
Explanation:
The payments of $1,033.34 at the end of every month is a constant amount which makes it an annuity.
Present value of annuity:
= Annuity * (1 - (1 + rate) ^-no. of periods) / rate
Rate needs to be made a monthly rate:
= 4%/12
= 4/12%
= 1,033.34 * ( 1 - ( 1 + 4/12%) ⁻³⁶/ 4/12%
= $35,000
Purchase price = Down payment + Present value of annuity
= 4,000 + 35,000
= $39,000
Answer:
a. Do these preferences exhibit a diminishing marginal rate of substitution?
- no, because the consumer is actually purchasing a higher amount of goods, the only difference is that they are paying a lower price.
Assume that this consumer has $24 of income to spend on sugar, and the price of store-brand sugar is $1 per pound and the price of producer-brand sugar is $3 per pound.
- The consumer will purchase 24 pounds of price of store sugar simply because the price is much lower, not because he/she wants to consume less. Actually a lower price might result in an increase of consumption.
b. How much of each type of sugar will be purchased?
- If the consumer is willing to spend the whole $24 on sugar, he/she will purchase 24 pounds of store brand sugar. The alternative is to buy 8 pounds of producer brand sugar, and that is not a good deal.
c. How would your answer change if the price of store-brand sugar was $2 per pound and the price of producer-brand sugar was $3 per pound?
- The consumer would purchase 12 pounds of store brand sugar instead of 24, but he/she will still not purchase producer brand sugar since the difference in price is still too high. Remember that consumers view both types of sugar as perfect substitutes, so they will purchase the brand with the lower price.
Answer:
d. $277,797
Explanation:
Savings = $7,500 for the first 6 years (t = 1 through t = 6)
Deposits = $15,000 for the following 6 years (t = 7 through t = 12)
Gifts = $25,000
Earnings = 9% annually
Calculation of the Final Amount by Savings, Deposits and Gifts:
Amount at the end of year 6
Interest rate 9.0%
1st Annuity (Savings) $7,500 $56,425 - Compounded at 9% 2nd Anuuity (Deposits) $15,000 NA
Gift $25,000 NA
Total Years 12
Annuity years 6
Amount at the end of year 12
$94,630
$112,850
$70,317
Final Amount: $277,797
Therefore, $277,797 is the final amount which you will have when you start your business 12 years from now.
