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Suppose that a paper mill "feeds " a downstream box mill. For the downstream mill, the marginal profitability of producing boxes declines with volume. For example, the first unit of boxes increases earnings by $10, the second $9, the third $8, and so on, until the tenth unit increases profit by just $1. The cost the upstream mill incurs for producing enough paper to make one unit of boxes is $3.50. a. if the two companies are separate profit centers, and the upstream paper mill sets a single transfer price (the price the box company pays the paper mill), what price will it set, and how much money will the company make b. if the paper mill were forced to transfer at marginal cost, how much money would the company make?
The managers of Firm A recommend that Firm A purchase Firm B because the purchase will diversify the business of Firm A. Diversification of risks is a desirable strategy for indivi
ACCOUNTING SYSTEM-EXAMPLE I Consider a very simple economy. It consists of a. A number of households. b. A single productive organization, a 'firm' - say the Jam Corpora
Rewrite the national-income model (3.23) in the format of (4.1), with Y as the first vari¬able. Write out the coefficient matrix and the constant vector.
explain the model
Jen spends all her income on shortbread cookies (S) and cupcakes (C). Her utility function is given by: U(S,C) = S +2C. Suppose that Jen has an income of $10 and that a cupcake cos
When a government spends more than it receives in taxes; it runs a budget deficit, which is generally covered by issuing debt obligations to domestic and/or international investors
Expenditures and the Effects of Fiscal Policy are stated as follows: Having finished the discussion on the tax policy and taxation, now let’s us focus on expenditures and the e
Determine the term - hot money A large 'hot money' inflow shifts the demand curve for currency to the right, leading to exchange rate rising and to an overvalued exchange rate
Regression Analysis This is a statistical tool which is used to discern the relationship among a dependent variable as like sales to one or more independent variables like adve
Ask Jenny, your niece, is a smart high-school student who wants to make smart choices for her future. Hearing of your course in Business Economics, she has emailed you asking for a
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