 admin # orrupt officials may have an incentive to reduce the provision of government services to help line their own pockets. Suppose that the provincial construction supervisor decides to cut the total number of housing inspectors from 20 to 10 in order to decrease the supply of new housing permits. This decrease in the supply of permits raises the equilibrium bribe from \$1,000 to \$2,500. How much per year will the construction supervisor now receive if he is still getting half of all the bribes collected by the 10 inspectors? How much more is the construction supervisor getting now than when he had 20 inspectors working in part b? Will he personally be happy with the reduction in government services?

2 months ago

## Solution 1 Guest #1626674
2 months ago

Instructions are listed below

Explanation:

Giving the following information:

Suppose that the provincial construction supervisor decides to cut the total number of housing inspectors from 20 to 10 to decrease the supply of new housing permits.

This decrease in the supply of permits raises the equilibrium bribe from \$1,000 to \$2,500.

A) The supervisor will receive \$1,250 per house.

We don't know how many houses per year are constructed. The formula is:

Bribe= 1250*X

X= number of houses constructed

B) Increase in bribe= 1250 - 500= \$750

C) He will, now he charges a lot more than before.

## 📚 Related Questions

Question
Ann, Bob, Carol, and Denis own a candy store. After a large argument, they decide to dissolve their partnership using the sealed bid method. Ann bids \$320,000 for the store, Bob bids \$440,000 for it, Carol bids \$240,000 for it, and Denis bids \$400,000 for it. What is Ann's fair share? \$ What is Bob's fair share? \$ What is Carol's fair share? \$ What is Denis's fair share? \$ Since Bob has the highest bid, he receives the business. After the initial allocation there is a surplus of how much? \$ In the final settlement, how much money does Ann receive?
Solution 1

(a) \$80,000; \$110,000; \$60,000; \$100,000

(b) \$90,000

(c) \$102,500

Explanation:

(a)

Fair share is calculated from each player's bid divided by the total number of players.

Ann's fair share = \$320,000/4

= \$80,000

Bob's fair share = \$440,000/4

= \$110,000

Carol's fair share =  \$240,000/4

= \$60,000

Denis's fair share = \$400,000/4

= \$100,000

Payments:

Ann = \$80,000 paid by estate

Bob = \$440,000 - \$110,000

= \$330,000 owes estate

Carol = \$60,000 paid by estate

Denis = \$100,000 paid by estate

Therefore,

Surplus = \$330,000 - (\$80,000 + \$60,000 + \$100,000)

= \$90,000

Split it equally among the four players:

So, each one receives = \$90,000/4

= \$22,500

(c) In final settlement Ann receive = \$80,000 +  \$22,500

= \$102,500

Question
g The Blue Utilities Company paid Sue \$2,000 for the right to lay an underground electric cable across her property anytime in the future. a. Sue must recognize \$2,000 gross income in the current year if the company did not install the cable during the year. *b. Sue is not required to recognize gross income from the receipt of the funds, but she must reduce her cost basis in the land by \$2,000. c. Sue must recognize \$2,000 gross income in the current year regardless of whether the company installed the cable during the year. d. Sue must recognize \$2,000 gross income in the current year, and when the cable is installed, she must reduce her cost basis in the land by \$2,000. e. None of the above.
Solution 1

B. Sue is not required to recognize gross income from the receipt of the funds, but she must reduce her cost basis in the land by \$2,000

Explanation:

Question
Walton Company currently produces and sells 6,800 units annually of a product that has a variable cost of \$18 per unit and annual fixed costs of \$174,400. The company currently earns a \$84,000 annual profit. Assume that Walton has the opportunity to invest in new labor-saving production equipment that will enable the company to reduce variable costs to \$16 per unit. The investment would cause fixed costs to increase by \$9,800 because of additional depreciation cost. Required Use the equation method to determine the sales price per unit under existing conditions (current equipment is used). Prepare a contribution margin income statement, assuming that Walton invests in the new production equipment.
Solution 1

The sales price per unit under existing conditions : Unit \$ 56,00

With this price the company keeps the same profit margin as before and without improvements.

Prepare a contribution margin income statement:

Contribution Margin with the improvements and under the actual price of Unit \$ 56,00

\$ 272,000 Contributing Margin

\$ 87,800 Segment Margin

Explanation:

The original situation before implementing the improvements it's:

Quantity  Unit  TOTAL     Income Statement

6,800      \$ 56,00 \$ 380,800 Total Net Sales

\$ 18,00 -\$ 122,400 Variable Cost

\$ 258,400 Contributing Margin

-\$ 174,400 Anual Fixed Costs

\$ 84,000 Segment Margin

If the improvements are implemented:

Quantity  Unit  TOTAL     Income Statement

6,800      \$ 56,00  \$ 380,800 Total Net Sales

\$ 16,00 -\$ 108,800 Variable Cost

\$ 272,000 Contributing Margin

-\$ 184,200 Anual Fixed Costs

\$ 87,800 Segment Margin

Question
Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market? a) Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. b) Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. c) Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d) Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
Solution 1

A. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous

Explanation:

Question
BRIEF EXERCISE 7.7 Accounting for Uncollectible Accounts: An Income Statement Approach Wilson Corporation uses an income statement approach to estimate credit losses. Its gross Accounts Receivable of \$5,000,000 at the beginning of the period had a net realizable value of \$4,925,000. During the period, the company wrote off actual accounts receivable of \$100,000 and collected \$7,835,000 from credit customers. Credit sales for the year amounted to \$9,000,000. Of its credit sales, 1 percent was estimated to eventually be uncollectible. Determine the net realizable value of the company’s accounts receivable at the end of the period.
Solution 1

The net realizable value of the company’s accounts receivable at the end of the period is \$6,000,000

Explanation:

For computing the net realizable value, first we have to compute the ending balance of the accounts receivable which is shown below:

Ending balance = Beginning balance + credit sales - collections  - written off accounts receivable

= \$5,000,000 + \$9,000,000 - \$7,835,000 - \$100,000

= \$6,065,000

Now the ending balance of allowance for doubtful debts would be equal to

= Beginning balance + estimated amount - written off amount

= \$75,000 + \$90,000 - \$100,000

= \$65,000

The beginning balance of  allowance for doubtful debts  = Beginning balance of accounts receivable - net realizable value

= \$5,000,000 - \$4,925,000

= \$75,000

And, the estimated amount would be

= Credit sales × estimated percentage

= \$9,000,000 × 1%

= \$90,000

Now the net realizable value equals to

= Ending balance of accounts receivable - ending balance of  allowance for doubtful debts

= \$6,065,000 - \$65,000

= \$6,000,000

Question
Quantitative Problem 2: Mitchell Manufacturing Company has \$1,900,000,000 in sales and \$390,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. What level of sales could Mitchell have obtained if it had been operating at full capacity? Do not round intermediate calculations. Round your answer to the nearest dollar. \$ What is Mitchell's Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to two decimal places. % If Mitchell's sales increase 35%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to the nearest do
Solution 1

1. \$2,533,333,333

2. 15.39%

3. \$136,458,000

Explanation:

1. The computation of sales level for full operating capacity is shown below:

= (Actual sales) ÷ (operating capacity)

= \$1,900,000,000 ÷ 75%

= \$2,533,333,333

2. The computation of the Target fixed assets sales ratio is shown below:

= Target fixed assets ÷ Full capacity sales

= \$390,000,000 ÷ \$2,533,333,333

= 15.39%

3. If sale increase by 35% so the new sales would be

= Sales  + Sales  × increase percentage

=  \$2,533,333,333 +  \$2,533,333,333 × 35%

=  \$2,533,333,333 + \$886666667

= \$3,420,000,000

So, increase in fixed assets =  Target fixed assets sales ratio × (New sales - full capacity sales)

= 15.39% × ( \$3,420,000,000 -  \$2,533,333,333)

= 15.39% ×  \$886666667

= \$136,458,000

Question
What is the correct answer regarding short-run and long-run budgets? a. A short-run budget is generally less than a year in length and often tied to a particular project b. None of the answers are correct c. A long-run budget is generally one year in length and often tied to a particular department or division d. A long-run budget projects from two (2) to 10 years into the future
Solution 1

Explanation: In simple words, Short run budgets refers to the budgets which are made for a period of less than 12 months and long run budgets are made for a time period greater than one year.

Short run budgets are prepared for some specific assets such as supplying a new customer for one year.

Thus, from the above we can conclude that the correct option is A.

Question
The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: (\$ in thousands) 2021 2020 Income statement information Net sales \$ 6,400 \$ 5,400 Net income 406 148 Balance sheet information Current assets \$ 920 \$ 870 Property, plant, and equipment (net) 2,180 1,830 Total assets \$ 3,100 \$ 2,700 Current liabilities \$ 1,500 \$ 1,210 Long-term liabilities 870 870 Common stock 400 400 Retained earnings 330 220 Liabilities and shareholders’ equity \$ 3,100 \$ 2,700 Required: Determine the following ratios for 2021: (Round your percentage answers to 1 decimal place.) Determine the amount of dividends paid to shareholders during 2021. (Enter your answer in whole dollars and not in thousands.)
Solution 1

\$296 (in thousands)

Explanation:

The Dividends paid is calculated as:

Dividend paid

= Beginning Retained earnings + Net income during 2021 - Ending Retained earnings

Now,

Beginning retained earning = Retained earning at 2020 i.e \$220,000

Net income during 2021 = \$406,000

Ending retained earning = Retained earning of 2021 i.e \$330,000

on substituting the value, we get

Dividend paid = \$220,000 + \$406,000 - \$330,000

or

Dividend paid = \$296 (in thousands)

Solution 2

The question is incomplete, the completed question is as follows:

The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: (\$ in thousands)

2021 2020

(\$ in thousands)

Income Statement

Net sales  6400 5400

Net income 406         148

Balance Sheet

Current assets  920 870

Property plant and equipment(net)  2180 1830

Total Assets  3100 2700

Current liabilities  1500 1210

Long term Liabilities  870 870

Common Stock  400 400

Retained Earnings  330 220

Liabilities and Shareholders Equity 3100 2700

Required:

1. Determine the following ratios for 2021:

(1) profit margin on sales, (2) return on assets, (3) return on shareholders equity (Round your percentage answers to 1 decimal place.)

2. Determine the amount of dividends paid to shareholders during 2021. (Enter your answer in dollars.)

Profit margin on sales = 6.3%

Return on assets = 13.1%

Return on shareholders equity = 60.2%

Dividends paid =  \$296, 000

Explanation:

Profit margin is the fraction of net income retained from sales revenue less operational costs. It is calculated as: Net income/ Sales * 100. The profit margin for Peabody in 2021 is: (\$406, 000/ \$6400000)*100 = 6.34375 %

Return on assets is the income generated by working assets. It is a profitability ratio that depicts the efficiency of management in creating value from the business assets. It is computed as: Net income/Total assets at the end of the period  * 100. The ROA for Peabody in 2021 is: (\$406, 000/\$3,100,000) * 100 = 13.09677%

Return on shareholder's equity is the profit generated from investments made by shareholders. This ratio can be used to compare the competitiveness of a company with that of its competitors in the industry or the industry average. It is calculated as: Net income/Average Shareholders Equity * 100. The average Shareholder's equity is calculated by adding beginning and ending balances of shareholders equity and dividing the amount by 2. The ROE for Peabody in 2021 is: (\$406, 000/\$675, 000)*100 = 60.14815%. \$675, 000 = (\$730, 000 + \$620,000)/2

Dividends are tokens paid to shareholders as a result of their investment in the firm's equity. It is obtained from the resulting net income from operations. The dividends paid out by Peabody in 2021 are calculated as a balancing figure in the retained earnings account:

Opening balance: Retained Earnings   \$220, 000

Net income:                                             \$406, 000

Dividends paid:                                      (\$296, 000)

Closing balance: Retained Earnings      \$330, 000

Question
On January​ 1, 2018​, Alaska Freight Airlines purchased a used airplane for \$ 44 comma 000 comma 000. Alaska Freight Airlines expects the plane to remain useful for five years ​(4 comma 000 comma 000 ​miles) and to have a residual value of \$ 4 comma 000 comma 000. The company expects the plane to be flown 1 comma 100 comma 000 miles the first year. Read the requirementsLOADING.... Requirement 1a. Compute Alaska Freight Airlines​'s ​first-year depreciation expense on the plane using the​ straight-line method. Begin by selecting the formula to calculate the​ company's first-year depreciation expense on the plane using the​ straight-line method. Then enter the amounts and calculate the depreciation for the first year.
Solution 1

The depreciation expense for the first year is \$8,000,000

Explanation:

Depreciation: The depreciation is an expense which reduce the value of the fixed assets due to tear and wear, usage, obsolesce, etc. It is shown under the income statement in the debit side and the accumulated depreciation would be shown in the asset side of the balance sheet. It is deducted from the ending value of the fixed assets.

The formula to compute the depreciation expense under straight line method is shown below:

= = = \$8,000,000

In straight line method, the depreciation expense would remain same over the useful life i.e 4 years.

And, we do not consider the miles so we ignored it.

Question
When the current state of the economy is such that Real GDP is greater than Natural Real GDP, the economy is in a(n) ____________________ gap. In this situation, the (actual) unemployment rate is ___________ than the natural unemployment rate, and there is a ________________ in the labor market.
Solution 1

Inflationary; lower; shortage

Explanation:

If the real GDP is higher than Natural Real GDP, this implies that the economy is in an inflationary gap.

This means that the economy is expanding. The real unemployment level is likely to be lower than the natural unemployment rate.

This means that there is no cyclical unemployment in the labor market and only structural and frictional unemployment exist.

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