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?
Solution 1
Answer:
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
Answer:
(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
(b) Since Bob has the highest bid, he receives the business.
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
Answer:
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:
Answer:
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
Answer:
A. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous
Explanation:
Answer:
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
Answer:
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
Answer: Option A
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.
Answer:
$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 = $296 (in thousands)
Answer:
The question is incomplete, the completed question is as follows:
The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: ($ 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
Answer:
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.
Answer:
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.