Answer:
Following are the responses to the given question:
Explanation:
This problem could be viewed as the upward sloping business cycle. The dividend curve is a graph that plots borrowing costs against time on the x-axis. As just a result, the upward slanting bond yield implies higher future borrowing costs for returns. Both as result, unless you're a minority shareholder, you'd become hopeful about long-term assets that will pay off in the potential.
Consider a project with the following data: accounting break-even quantity = 16,700 units; cash break-even quantity = 15,000 units; life = four years; fixed costs = $150,000; variable costs = $32 per unit; required return = 15 percent. Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer: 17381.80 units
Explanation:
To solve the question, the OCF need to be known. To solve this, we need to know the price of the project which will be:
15000 = $150,000/(P - $32)
15000P - 480000 = 150000
15000P = 150000 + 480000
15000P = 630000.
P = 630000/150000
P = 42
Since we know the price, we'll calculate depreciation which will be:
16700 = ($150,000 + D)/($42 -$32)
Depreciation = 17000
Based on the information, initial investment will now be:
= 4 × 17000
= 68000
Then, we can now solve the OCF which will be:
68000 = OCF(PVIFA15%,4)
OCF = 23818.04
Therefore, the financial breakeven quantity will be:
= 150,000 + 23818.04/(42-32)
= (150000 + 23818.04)/10
= 173818/10
= 17381.80 units
Therefore, the financial breakeven quantity is 17381.80 units
Mandy, who has AGI of $80,000 before considering rental activities, is active in three separate real estate rental activities. Mandy has a marginal tax rate of 22%. She has $12,000 of losses from Activity A, $18,000 of losses from Activity B, and income of $10,000 from Activity C. She also has $2,100 of tax credits from Activity A. Calculate her deductions and credits allowed and the suspended losses and credits.
Answer: See explanation
Explanation:
Mandy's deductions and credits allowed and the suspended losses and credits are calculated as follows:
Mandy's deduction (her utilized loss) total = $12000 + $18000 - $10000 = $20000
Her suspended loss = $0
After deducting the loss, Mandy has available a deduction equivalent of = $5000
Hee utilized credit is ($5000 × 22%) = $1100 and her suspended credit is ($2100 - $1100) = $1000.
7. How micro and macro economics are interdependent
to each other?
Explanation:
Actually micro and macroeconomics are interdependent. The theories regarding the behaviour of some macroeconomic aggregates (but not all) are derived from theories of individual behaviour. ... Similarly, the theory of aggregate consumption function is based upon the behaviour patterns of individual consumers.
Why should interest earned NOT be a factor with your emergency fund?
O Interest-bearing accounts at banks earns a high rate of interest, therefore, interest is not a concern.
It should be a factor.
O Inflation can eat up the interest earned.
O The emergency fund is not intended to grow wealth
Answer:
O The emergency fund is not intended to grow wealth
Sea Green Enterprises reports the following assets and liabilities on its balance sheet. Net Book Value Fair Market Value Assets $600,000 $925,000 Liabilities 200,000 200,000 Sea Green just lost a product liability suit with damages of $10,000,000 being awarded to the plaintiff. Although Sea Green will appeal the judgment, legal counsel indicates the judgment is highly unlikely to be overturned by the appellate court. The product liability insurance carried by Sea Green includes a payout ceiling of $6,000,000. Assume any net assets of the company will be used to reduce the judgment. For how much of the judgment is the entity and its owners liable if Sea Green is a sole proprietorship, a partnership, an LLC, a C corporation, and an S corporation
Answer:
A. $3,275,000
B. $3,275,000
C. $3,075,000
D. $3,075,000
Explanation:
A. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a SOLE PROPRIETORSHIP,
First step is to calculate the FMV of the net assets
FMV of the net assets=($925,000 - $200,000)
FMV of the net assets =$725,000
Now let calculate the amount the owner is liable of
Amount liable=($10,000,000-$6,000,000)-$725,000
Amount liable= ($4,000,000 - $725,000).
Amount liable=$3,275,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a SOLE PROPRIETORSHIP is $3,275,000
B. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a PARTNERSHIP
First step is to calculate the net FMV of the
net assets
Net FMV of the
net assets =($925,000 - $200,000)
Net FMV of the
net assets= $725,000
Now let calculate the partners are liable of
Amount liable=($10,000,000-$6,000,000)-$725,000
Amount liable= ($4,000,000 - $725,000).
Amount liable=$3,275,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a PARTNERSHIP is $3,275,000
C. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a C corporation
Corporate debts=($10,000,000-$6,000,000)-$925,000
Corporate debts=($4,000,000 - $925,000).
Corporate debts =$3,075,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a C corporation is $3,075,000
D. Calculation to determine how much of the judgment is the entity and its owners liable if Sea Green is a S corporation
Corporate debts=($10,000,000-$6,000,000)-$925,000
Corporate debts=($4,000,000 - $925,000).
Corporate debts =$3,075,000
Therefore the amount of the judgment that the entity and its owners liable if Sea Green is a S corporation is $3,075,000
The efficient frontier of risky assets is:_______
A. The portion of the minimum-variance portfolio that represents the highest standard deviations.
B. The portion of the minimum-variance portfolio that includes the portfolios with the lowest standard deviation.
C. The portion of the minimum-variance portfolio that lies above the global minimum variance portfolio.
D. The set of portfolios that have zero standard deviation.
Choose 2 multinational companies (1 U.S.-based company + 1 foreign-based company).
Visit the websites of the 2 companies and conduct research using databases such as Business and Company ASAP and Business
Source Complete.
How do these 2 multinational companies have organized their global business operations?
What are their similarities and differences, and what might explain those similarities and differences?
How might you characterize their business and international strategies?
Tools like nation portfolio analysis and political risk assessment, which primarily concentrate on the potential benefits from doing business in emerging countries, are used by companies that seek new markets.
How a Global Corporation Operates?An organisation is considered a global corporation if its operations span at least two nations. Some individuals would classify any business having an overseas branch as a multinational corporation. Some people might restrict the term to only include businesses with at least 25% of their revenue coming from sources outside of their own nation.
What Are Some of the Risks Facing Global Corporations?The various nations and regions in which multinational firms operate expose them to dangers. These include potential dangers to regulations or the law, political unpredictability, crime and violence, and cultural
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Speedy Delivery Systems can buy a piece of equipment that is anticipated to provide an 11 percent return and can be financed at 6 percent with debt. Later in the year, the firm turns down an opportunity to buy a new machine that would yield a 9 percent return but would cost 15 percent to finance through common equity. Assume debt and common equity each represent 50 percent of the firm’s capital structure. a. Compute the weighted average cost of capital. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Answer:
10.5%
Explanation:
WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate)
(6% x 0.5) + (15% x 0.5) = 3% + 7.5% = 10.50%
A project scope statement provides the first phase the project.
True
False
Answer:
true coz i know the answer
Actual sales price is 20% higher than budgeted. Actual sales revenue in dollars is 14% higher than budgeted. Actual sales volume in units is 5% lower than budgeted. Actual input quantity per unit is 2% higher than budgeted. Actual input price is 4% lower than budgeted. Which of the following is true: Group of answer choices Sales volume variance is unfavorable and input efficiency variance is unfavorable Sales volume variance is unfavorable and input efficiency variance is favorable Sales volume variance is favorable and input efficiency variance is unfavorable Not enough information Sales volume variance is favorable and input efficiency variance is favorable
Answer: Sales volume variance is unfavorable and input efficiency variance is unfavorable
Explanation:
The sales volume variance is regarded as the difference in the revenue or the profit which is as a result of the difference between the actual sales and the budgeted sales.
With regards to the question, since the Actual sales volume in units is 5% lower than the budgeted sales, we can infer that the sales volume variance will be unfavourable. On the other hand, since, the actual input quantity per unit is 2% higher than budgeted input quantity per unit, then we can infer that the input efficient variance is unfavourable.
Each year, a bicycle repair shop receives $120,000 in total revenue. Annual costs include $40,000 for labor, $5,000 in parts, and $30,000 in equipment rental. The owner of the bicycle repair shop owns the building and could rent it out for $12,000 per year. She could be making $50,000 per year if she worked as a project manager instead. What is the owner's accounting profit
Answer:
Accounting profit= $45,000
Explanation:
The accounting profit does not take into account the opportunity cost of making a different decision. Therefore, the opportunity of renting the building and working as a project manager will not be taken into account.
Accounting profit= 120,000 - 40,000 - 5,000 - 30,000
Accounting profit= $45,000
All of the following statements about the online insurance industry are true except: Group of answer choices the industry has been very successful in attracting visitors searching for information about prices and terms of insurance policies. the Internet has lowered search costs, increased price comparison, and decreased prices to consumers for all forms of insurance. websites of almost all the major firms provide the ability to obtain an online quote. the wave of interest in fintech companies has not yet reached the insurance industry.
Regardless which form of media used, all ads can be divided into _?_types based on the kind of message conveyed.
seven
C. five
b. two
d. three
a.
what symptom must be reported to a manger
vomiting, diarrhea, jaundice, or a fever accompanied by a sore throat
g Over the last several years your company has collected the following monthly repair frequency history on a key piece of manufacturing equipment. If the average repair cost (parts and labor) is $356/repair, calculate the expected annual repair budget for this piece of equipment. Repairs/month Probability 0 0.02 1 0.05 2 0.08 3 0.1 4 0.12 5 0.13 6 0.12 7 0.16 8 0.11 9 0.09 10 0.02
Answer:
The expected annual repair budget for this piece of equipment is $1,933.20.
Explanation:
Note: See the attached excel file for the calculation of the expected annual repair budget for this piece of equipment.
In the attached excel file, the following formula is used
Expected monthly repair cost = Repairs/month * Probability * Average cost per repair
From the attached excel file, we have:
Expected annual repair budget = Total of expected monthly repair cost = $1,933.20
Therefore, the expected annual repair budget for this piece of equipment is $1,933.20.
"Group Think" happens when
everyone agrees with the same
thought.
True or false
It is a phenomenon that can lead to poor decision-making True.
What is group think?Group think is a phenomenon in which a group of people, influenced by their desire for consensus, make irrational or poor decisions. It often occurs when group members are unwilling or unable to express their individual opinions, or when group members feel pressure from an authority figure to come to an agreement. Group think can lead to poor decision-making, as group members may ignore potential problems or negative information that could be beneficial to the decision-making process. Additionally, group think can lead to conformity among members, making it difficult for them to think outside the box and come up with creative solutions.
Group Think can lead to poor decision-making because it eliminates any divergence of opinion, leading to conformity and the absence of critical thought. This can lead to an inability to objectively evaluate the risks and benefits involved in a decision, as well as a lack of creativity and innovation. Additionally, group think can lead to a lack of accountability, as members of a group may be less likely to challenge decisions or provide constructive criticism.
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Assume that IBM leased equipment that was carried at a cost of $182,000 to Sharon Swander Company. The term of the lease is 6 years beginning January 1, 2017, with equal rental payments of $35,685 at the beginning of each year. All executory costs are paid by Swander directly to third parties. The fair value of the equipment at the inception of the lease is $182,000. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 7%, no bargain-purchase option, and no transfer of title. Collectibility is reasonably assured with no additional cost to be incurred by IBM.
Prepare IBM’s January 1, 2017, journal entries at the inception of the lease
Date Account Titles & Explnation Debit Credit
January 1
January 1
Answer:
IBM
Journal entries at the inception of the lease
Date Account Titles & Explanation Debit Credit
January 1
Debit Accounts receivable (Sharon Swander Company) $182,000
Credit Leased Asset $182,000
To record the lease of the asset to Sharon Swander.
January 1
Debit Cash $35,685
Credit Accounts receivable (Sharon Swander Company) $35,685
To record the receipt of the first rental payment.
Explanation:
a) Data and Calculations:
Cost of equipment on lease = $182,000
Lease terms:
Lease period = 6 years
Annual rental payments = $35,685
Implicit interest rate = 7%
The Kentucky government approves tax incentives to encourage more industry to move to the state. Which of the following statements best describes a potential negative externality? (1 point)
a
Development results in reduction of green space.
b
Taxes for local road maintenance decrease.
c
The state gambling industry fails to fund education.
d
The state park system loses positive media coverage.
Answer:
a
Explanation:
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.
Government can regulate the amount of externality produced by placing an upper limit on the amount of negative externality permissible
Which entities offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field?
Answer:
Entities that offer certifications and qualifications in accounting that will help increase your future earning potential, deepen your knowledge, and enhance your credibility in the field include:
Explanation:
Certified Public Accountant (CPA), Certified Financial Analyst (CFA), Certified Fraud Examiner (CFE), and Certified Internal Auditor (CIA). Additionally, organizations such as the American Institute of Certified Public Accountants, the Institute of Management Accountants, and the International Ethics Standards Board for Accountants (IESBA) offer certifications and qualifications that are beneficial for those in the accounting field.
Double West Suppliers (DWS) reported sales for the year of $300,000, all on credit. The average gross profit percentage was 40 percent on sales. Account balances follow: Beginning Ending Accounts receivable (net) $ 45,000 $ 55,000 Inventory 60,000 40,000 Required: Compute the following turnover ratios. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory.
Answer:
(1) Account receivable turnover Ratio = 6 times
Inventory turnover Ratio = 3.6 times
(2) Average days to collect receivables = 61 days
Average days to collect inventory = 101 days
Explanation:
(1). Net credit sales = $300,000
Average account receivable = ($45,000 + $55,000) ÷ 2 = $50,000
COG sold = $300,000 - (40% × $300,000) = $180,000
Average inventory = (60,000 + 40,000) ÷ 2 = 50,000
Account receivable turnover Ratio= Net Credit Sales ÷ Average Accounts receivable
= $300,000 ÷ 50,000
= 6 times
Inventory turnover Ratio= COG Sold ÷ Average Inventory
= 180,000 ÷ 50,000
= 3.6 times
(2). Average days to collect receivables= 365 ÷ 6
= 60.83 or 61 days
Average days to collect inventory= 365 ÷ 3.6
= 101.38 or 101 days
What entrepreneurial skills do you think would be necessary to start a DJ business?
Answer:What Skills Do You Need To Make Money As A DJ Entrepreneur? · Ambition · Drive · Discipline · Leadership · Creative Thinking · Strategic Thinking.
Explanation:
Assume that three identical units of merchandise were purchased during October, as follows:
Units Cost
Oct. 5 Purchase 1 $5
12 Purchase 1 13
28 Purchase 1 15
Total 3 $33
Assume one unit is sold on October 31 for $28. Determine cost of merchandise sold, gross profit, and ending inventory under the average cost method.
Answer:
Cost of Merchandise sold: $11
Gross Profit: $17
Ending inventory: $22
Explanation:
STATEMENT SHOWING INVENTORY RECORD UNDER WEIGHTED AVERAGE METHOD
RECIEPTS COST OF GOODS SOLD BALANCE
DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $
balance
05-Oct 1 5 5
12-Oct 1 13 13
28-Oct 1 15 15
TOTAL 3 11 33 1 11 11 2 11 22
Gross Profit:
Sales revenue 28
Less: Cost of good sold 11
Gross Profit: 17
Assume that in 2018, a copper penny struck at Philadelphia mint in 1796 was sold for $480,000. What was the rate of return on this investment?
Answer:
The annual rate of return on this investment is 8.29%
Explanation:
The computation of the rate of return on this investment is shown below:
Since the copper penny is in 1795 is 1 cent
And,
1 cent = .01 dollars
Now
Year 1796 2018
Amount (in dollars) 0.01 $390,000
We know that
Future Value = Present Value × ((1 + rate )^time period)
Here,
t = 2018 - 1795 = 222
So,
.01 × ((1+rate)^(222)) = $480,000
(1+rate)^(222) = $48,000,000
1 + rate = $48,000,000^(1 ÷ 222)
1 + rate = $48,000,000^(0.004505)
1+rate = 1.082929503
rate = 0.082929503
Hence, The annual rate of return on this investment is 8.29%
Payroll entries.
Total payroll of Walnut Co. was $1,840,000, of which $320,000 represented amounts paid in excess of $106,800 to certain employees. The amount paid to employees in excess of $7,000 was $1,440,000. Income taxes withheld were $450,000. The state unemployment tax is 1.2%, the federal unemployment tax is .8%, and the F.I.C.A. tax is 7.65% on an employee's salaries and wages to $106,800 and 1.45% in excess of $106,800.
Instructions
(a) Prepare the journal entry for the salaries and wages paid.
(b) Prepare the entry to record the employer payroll taxes.
Answer:
A. Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
Cr Cash $2,169,080
B. Dr Employer's Tax expenses $112,920
Cr FICA taxes payable $120,920
Cr SUTA payable $4,800
Cr FUTA payable $3,200
Explanation:
a. Preparation of the journal entry for the salaries and wages paid.
Dr Salaries & Wages exp. $1,840,000
Dr Fed tax withheld & payable $450,000
Cr FICA Taxes withheld & payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr Cash $2,169,080
($1,840,000+$450,000-$120,920)
(Being net salaries and wages paid after holding taxes)
b. Preparation of the entry to record the employer payroll taxes.
Dr Employer's Tax expenses $112,920
($120,920-$4,800 -$3,200)
Cr FICA taxes payable $120,920
[($1,840,000-$320,000*7.65%)+($320,000*1.45%)]
Cr SUTA payable $4,800
($1,840,000-$1,440,000*1.2%)
Cr FUTA payable $3,200
($1,840,000-$1,440,000*.8%)
(Being employer's taxes made payable towards salaries & wages)
Apple invented the modern smart phone but Android con trolled 80 percent of the world market in 2016 because of:__________.
Answer:
Stimulus diffusion
Explanation:
In simple words, When a concept spreads from its historical flame outwards, the original thought is altered by the future followers which is known as stimulus diffusion. Given of the manner civilization adjusts to various environmental, economic, as well as political contexts, mostly all cultural evicting will include some form of stimulus dissemination.
Thus, from the above we can conclude that the correct answer is stimulus diffusion.
Vextra Corporation is considering the purchase of new equipment costing $38,000. The projected annual cash inflow is $11,600, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows:
Periods 12%
1 0.8929
2 1.6901
3 2.4018
4 3.0373
What is the net present value of the machine (rounded to the nearest whole dollar)?
a. $(35,233).
b. $(2,767).
c. $38,000.
d. $(3,700).
e. $5,233.
Answer:
b
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-38,000.
Cash flow in year 1 - 4 = $11,600
I = 12%
NPV = $(2,767).
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
You want to invest in a project in Wonderand. The project has an initial cost of W738,000 and is expected to produce cash inflows of W321,000 a year for 4 years. The project will be worthless after that. The expected inflation rate in Wonderland is 2.5% while it is 4.5% in the U.S. The applicable interest rate for a project like this in Wonderland is 13%. The current spot exchange rate is W1 = $2.3456.
Required:
What is the Net Present Value of this project in Wonderland's currency (i.e., in "W")?
Answer:
Wonderland
Net Present Value of this project in Wonderland's currency is:
= W169,256.05.
Explanation:
a) Data and Calculations;
Initial project cost = W738,000
Expected annual cash inflows = W321,000
Project duration = 4 years
Expected inflation rate in Wonderland = 2.5%
Applicable interest rate for the project = 13%
Real interest rate = 15.5% (13% + 2.5%)
Present value of annual cash inflows = W907,256.05
Present value of initial cost outflows = W738,000.00
Net Present Value of this project = W169,256.05
Calculating the PV of the Cash Inflows from an online financial calculator:
N (# of periods) 4
I/Y (Interest per year) 15.5
PMT (Periodic Payment) = W321000
FV (Future Value) 0
Results
PV = W907,256.05
Sum of all periodic payments = W1,284,000.00
Total Interest = W376,743.95
The following accounts are from last year's books at Sharp Manufacturing: Raw Materials Bal 0 (b) 87,000 (a) 93,000 5,000 Work In Process Bal 0 (f) 251,000 (b) 69,000 (c) 82,000 (e) 100,000 0 Finished Goods Bal 0 (g) 226,000 (f) 251,000 25,000 Manufacturing Overhead (b) 18,000 (e) 100,000 (c) 12,000 (d) 67,000 (h) 3,000 3,000 Cost of Goods Sold (g) 226,000 (h) 3,000 223,000 Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?
Answer:
$251,000
Explanation:
Calculation to determine the amount of cost of goods manufactured for the year
Using this formula
Cost of goods manufactured=Debit to Finished Goods+Credit to Work in Process
Let plug in the formula
Cost of goods manufactured =$226,000+$25,000
Cost of goods manufactured =$251,000 (entry f)
Therefore the amount of cost of goods manufactured for the year is $251,000 (entry f)
Augustus Company is considering investing in new equipment. Based on the following, what is the Average Annual Operating Income (as in the Accounting Rate of Return calculation)?
Estimated Cost of New Equipment $500,000
Useful life in years 5
Estimated Residual Value $50,000
Expected New Cash Inflows over life of asset $700,000
Answer:
$50,000
Explanation:
Estimated Cost of New Equipment = $500,000
Useful life in years = 5
Estimated Residual Value = $50,000
Expected New Cash Inflows over life of asset = $700,000
Annual depreciation expense = (Estimated Cost of New Equipment-Estimated Residual Value)/Useful life in years
= ($500,000 - $50,000) / 5
= $450,000 / 5
= $90,000
Average annual cash flow = Expected New Cash Inflows over life of asset/ Useful life in years
= $700,000/5
= $140,000
Average annual operating income = Average annual cash flow - Annual depreciation expense
= $140,000 - $90,000
= $50,000
7. A monopolist has cost function = + 2 and the regulator is willing to allow the firm to use a two-part tariff per consumer = + to cover total costs. Total demand is = 102 − and there are 100 identical consumers. Up to how much is willing to pay each indidual consumer to have the right to consume the good at marginal cost? What is the optimal tariff or tariff that would maximize social welfare (fixed part and marginal price) ?
Answer: hello your question is poorly written below is the complete
A monopolist has cost function C = F + 2Q and the regulator is willing to allow the firm to use a two-part tariff per consumer equal to T = A + pq to cover total costs. Total demand is Q = 102 − p and there are 100 identical consumers. What is the optimal tariff or tariff that would maximize social welfare (fixed part and marginal price)?
answer : Fixed part = $5000 per customer = $500,000
marginal price = $2
Explanation:
Marginal cost of monopolist = dc / dq = 2
Q = quantity of the concerned good/service.
p = price of concerned good/service
Based on profit maximizing condition of the monopoly firm under the two-part tariff system ; output of concerned goods/services = MC = price of concerned goods/service
P = MC
102 - Q = 2 ∴ Q = 100
back to the Total demand function ( p = 102-Q )
p = 102 - Q
p = 2
when Q = 0
p = 102 - Q = 102
hence; Total consumer surplus = 0.5 * ( 102 - 2 ) * ( 100-0 ) = $5000 i.e. fee charged by monopolist per customer
marginal / socially optimal price charged = $2
Total Fixed rate/part that the monopolist will charge from 100 customers
= (100*5000) = $500,000