The effects of stockholders investing cash in exchange for additional shares of stock on the basic accounting equation are to
When stockholders invest cash in exchange for additional shares of stock, it results in an increase in both assets and equity but does not affect liabilities.
When stockholders invest cash in exchange for additional shares of stock, there are two effects on the basic accounting equation:
Assets increase: The cash (an asset) of the company increases because it has received cash from the stockholders in exchange for new shares.
Equity increases: The equity of the company increases because the stockholders have invested in the company by purchasing new shares of stock.
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electronic superstore's inventory increases during the year by $3.7 million, and its accounts payable to suppliers increases by $5.7 million during the same period. what is the amount of cash paid to suppliers of merchandise during the reporting period if its cost of goods sold is $32.0 million?
The cash amount that paid to suppliers of merchandise in the reporting period is $37.7 million if the cost of goods sold is $32.0 million.
Merchandise refers to goods or products that are bought and sold in a business, typically for the purpose of making a profit. Examples of merchandise include clothing, electronics, furniture, groceries, and many other types of tangible goods.
In retail and wholesale businesses, the inventory usually consists of various types of merchandise that are purchased from suppliers and then sold to customers at a markup.
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in a typical latin american city, the newer commercial and business strip that extends from the colonial core to newer parts of the city is called the .
The newer commercial and business strip that extends from the colonial core to newer parts of a typical Latin American city is called the "zona rosa".
This area is often characterized by its modern architecture, high-end shops and restaurants, and bustling nightlife. The term "zona rosa" literally translates to "pink zone" and is thought to have originated in Mexico City, where the neighborhood of Zona Rosa was known for its pink-colored buildings.
Today, the term is commonly used throughout Latin America to refer to similar commercial and business areas in urban centers.
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Marty wants to rank the following alternatives
assuming he can earn 5% p.a.
a) $180 received in one year
b) $220 received in five years
c) $300 received in ten years
The present value $180 received in one year is the best option for Marty, followed by the $220 received in five years and the $300 received in ten years.
1) $180 received in one year (present value of $171.43) 2) $220 received in five years (present value of $170.22) 3) $300 received in ten years (present value of $162.89) To rank these alternatives, Marty needs to calculate their present values using a discount rate of 5% p.a. Present value is the current value of a future cash flow, and it is calculated by discounting the future cash flow back to its present value. a) To calculate the present value of $180 received in one year, Marty can use the formula: PV = FV / (1 + r)^n
PV = 180 / (1 + 0.05)^1
PV = $171.43 b) To calculate the present value of $220 received in five years, Marty can use the formula:
PV = FV / (1 + r)^n
PV = 220 / (1 + 0.05)^5
PV = $170.22 c) To calculate the present value of $300 received in ten years, Marty can use the formula:
PV = FV / (1 + r)^n
PV = 300 / (1 + 0.05)^10
PV = $162.89 Therefore, the ranking of the alternatives based on their present values is:
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if government spending exceeds tax revenues, which of the following is necessarily true? there is a positive budget balance. contractionary fiscal policy. recession. government debt. budget deficit.
A budget deficit occurs when the government borrows money to finance its spending, resulting in government debt.Option (4)
In such a scenario, the government has two options: it can either reduce its spending or increase its revenue by raising taxes. If the government chooses to reduce spending, it will adopt the contractionary fiscal policy, which can lead to a recession if done too abruptly or without proper consideration of the economic context.
Therefore, it is not necessarily true that a positive budget balance or a recession will occur, but government debt and the budget deficit will be present. The appropriate policy response to a budget deficit depends on the economic context, and governments need to balance their spending and revenue to avoid unsustainable levels of debt.
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Full Question: if government spending exceeds tax revenues, which of the following is necessarily true?
there is a positive budget balance. contractionary fiscal policy. recession. government debt. budget deficit.You are currently developing the resource management plan for a project you are managing. Which tool is the BEST for linking work packages from the project's work breakdown structure to the resources listed in the organizational breakdown structure?AnswersA. RAMB. RBSC. Network diagramD. Pareto chart
The best tool for linking work packages from the project's work breakdown structure to the resources listed in the organizational breakdown structure is a Resource Allocation Matrix (RAM). The correct answer is option A
The RAM enables project managers to see which resources are needed for each task and assign them accordingly. It also helps in identifying any resource constraints, allowing the project manager to take necessary actions to mitigate the risks associated with resource allocation. By using a RAM, project managers can ensure that resources are not over-allocated or under-utilized, which can have a significant impact on the project schedule and budget.
The RB and network diagram are useful tools for project management, but they are not specifically designed for resource allocation. The Pareto chart is used to identify the most significant factors in a process and is not relevant for linking work packages to resources. The correct answer is option A
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If a pure monopolist is producing at that output where P = ATC, then:
1.
its economic profits will be zero.
2.
it will be realizing losses.
3.
will be producing less than the profit-maximizing level of output.
4.
t will be realizing an economic profit.
If a pure monopolist is producing at that output where P = ATC, then its economic profits will be zero. The correct option is 1.
This is because at the output where P = ATC, the monopolist is producing at the minimum point on its average total cost curve. This means that the monopolist is producing at the most efficient level possible, given its production technology. At this level of output, the monopolist's total revenue (TR) will be equal to its total cost (TC), including both its fixed and variable costs. Therefore, the monopolist will be earning zero economic profits, as its revenue just covers its costs.
Hence, the correct answer is option 1.
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The beta for the DAK Corporation is 1.25. If the yield on 30 year T-bonds is 5.65%, and the long term average return on the S&P 500 is 11%. Calculate the required rate of return for DAK Corporation.a. 12.34%b. 7.06%c. 13.74%d. 5.35%e. 5.65%
The required rate of return for DAK Corporation, as per the mentioned informations, is calculated to be 12.34%. So, the correct answer is option (a).
The required rate of return for DAK Corporation can be calculated using the capital asset pricing model (CAPM), which is:
Required Rate of Return = Risk-Free Rate + Beta x (Market Return - Risk-Free Rate)
Here, the risk-free rate is the yield on 30-year T-bonds, which is 5.65%, the market return is the long-term average return on the S&P 500, which is 11%, and the beta for DAK Corporation is 1.25. Therefore, substituting the values into the formula:
Required Rate of Return = 5.65% + 1.25 x (11% - 5.65%) = 12.34%
Thus, the required rate of return for DAK Corporation is 12.34%, and the answer is (a) 12.34%.
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economists believe that: group of answer choices utility is personal and subjective. utility can be measured like temperature. utility is impersonal a
Economists believe that utility is personal and subjective, meaning that it varies from person to person and cannot be measured objectively like temperature. Therefore the correct option is option A.
Utility is the satisfaction or benefit derived by a person from consuming a specific commodity or service, and it is influenced by a variety of individual factors such as preferences, tastes, income, and cultural background.
Utility cannot be directly evaluated or compared between persons because it is personal and subjective.
However, economists utilise many models and theories based on assumptions about individuals' preferences and decision-making processes to assess utility and anticipate consumer behaviour. Therefore the correct option is option A.
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Constraints on qualitative characteristics of accounting information include:
A. Freedom from material error.
B. Going concern.
C. Neutrality.
D. Cost effectiveness.
The correct answer is A, B, C, and D. Constraints are factors that can limit the decision-making process in accounting, and in this case, the qualitative characteristics of accounting information. The four constraints on qualitative characteristics are: 1) Freedom from material error, 2) Going concern, 3) Neutrality, and 4) Cost effectiveness. These constraints ensure that the information presented in the financial statements is reliable, relevant, and comparable, which enhances the decision-making process for users of financial statements.
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catie decides to open her own hotdog stand on university avenue. she rents the stand for $1,500.00 a month and the variable cost per hotdog is $0.50. catie estimates that she will sell 500 hotdogs a month. assuming the catie sells all 500 hotdogs and that the only fixed cost she incurs is the cost of renting the stand, what is her breakeven price?
Catie needs to sell her hotdogs at $3.50 per hotdog to break even and cover all her costs.
The breakeven price for Catie's hotdog stand can be calculated by considering the total costs she incurs to sell 500 hotdogs per month, and then dividing that total cost by the number of hotdogs sold.
The total cost consists of two components: the fixed cost (i.e., the rent for the stand) and the variable cost per hotdog. The fixed cost is $1,500 per month, and the variable cost per hotdog is $0.50. Therefore, the total cost for selling 500 hotdogs is:
Total Cost = Fixed Cost + (Variable Cost per Hotdog * Number of Hotdogs)
Total Cost = $1,500 + ($0.50 * 500)
Total Cost = $1,750
To calculate the breakeven price, we need to divide the total cost by the number of hotdogs sold:
Breakeven Price = Total Cost / Number of Hotdogs Sold
Breakeven Price = $1,750 / 500
Breakeven Price = $3.50
Any price above this breakeven price will result in a profit for Catie, while any price below it will result in a loss.
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Suppose a person is obtaining greater utility per dollar from consuming one good than from another. This person is
The notion of _______________ is among the most durable and powerful ideas in IPE.
The notion of globalization is among the most durable and powerful ideas in International Political Economy (IPE). Globalization refers to the interconnectedness and interdependence of various economic, social, cultural, and political systems across the world.
Globalization has been a significant driving force in the integration of national economies, the growth of multinational corporations, the rise of international financial institutions, and the expansion of global trade. While globalization has brought many benefits such as increased economic growth, technological advancement, and cultural exchange.
it has also created challenges such as rising inequality, environmental degradation, and political instability. Overall, the notion of globalization remains a central concept in IPE, shaping the economic and political landscape of the modern world.
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Suppose the majority of the shares of Apple Inc. were sold to a Japanese firm. If everything else remains unchanged, this would (a) improve the US's financial-account balance. (b) improve the US's current-account balance. (c) worsen the US's trade balance. (d) lead to a deficit in the US's balance of payments.
The right response is (d), as selling the bulk of the company to a foreign company would cause capital to leave the country and could possibly have an effect on the US's overall balance of payments.
What transpires when there is a balance of payments deficit?The demand for foreign currency increases when there is a balance of payments deficit, which is bad for the native currency since it would depreciate. However, an excessive account balance entails a significant quantity of foreign cash that would need to be exchanged for the local currency.
What does a deficit in the balance of payments mean, Mcq?A balance of payments imbalance indicates that the nation imports more capital, products, and services than it exports.
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What is term of the step below?
-involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison w/ competing products
-after identifying target segments, a firm must evaluate each of its strategic opportunities
The term process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what product they own or represent in comparison with competing products is called market positioning.
Market Positioning refers to the ability to influence consumer perception regarding a brand or product relative to competitors. The objective of market positioning is to establish the image or identity of a brand or product so that consumers perceive it in a certain way.
A perceptual map is used to show consumer perception of certain brands. The map allows you to identify how competitors are positioned relative to you and to identify opportunities in the marketplace.
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TRUE/FALSE. Markets will overproduce goods that yield external benefits and underproduce goods that yield external costs.
The given statement "Markets will overproduce goods that yield external benefits and underproduce goods that yield external costs." is TRUE.
What are External benefits?
External benefits refer to benefits that accrue to individuals or society as a result of actions taken by producers or consumers but are not reflected in the price mechanism. For example, when a firm invests in research and development, the benefits of that investment may extend beyond the firm itself to the wider society.
What are External costs?
External costs refer to costs that are imposed on individuals or society as a result of actions taken by producers or consumers but are not reflected in the price mechanism. For example, environmental pollution or congestion from excessive car usage.
Markets will overproduce goods that yield external benefits and underproduce goods that yield external costs. This occurs because external benefits and costs are not reflected in market prices, leading to market inefficiencies. When a good yields external benefits, the market tends to underproduce it, as the social benefits exceed the private benefits. Conversely, when a good yields external costs, the market tends to overproduce it, as the social costs exceed the private costs.
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why will the long-run market supply curve for most products slope upward to the right? a. the firms producing the product will be unable to expand the size of their plant and equipment in the long run. b. economies of scale are present in most industries. c. most products are produced under conditions of constant cost. d. resource prices will rise and push costs upward as the output of the industry expands.
The long-run market supply curve for most products will slope upward to the right because of the answer (b) economies of scale.
In the long run, firms can adjust their production capacity and can experience economies of scale, which means that their average cost of production will decrease as they increase their output. This will result in lower prices and higher quantities supplied, which will induce more firms to enter the industry and increase the overall supply. As the industry expands, however, some firms may experience diseconomies of scale, causing their costs to rise and potentially reducing the overall supply. Nonetheless, in the absence of external factors, the long-run market supply curve is expected to slope upward to the right.
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The factor that likely poses the greatest threat of extinction of species worldwide isweakening of environmental legislationincrease in hunting and fishingaggressive collecting of specimens by museums and zoosblack-market trade in endangered speciesincreasing loss of habitat
Based on current research and expert opinions, the factor that likely poses the greatest threat of extinction of species worldwide is the increasing loss of habitat. However, it's important to note that all of the other factors you mentioned, including weakening of environmental legislation, increase in hunting and fishing, aggressive collecting of specimens by museums and zoos, and black-market trade in endangered species, also contribute to the overall threat of extinction. It's important for individuals, organizations, and governments to work together to address these issues and implement effective conservation measures to protect our planet's biodiversity, legislation, the preparing and enacting of laws by local, state, or national legislatures.
What do you mean by zoosblack-market?
In other contexts it is sometimes used to apply to municipal ordinances and to the rules and regulations of administrative agencies passed in the exercise of delegated legislative functions. Legislation involves not only action by a legislative body, but also participation by the executive. Concurrence by the executive is required to make legislation effective except where the exercise of veto power is overridden by a sufficient majority of each house of the legislature. Moreover, the role of the executive involves far more than mere acquiescence or dissent. As the principal officer of state and as a political leader, the executive participates extensively in the formulation of governmental policy and often in the actual preparation of legislation. Listen President Barack Obama speaking before signing the Patient Protection and Affordable Care Act after an introduction by Joe Biden Listen President Barack Obama speaking before signing the Patient Protection and Affordable Care Act after an introduction by Joe Biden See all videos for this article In the United States the subject of legislation is complicated by the federal character of the country. Each state possesses lawmaking power effective within its boundaries. The national government, within the scope of its constitutional powers, may pass legislation effective throughout the nation. Thus, conflicts may arise between a state and the national government. These conflicts are resolved by the courts. The Constitution, treaties, and laws of the United States are the supreme laws of the land, and state statutes passed in contravention of them are unenforceable. Both state and federal courts are obliged to refuse to enforce a state statute contravening federal constitutional or statutory law. Furthermore, the Supreme Court of the United States may review state legislation and decide whether or not it conflicts with the Constitution of the United States or with legislation passed by Congress. The Supreme Court of the United States is the final arbiter with respect to federal legislation and as to state laws insofar as their conflict with federal power is concerned. State legislation also must comply with the provisions of state constitutions. Final decision with respect to such compliance is vested in the state courts.
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Suppose a colleague of yours is gearing up to write a business plan for a business she intends to start. She told you she plans to prepare the financial statements first, to get that job out of the way before she tackles the rest of the plan. Explain to your colleague the flaw in her approach.
While preparing financial statements is a crucial part of a business plan, it is not advisable to tackle it before addressing the other components.
Your colleague's approach neglects the importance of conducting market research, defining the business's mission and goals, and outlining strategies for achieving those goals. By prioritizing the financial statements, she may miss crucial information that affects the business's financial outlook, such as potential risks and opportunities.
Additionally, the financial statements rely heavily on assumptions about the business's operations and market, which should be informed by the other components of the plan.
Therefore, it's essential to address all aspects of the business plan in a balanced and strategic manner to ensure a comprehensive and accurate representation of the business's potential.
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a company wants to ensure all aws accounts in their environment conform to company-wide policies. which services can help?.
To ensure all AWS accounts in a company's environment conform to company-wide policies, you can use AWS Organizations and AWS Config.
AWS Organizations, allows companies to centrally manage multiple AWS accounts and apply policies across them. Another service that can be useful is AWS Config, which enables companies to assess and audit their AWS resources for compliance with policies.
Additionally, AWS Identity and Access Management (IAM) can be used to enforce policies around user and resource access, and AWS CloudTrail can be used to monitor and log activity across AWS accounts. Overall, a combination of these services can help companies maintain consistent policies and best practices across their AWS environment.
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Minimum wage is a price floor because a. it is a government regulation. b.if it is removed, unemployment will increase a c. It is not a price floor. It is a price ceiling. d. it if is removed, wages for jobs paying minimum wage will decrease.
a.
Minimum wage is a price floor because it is a government regulation that sets a minimum price that employers must pay their employees. If the minimum wage is removed, wages for jobs paying minimum wage will decrease, which could lead to increased unemployment as workers are willing to work for lower wages. Therefore, minimum wage serves as a price floor, preventing wages from falling below a certain level.Advocates of offshore banking often characterise government regulation as a form of tax on domestic banks, reducing interest rates on deposits.
Government regulation of the use of this professional title is less universal than for dietician.
They can occur due to unforeseen circumstances in a product's market, such as unexpected demand or government regulation.
He opposes government regulation of vitamins and minerals (some proposals he opposes would require a prescription for vitamins).
Unless real wages were held above their market level by union action or government regulation, unemployment could only be a short run phenomenon.
He recommended empowering parents with tools and information to determine the appropriate video content for their children rather than government regulation of video content.
Central to its emergence was the view that public provision of water and government regulation of environmentally damaging behaviour was ineffective.
Most of the section is language from both countries agreeing to share information on several levels of government regulation.
Such a deviation may result from government regulation, monopoly tariffs and import quotas, which in theory may give rise to rent seeking.
Anti-trust laws and government regulation can not break this domination
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when joel salatin's father bought what is now polyface farm, it had suffered 150 years of agricultural mismanagement. what innovations helped
When Joel Salatin's father bought what is now Polyface Farm, it had indeed suffered 150 years of agricultural mismanagement.
However, through innovative farming practices, the Salatin family was able to restore the land and make it productive once again. Some of the key innovations that helped include:
1. Rotational grazing: Rather than keeping all the animals in one place and overgrazing the land, the Salatins implemented a system of rotational grazing. This means that the animals are moved to different areas of the farm on a regular basis, allowing the land to rest and recover.
2. Composting: The Salatins use a system of composting to recycle organic matter and improve soil fertility. They collect manure and other organic waste from the animals and combine it with other materials like straw and wood chips to create a rich, nutrient-dense compost.
3. Permaculture: Polyface Farm practices permaculture, which is a system of agriculture that mimics natural ecosystems. This means that the farm is designed to work in harmony with the environment, using natural processes to create a self-sustaining system.
4. Multi-species grazing: Rather than just raising one type of animal, the Salatins use a variety of species on their farm, including cows, chickens, pigs, and rabbits. Each species plays a unique role in the ecosystem, and they all work together to create a healthy and sustainable farm.
Overall, the innovative farming practices used at Polyface Farm have helped to restore the land and make it productive once again. By working with nature rather than against it, the Salatins have created a sustainable and profitable farming operation that serves as a model for others to follow.
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True or false: In general, the QBI deduction equals 20 percent of qualified business income.
True: In general, the QBI (Qualified Business Income) deduction equals 20 percent of qualified business income.
The QBI deduction, or the Qualified Business Income deduction, was introduced as part of the Tax Cuts and Jobs Act (TCJA) of 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income from their taxable income. However, the 20 percent deduction is subject to several limitations and restrictions, and the actual deduction amount may be lower in some cases. For example, the deduction is generally limited to the lesser of 20 percent of qualified business income or taxable income (minus any capital gains). Additionally, certain types of businesses, such as specified service businesses like law firms and accounting firms, may be subject to phase-out rules that limit or eliminate the deduction entirely for high-income taxpayers.
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what is the value of a 20-year, zero-coupon bond with a face value of $1,000 when the market required rate of return is 9.6 percent, compounded semiannually? group of answer choices $192.40 $168.31 $195.26 $172.19 $153.30
$192.40 the market required rate of return is 9.6 percent, compounded semiannually. The answer is OPTION A
Bonds that don't pay any interest or coupons are referred to as zeros. With a zero, you purchase the bond at a discount from its face value and are paid the bond's face value when it matures rather than receiving interest payments.
A type of fixed income security known as a zero coupon bond does not provide the bondholder with any interest payments. A discount bond is another name for it. These bonds are being sold below their face value. It is traded at a substantial discount, in other words. Instead, holders of zero-coupon bonds only get the bond's face value.
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the situation that occurs when two users are each waiting for a resource that the other person has locked is known as a(n) .
The situation that occurs when two users are each waiting for a resource that the other person has locked is known as a "deadlock." To avoid deadlocks, strategies such as resource allocation algorithms, timeouts, and deadlock detection and recovery mechanisms can be implemented.
Deadlock occurs in a computer system when two or more processes or threads are blocked, each waiting on the other to release a resource or complete a task before continuing. This results in a standstill where none of the processes can proceed, causing a loss of productivity and potentially crashing the system. Deadlocks can occur in various situations, such as when multiple processes require exclusive access to a shared resource or when multiple processes need to acquire a set of resources in a particular order.
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: QUESTION 2 If you make quarterly deposits for 22 years (beginning one quarter from now) into an account that compounds interest at 1% per month, the value of n in the F/A factor (for determining Fat the end of the 22-year period),
In this scenario, the value of n in the F/A factor for determining the future value (F) of the annuity at the end of the 22-year period is 88. This means that the future value of your quarterly deposits will be calculated using 88 compounding periods, considering a 1% monthly interest rate.
Quarterly deposits: Deposits made every three months for 22 years. Compounds interest: Interest is calculated on the initial principal and the accumulated interest of previous periods. 1% per month: The interest rate per month. F/A factor: The formula used to calculate the future value of a series of equal payments made at regular intervals (annuity).
Now, let's address the value of n in the F/A factor for your given scenario. The future value (F) of an annuity can be calculated using the following formula:[tex]F = A * [(1 + r)^n - 1] / r[/tex]
Where:- A is the quarterly deposit amount- r is the interest rate per period (1% per month in this case) - n is the number of periods
Since you make quarterly deposits for 22 years, there will be 4 deposits per year. Therefore, the number of periods (n) can be calculated as: n = 22 years * 4 deposits per year = 88 periods
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A company that personalizes service by tailoring product information for individual customers in order to provide an exceptional, personalized shopping experience is practicing __________________.
A company that personalizes service by tailoring product information for individual customers in order to provide an exceptional, personalized shopping experience is practicing what is known as "customer segmentation" or "personalization marketing." This marketing technique involves dividing customers into distinct groups based on their needs, preferences, and behaviors.
The company then uses this information to create targeted marketing campaigns and personalized recommendations that are tailored to each customer's specific needs.By utilizing customer segmentation, companies can increase customer satisfaction and loyalty, as well as drive sales and revenue.
Customers are more likely to feel valued and appreciated when they receive personalized recommendations and offers, and this can lead to repeat business and positive word-of-mouth referrals.Overall, personalization marketing is an effective way for companies to stand out in a competitive marketplace and provide exceptional customer experiences that are tailored to each individual's unique needs and preferences.
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ibis university, a public university, had tuition and fees for the year ended june 30, 2020, in the amount of $27,000,000. scholarships, for which no services were required, amounted to $2,100,000. graduate assistantships, for which services were required, amounted to $1,950,000. the amount to be reported by the university as net tuition and fee revenue would be
The amount to be reported by Ibis University as net tuition and fee revenue would be $23,850,000. This is because scholarships, for which no services were required, should be deducted from tuition and fees to arrive at net tuition and fee revenue. (Option D )
Therefore, the net tuition and fee revenue is $24,900,000 ($27,000,000 - $2,100,000). Graduate assistantships, for which services were required, are not considered tuition and fee revenue and should not be included in the calculation of net tuition and fee revenue. Net tuition and fee revenue is an important figure for universities as it represents the actual amount of revenue generated from student enrollment after deducting any scholarships or discounts.
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Full Question ;
A public university had tuition and fees for the year ended June 30, 2012, in the amount of $27,000,000. Scholarships, for which no services were required, amounted to $2,100,000. Graduate assistantships, for which services were required, amounted to $1,950,000. The amount to be reported by the university as net tuition and fee revenue would be
a) $27,000,000
b) $25,050,000
c) $24,900,000 ,
d) $23,850,000
How do the leader, follower, and consumers fair in the Cournot oligopoly compared to Stackelberg?
In a Cournot oligopoly, firms compete by setting their output levels simultaneously. This results in an equilibrium where each firm produces less than it would in a monopolistic market.
The leader in the market has an advantage as it is able to set its output level first and the follower must then respond to the leader's action.
Consumers benefit from this competition as the firms will have lower prices due to the lower output levels. In contrast, in a Stackelberg oligopoly, the leader sets its output level first, giving it an advantage over the follower. The follower then responds to the leader's action.
This results in a higher level of output and prices compared to the Cournot oligopoly, which benefits firms but not consumers.
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Question 1
(a) About how many people are living in extreme poverty in the world? Which regions have the greatest percentages of people living in extreme poverty?
(b) Explain the difference between size and functional measures of income distribution.
(c) What is a Lorenz curve? Draw one, labelling the axes. Explain why a Lorenz curve can never lie to the left or above the 45 degree line. Using a Lorenz curve diagram, explain how to calculate the Gini coefficient.
(a) According to the World Bank, as of 2021, approximately 9.2% of the world's population, or about 703 million people, are living in extreme poverty, which is defined as living on less than $1.90 per day. Sub-Saharan Africa and South Asia have the highest percentages of people living in extreme poverty, with rates of 32.1% and 5.4% respectively.
(b) Size measures of income distribution focus on the actual dollar amounts earned by individuals or households, such as mean or median income. Functional measures, on the other hand, examine how income is distributed across different groups in society, such as the percentage of total income earned by the top 1% or the Gini coefficient.
(c) A Lorenz curve is a graphical representation of income distribution that compares the actual distribution of income to a perfectly equal distribution. The horizontal axis represents the cumulative percentage of the population, while the vertical axis represents the cumulative percentage of income. The Lorenz curve is always below the 45 degree line because if income were distributed equally, the poorest 10% of the population would receive 10% of total income, the poorest 20% would receive 20% of total income, and so on. The Gini coefficient can be calculated by dividing the area between the Lorenz curve and the 45 degree line by the total area below the 45 degree line. The resulting value ranges from 0 (perfect equality) to 1 (perfect inequality).
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