Question: 2.1. A car rental company currently
2.1. A car rental company currently has seven cars in its fleet, and its total daily cost is $2,300. If the company added an 8th car, its daily cost would be $2,400, or $300 per car. Adding the 8th car will increase the daily total revenue by $200. Should the company add the 8th car? __________ (Yes/No) 2.2. In Figure 2.3, suppose the marginal cost of movies is constant at $125 million. Is it sensible to produce the third movie? __________ (Yes/No) Figure 2.3: 
2.3. Suppose that stricter emissions standards would reduce health-care costs by $50 million but increase the costs of fuel and emissions equipment by $30 million. Is it sensible to tighten the emissions standards? __________ (Yes/No) 2.4. Arrows up or down: The decision about how fast to sail a cargo ship is based on the __________ benefit and the __________ cost. 2.5. How Fast to Drive? Suppose Duke is driving to a nearby town to attend a dance party, and must decide how fast to drive. The marginal benefit of speed is the extra dance time he will get by driving faster, and the marginal cost is the additional risk of a collision. The marginal-benefit curve is negatively sloped, and the marginal-cost curve is positively sloped. a. Draw a pair of curves that suggest Duke will drive 40 mph. b. Suppose the normal country band is replaced by Adam Smith and the Invisible Hands, Duke’s favorite punk band. Duke’s utility from slam dancing is twice his utility from the two-step. Use your curves to show how Duke’s chosen speed will change. c. Suppose Duke’s favorite dance partner, Daisy, is grounded for makeup violations. Use your curves to show how Duke’s chosen speed will change. d. Suppose the legal speed limit is set at 35 mph, and there is a 50 percent chance that Duke will be caught if he speeds. Use your curves to show how Duke’s chosen speed will change. 2.6. Highlanders Go Marginal. Suppose that the owners of traditional horse-drawn carriages in the Tatra mountains of Poland observed that up to half the seats during evening rides through the Chochołowska Valley are empty. The average cost of an evening ride through the valley is 150 Polish zloty, a figure that includes fixed costs such as stable fees. A half-full evening ride generates only 200 Polish zloty of revenue. a. Use the marginal principle to explain why the owners of horse-drawn carriages continued evening rides through the valley. b. It will be sensible to run a half-empty evening ride if the marginal __________ of the ride is __________ than __________ Polish zloty. 2.7. Marginal Airlines. Marginal Airlines runs 10 flights per day at a total cost of $50,000, including $30,000 in fixed costs for airport fees and the reservation system and $20,000 for flight crews and food service. a. If an 11th flight would have 25 passengers, each paying $100, would it be sensible to run the flight? b. If the 11th flight would have only 15 passengers, would it be sensible to run the flight? 2.8. How Many Police Officers? In your city, each police officer has a budgetary cost of $40,000 per year. The property loss from each burglary is $4,000. The first officer hired will reduce crime by 40 burglaries, and each additional officer will reduce crime by half as much as the previous one. How many officers should the city hire? Illustrate with a graph with a marginal benefit curve and a marginal-cost curve. 2.9. How Many Hours at the Candy Stall? The opportunity cost of your time spent selling candy at your stall in a shopping mall is $15 per hour. Electricity costs $2 per hour, and the weekly rent is $300. You normally stay open 11 hours per day (the mall is open 24/7). a. What is the marginal cost of staying open for one more hour? b. If you expect to sell 4 kilograms of candy in the 12th hour, earning $7 per kilogram, is it sensible to stay open for the extra hour? 2.10. How Many Pints of Blackberries? The pleasure you get from each pint of freshly picked blackberries is $2.00. It takes you 12 minutes to pick the first pint, and each additional pint takes an additional 2 minutes (14 minutes for the second pint, 16 minutes for the third pint, and so on). The opportunity cost of your time is $0.10 per minute. a. How many pints of blackberries should you pick? Illustrate with a complete graph. b. How would your answer to (a) change if your pleasure decreased by $0.20 for each additional pint ($1.80 for the second, $1.60 for the third, and so on)? Illustrate with a complete graph.
Transcribed Image Text:
Marginal benefit $300 b 210 Marginal cost 175 2 3 Number of movies $in millions
> 1. Prepare the journal entry to record Tamasine Company’s issuance of 5,000 shares of $100 par value, 7% cumulative preferred stock for $102 cash per share. 2. Assuming the facts in part 1, if Tamasine declares a year-end cash dividend, what is the amoun
> The stockholders’ equity section of Jun Company’s balance sheet as of April 1 follows. On April 2, Jun declares and distributes a 10% stock dividend. The stock’s per share market value on April 2 is $
> Prepare the issuer’s journal entry for each of the following separate transactions. a. On March 1, Atlantic Co. issues 42,500 shares of $4 par value common stock for $297,500 cash. b. On April 1, OP Co. issues no-par value common stock for $70,000 cash.
> Prepare the journal entry to record Jevonte Company’s issuance of 36,000 shares of its common stock assuming the shares have a: a. $2 par value and sell for $18 cash per share. b. $2 stated value and sell for $18 cash per share.
> Locate “Note 11” that reports Apple’s segments from its September 28, 2013, annual report on its website (Apple.com). Identify its segments and list the net sales for each.
> Foxburo Company expects to pay a $2.34 per share cash dividend this year on its common stock. The current market value of Foxburo stock is $32.50 per share. Compute the expected dividend yield on the Foxburo stock. Would you classify the Foxburo stock as
> Answer the following questions related to a company’s activities for the current year: 1. A review of the notes payable files discovers that three years ago the company reported the entire amount of a payment (principal and interest) on an installment no
> On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $36,000 cash. On November 4, Zirbal reissued 850 shares of this treasury stock for $8,500. Prepare the May 3 and November 4 journal entries to record Zirbal’s purchase and reissuanc
> Howe and Duley’s company is organized as a partnership. At the prior year-end, partnership equity totaled $150,000 ($100,000 from Howe and $50,000 from Duley). For the current year, partnership net income is $24,990 ($20,040 allocated to Howe and $4,950
> The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $131,250; Brown, $165,000; and Snow, $153,750. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all
> Amy and Lester are partners in operating a store. Without consulting Amy, Lester enters into a contract to purchase merchandise for the store. Amy contends that she did not authorize the order and refuses to pay for it. The vendor sues the partners for t
> Merger Co. has 10 employees, each of whom earns $2,000 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $117,000 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% a
> On November 7, 2015, Mura Company borrows $160,000 cash by signing a 90-day, 8% note payable with a face value of $160,000. (1) Compute the accrued interest payable on December 31, 2015, (2) prepare the journal entry to record the accrued interest expe
> Dextra Computing sells merchandise for $6,000 cash on September 30 (cost of merchandise is $3,900). The sales tax law requires Dextra to collect 5% sales tax on every dollar of merchandise sold. Record the entry for the $6,000 sale and its applicable sal
> Garcia Co. owns equipment that cost $76,800, with accumulated depreciation of $40,800. Garcia sells the equipment for cash. Record the sale of the equipment assuming Garcia sells the equipment for (1) $47,000 cash, (2) $36,000 cash, and (3) $31,000 ca
> Refer to Samsung’s balance sheet in Appendix A. How does its cash (titled “Cash and cash equivalents”) compare with its other current assets (both in amount and percent) as of December 31, 2013? Compare and assess its cash at December 31, 2013, with its
> 1. Classify the following as either a revenue expenditure or a capital expenditure. ______ a. Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years. ______ b. Paid $200 cash per truck for the cost
> A fleet of refrigerated delivery trucks is acquired on January 5, 2015, at a cost of $830,000 with an estimated useful life of eight years and an estimated salvage value of $75,000. Compute the depreciation expense for the first three years using the dou
> Answer each of the following related to international accounting standards. a. Accounting for plant assets involves cost determination, depreciation, additional expenditures, and disposals. Is plant asset accounting broadly similar or dissimilar between
> Caleb Co. owns a machine that costs $42,400 with accumulated depreciation of $18,400. Caleb exchanges the machine for a newer model that has a market value of $52,000. (1) Record the exchange assuming Caleb paid $30,000 cash and the exchange has commerc
> On August 2, 2015, Jun Co. receives a $6,000, 90-day, 12% note from customer Ryan Albany as payment on his $6,000 account. (1) Compute the maturity date for this note. (2) Prepare Jun’s journal entry for August 2.
> Warner Company’s year-end unadjusted trial balance shows accounts receivable of $99,000, allowance for doubtful accounts of $600 (credit), and sales of $280,000. Uncollectibles are estimated to be 1.5% of accounts receivable. 1. Prepare the December 31 y
> Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an $800 account of a customer, C. Green. On March 9, it receives a $300 payment from Green. 1. Prepare the journal entry or entries for January 31. 2. Prepar
> Answer each of the following related to international accounting standards. a. Explain (in general terms) how the accounting for recognition of receivables is different between IFRS and U.S. GAAP. b. Explain (in general terms) how the accounting for valu
> The following data are taken from the comparative balance sheets of Ruggers Company. Compute and interpret its accounts receivable turnover for year 2015 (competitors average a turnover of 7.5). 2015 2014 Accounts receivable, net. $153,400 $138,500
> The following annual account balances are taken from Armour Sports at December 31. What is the change in the number of days’ sales uncollected between years 2014 and 2015? (Round the number of days to one decimal.) According to this a
> Credits to customer accounts and credits to Other Accounts are individually posted from a cash receipts journal such as the one in Exhibit 7.7. Why not put both types of credits in the same column and save journal space? Exhibit 7.7: Tasks Reports
> An entrepreneur commented that a bank reconciliation may not be necessary as she regularly reviews her online bank statement for any unusual items and errors. a. Describe how a bank reconciliation and an online review (or reading) of the bank statement a
> For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.
> 1. The petty cash fund of the Brooks Agency is established at $150. At the end of the current period, the fund contained $28 and had the following receipts: film rentals, $24; refreshments for meetings, $46 (both expenditures to be classified as Entertai
> Answer each of the following related to international accounting standards. a. Explain how the purposes and principles of internal controls are different between accounting systems reporting under IFRS versus U.S. GAAP. b. Cash presents special internal
> An important part of cash management is knowing when, and if, to take purchase discounts. a. Which accounting method uses a Discounts Lost account? b. What is the advantage of this method for management?
> Answer each of the following questions related to international accounting standards. a. Explain how the accounting for items and costs making up merchandise inventory is different between IFRS and U.S. GAAP. b. Can companies reporting under IFRS apply a
> Apple reports the following net sales by product segments. Compute the percentage of total sales for each of its six product segments. Comment on the relative contributions of each product segment. $ millions iPhone iPad Mac iPod iTunes Accessories
> Warton Company posts its sales invoices directly and then binds them into a sales journal. The company had the following credit sales to these customers during July. Required 1. Open an accounts receivable subsidiary ledger having a T-account for each
> In taking a physical inventory at the end of year 2015, Grant Company forgot to count certain units. Explain how this error affects the following: (a) 2015 cost of goods sold, (b) 2015 gross profit, (c) 2015 net income, (d) 2016 net income, (e) the c
> Following is information from Fredrickson Company for its initial month of business. (1) Identify the balances listed in the accounts receivable subsidiary ledger. (2) Identify the accounts receivable balance listed in the general ledger at monthâ
> Refer to the December 31, 2013, financial statements of Samsung in Appendix A. Does Samsung report its accounts receivable as a current or noncurrent asset? Does Samsung report its GOOGLE accounts receivable net of an allowance? Samsungâ€
> How do sellers benefit from allowing their customers to use credit cards?
> Suppose the price of an MP3 player decreases from $60 to $40. Using the midpoint approach, the percentage change in price is _________. Using the initial-value approach, the percentage change in price is _________.
> Compute the new values for the following changes: Initial Value Percentage Change New Value 100 12% 50 8 20 15
> Compute the percentage changes for the following: Initial Value New Value Percentage Change 10 12 100 92 40 45
> Suppose you have $120 to spend on CDs and movies. The price of a CD is $12, and the price of a movie is $6. a. Using Figure 1A.6 on page 51 as a model, prepare a table and draw a curve to show the relationship between the number of CDs (on the horizontal
> The following graph shows the relationship between the number of Frisbees produced and the cost of production. The vertical intercept is $_________, and the slope of the curve is $_________ per Frisbee. Point b shows that the cost of producing _________
> Suppose you belong to a tennis club that has a monthly fee of $100 and a charge of $5 per hour to play tennis. a. Using Figure 1A.4 as a model, prepare a table and draw a curve to show the relationship between the hours of tennis (on the horizontal axis)
> 5.1. Your savings account pays 4 percent per year: Each $100 in the bank grows to $104 over a 1 year period. If prices increase by 3 percent per year, by keeping $100 in the bank for a year you actually gain $__________. 5.2. You earn 4 percent interest
> 3.1. When two people involved in an exchange say “thank you” afterward, they are merely being polite. __________ (True/False) 3.2. Consider a transaction in which a consumer buys a toy for $20. The value of the toy to the buyer is at least $__________, a
> 1.1. Consider Figure 2.1. Between points c and d, the opportunity cost of __________ tons of wheat is __________ tons of steel. Figure 2.1: 1.2. Arrow up or down: An increase in the wage for high school graduates __________ the opportunity cost of col
> 4.1. Consider the example of Xena’s copy shop. Adding a second worker increased output by 300 pages. If she added a third worker, her output would increase by fewer than __________ pages. 4.2. If a firm is subject to diminishing margina
> You manage Gofer Delivery Service. You rent a truck for $50 per day, and each delivery takes an hour of labor time. The hourly wage is $8. a. Draw a curve showing the relationship between the number of deliveries (on the horizontal axis) and your total c
> A change in a variable measured on an axis of a graph causes movement _________ a curve, while a change in a relevant variable that is not measured on an axis _________ the entire curve.
> 1. The three basic economic questions a society must answer are _________ products do we produce? _________ do we produce the products? _________ consumes the products? 2. List the five factors of production. 3. Which of the following statements is true?
> 3.1. In 2015, less than 20 percent of the unemployed in the United States were unemployed for a period shorter than 5 weeks. _________ (True/False) 3.2. As most states in the United States replace the entire wages of individuals on unemployment insuranc
> 6.1. Inflation that is not expected is known as _________ inflation. 6.2. Shoe-leather costs typically increase with the rate of inflation. _________ (True/False) 6.3. Creditors lose from unanticipated inflation. _________ (True/False) 6.4. Hyperinflat
> 4.1. The value of a price index in the base year is equal to _________. 4.2. Economists believe that the CPI tends to overestimate the increase in the cost of living over time. _________. (True/False) 4.3. Unlike the CPI, the chain-weighted price index
> 5.1. If a price index is 40 in 1997 and 50 in 1998, the rate of inflation between the two years is _________. 5.2. Inflation in the United States was higher from 1990 to 2009 than it was from 1970 to 1980. _________ (True/ False) 5.3. Which of the foll
> 1.1. Which of the following is not included in the labor force? a. People who have full-time, but poorly paid jobs. b. Individuals who have sizable inheritances and do not want any jobs. c. People who work 15 hours a week. d. 17-year-olds who do not have
> 2.1. The three key types of unemployment are cyclical, structural, and _________. 2.2 The natural rate of unemployment consists solely of _________ and _________ unemployment. 2.3. When the economy is at full employment, there is no cyclical unemployme
> 2.1. When calculating GDP using the production method, which of the following would you not include? a. Consumption b. Investment c. Value added d. Government purchases e. Net exports 2.2. What part of government spending is excluded from GDP because it
> 3.1. What do we add to GDP to reach GNP? a. Net income earned abroad by U.S. households b. Personal income c. Depreciation d. Net exports 3.2. If no foreign companies produce in a country, but many of the country’s companies produce abroad, then it
> 1.1. The circular flow describes the process by which GDP generates __________, which is spent on goods and services. 1.2. Macroeconomics is the study of the __________ (national/international) economy taken as a whole. 1.3. Which government department p
> 6.1. Which of the following are not included in GDP? a. A mother taking care of children at home b. Professors teaching at a university c. Strawberries sold in a grocery store d. Economics textbooks sold in a bookstore 6.2. Men’s reported happiness has i
> 1. A road map incorporates two unrealistic assumptions: (1) _________ and (2) _________. 2. The four elements of the economic way of thinking are (1) use _________ to simplify the analysis, (2) explore the relationship between two variables by _________,
> 5.1. The date that a recession ends is called the __________. 5.2. The traditional definition of a recession is a decline in real GDP lasting for at least two consecutive quarters. __________ (True/False) 5.3. The __________ marks the date that a recessi
> 4.1. The GDP deflator is calculated for any given year by dividing nominal GDP by __________ GDP and multiplying by 100. 4.2. Nominal GDP is not an accurate measure of the real level of economic activity in a country because the GDP deflator constantly u
> 1. The supply curve depicts the relationship between the __________ and the __________. 2. From the following list, choose the variables that are held fixed when drawing a market supply curve: • The price of the product â€&ce
> 1. Arrow up or down: According to the law of demand, an increase in price __________ the quantity demanded. 2. From the following list, choose the variables that are held fixed in drawing a market demand curve: • The price of the produ
> 1. Fill in the blanks in the following table. Note that the ordering of the first column has been scrambled. 2. When (supply/demand) changes, the equilibrium price and the equilibrium quantity change in the same direction. When (supply/demand) changes,
> 1. The market equilibrium is shown by the intersection of the __________ curve and the __________ curve. 2. Excess demand occurs when the price is (less/greater) than the equilibrium price; excess supply occurs when the price is (less/greater) than the e
> 1. A change in demand causes a (movement along/ shift of) the demand curve. A change in quantity demanded causes a (movement along/shift of) the demand curve. 2. Circle the variables that change as we move along the demand curve for pencils and cross out
> 2.1. Four social inventions that support markets are (1) __________, which specify the terms of exchange; (2) __________, which reduce the risk of entrepreneurs; (3) __________, which increases the profitability of inventions; and (4) __________ rules, w
> 3.1. For markets to operate efficiently, the people making consumption and production decisions must bear the full __________ and reap the full __________ from their decisions. 3.2. Pollution from a paper mill is an example of market failure because peop
> 1.1. Consider an accounting firm with two accountants. a. Fill in the blanks in the following table. b. Quigley has a comparative advantage in __________, while Slokum has a comparative advantage in __________. 1.2. To explore the rationale for special
> 1. What is the economist’s solution to the problem of smog in cities? a. Ban the use of cars in cities. b. Require commuters to use bicycles at least twice a week. c. Tax the owners of vehicles that produce significant amounts of air pollution. d. No eco
> Administrative theorists concluded many decades ago that the most effective organizations have a narrow span of control. Yet today’s top-performing manufacturing firms have a wide span of control. Why is this possible? Under what circumstances, if any, s
> Think about the business school or other organizational unit whose classes you are currently attending. What is the dominant coordinating mechanism used to guide or control the instructor? Why is this coordinating mechanism used the most here?
> Valve Corporation’s organizational structure was described at the beginning of this chapter. What coordinating mechanism is likely most common in this organization? Describe the extent and form in which the other two types of coordination might be appare
> You hear two people debating the merits of women as leaders. One person claims that women make better leaders than do men because women are more sensitive to their employees’ needs and involve them in organizational decisions. The other person counters t
> How do you think emotional intelligence, cognitive, and practical intelligence influence authentic leadership?
> Find two newspaper ads for management or executive positions. What leadership competencies are mentioned in these ads? If you were on the selection panel, what methods would you use to identify these competencies in job applicants?
> Identify a current political leader (e.g., president, governor, mayor) and his or her recent accomplishments. Now, using the implicit leadership perspective, think of ways that these accomplishments of the leader may be overstated. In other words, explai
> Your employees are skilled and experienced customer service representatives who perform nonroutine tasks, such as solving unique customer problems or meeting special needs with the company’s equipment. Use path- goal theory to identify the most appropria
> Consider your favorite teacher. What people-oriented and task-oriented leadership behaviors did he or she use effectively? In general, do you think students prefer an instructor who is more people-oriented or task- oriented? Explain your preference.
> This chapter distinguished charismatic leadership from transformational leadership. Yet charisma is identified by most employees and managers as a characteristic of effective leaders. Why is charisma commonly related to leadership? In your opinion, are t
> I recently served on the Outstanding Faculty Award committee for the College of Business. This award is our college’s highest honor for a faculty member, which is bestowed at a special reception ceremony. At the first meeting, our committee discussed the
> Transformational leadership is the most popular perspective of leadership. However, it is far from perfect. Discuss the limitations of transformational leadership.
> Why is it important for top executives to value and support shared leadership?
> Laura is about to renegotiate her job role with her new manager. She has heard through the grapevine that he is a tough negotiator, highly competitive, and unwilling to take others’ needs into consideration. She has also heard that even if he gives conce
> You are a new program manager with responsibility for significant funding and external relations, and because of downsizing issues in your area, you have lost two valuable employees (actually 1.5, because the second person is on half time now; she used t
> Jane has just been appointed as purchasing manager of Tacoma Technologies, Inc. The previous purchasing manager, who recently retired, was known for his “winner-take-all” approach to suppliers. He continually fought for more discounts and was skeptical a
> Describe the inquisitional approach to resolving disputes between employees or work units. Discuss its appropriateness in organizational settings, including the suitability of its use with a multigenerational workforce.
> The chief operating officer (COO) has noticed that production employees in the company’s Mexican manufacturing operations are unhappy with some of the production engineering decisions made by engineers in the company’s headquarters in Chicago. At the sam
> You are a special assistant to the commander-in-chief of a peacekeeping mission to a war-torn part of the world. The unit consists of a few thousand peacekeeping troops from the United States, France, India, and four other countries. The troops will work
> Conflict among managers emerged soon after a French company acquired a Swedish firm. The Swedes perceived the French management as hierarchical and arrogant, whereas the French thought the Swedes were naive, cautious, and lacking an achievement orientati
> The chief executive officer of Creative Toys, Inc., read about cooperation in Japanese companies and vowed to bring this same philosophy to the company. The goal is to avoid all conflict, so that employees would work cooperatively and be happier at Creat
> Tamarack Industries manufactures motorboats primarily used for water skiing. Students are hired during summer months to fill in for permanent employees on vacation. In past years, students worked alongside permanent employees, but a few staff complained
> Distinguish task conflict from relationship conflict and explain how to apply the former, with minimal levels of the latter.
> This book frequently emphasizes that successful companies engage in organizational learning. How do political tactics interfere with organizational learning objectives?
> In the mid-1990s, the CEO of Apple Computer invited the late Steve Jobs (who was not associated with the company at the time) to serve as a special adviser and raise morale among Apple employees and customers. While doing so, Jobs spent more time advisin
> Consider a situation in which there is a only one female member on a team of six people, and she is generally excluded from informal gatherings of the team. What kind of influence tactics can she use to address this situation?
