Answer: 150,460 currency units
Explanation:
The costs that are included in inventory include:
Cost of raw materials Transportation in costs Tax duties Trade discountsInventory cost is:
= Cost of raw materials + Transport in costs + Tax duties - Trade discounts
= 150,000 + 640 + 340 - 520
= 150,460 currency units
Dake Corporation's relevant range of activity is 2,200 units to 5,000 units. When it produces and sells 3,600 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.85 Direct labor $ 2.80 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 3.00 Fixed selling expense $ 0.90 Fixed administrative expense $ 0.60 Sales commissions $ 0.70 Variable administrative expense $ 0.60 If 2,600 units are produced, the total amount of direct manufacturing cost incurred is closest to: rev: 12_18_2020_QC_CS-244896 Multiple Choice $28,990 $36,790 $25,090 $30,810
Answer: $25,090
Explanation:
Direct manufacturing costs are the direct material and direct labor costs tha were incurred to produce the goods in question.
Direct manufacturing costs = (Direct materials per unit + Direct labor per unit) * number of units produced
= (6.85 + 2.80) * 2,600
= 9.65 * 2,600
= $25,090
acc 430 Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm B
Answer: See explanation
Explanation:
a. Even though firm B received a cash of $522, only $22 which is the interest will be taxable as the $500 which is the principal isn't taxable.
b. Even though Firm B got $600 cash, there'll be no taxable income as the receipt brought about a liability. Hence, taxable income is 0.
c. Even though Firm B got $10000 cash, there'll be no taxable income as the receipt brought about a liability and the net worth wasn't increased. Hence, taxable income is 0.
d. The taxable income here will be $888.
Samir is a self-employed marketing consultant. He had no income from January through March 2020. His April through December 2020 income subject to SE tax is $55,000.
Samir's SE tax for 2020 is $7,771 [$55,000 x 0.9235 x 0.153 = $7,771]. Samir may reduce his estimated tax payments by how much? Hint: USE Form Schedule SE to help you find the answer.
Answer:
$3,886
Explanation:
Since SELF EMPLOYMENT TAX is 15.3% of your wages which is why the Internal Revenue Service (IRS) make it possible for you to deduct your employer equal portion of your self employment taxes that the employer pays during the year which is 7.65% Calculated as (15.3%/2) which therefore means that Samir may reduce his ESTIMATED TAX PAYMENTS by $3,886 [$55,000 x 0.9235 x 0.0765 = $3,886] while the remaining 7.65%( 15.3% -7.65%) are not deductible because they correspond to employee taxes.
Therefore he may reduce his ESTIMATED TAX PAYMENTS by $3,886.
Please describe an effective leadership style
Business leaders can improve employee engagement and satisfaction, stimulate creativity and productivity, and ultimately accomplish the aims and objectives of the organization by using a transformational leadership style.
What is transformational leadership style?A leadership style known as transformational leadership focuses on inspiring and encouraging followers to produce amazing achievements that go above and beyond what they had anticipated. By establishing a vision and uniting people around it, it is a leadership strategy that aims to transform both people and organizations. The skill of inspiring and motivating others to accomplish at their highest level and realize their full potential is a trait of transformational leaders.
Transformational leaders are able to express their compelling future vision in a way that inspires and motivates others. They are endowed with charisma and the capacity to enthrall and sway their audience.
Setting high standards and pushing their followers to go beyond their own boundaries are two ways that transformational leaders inspire and encourage their followers.
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The complete question is:
Please describe an effective leadership style in a business
A portfolio manager believes interest rates will drop and decides to sell short-duration bonds and buy long-duration bonds. This is an example of _____________ swap.
a. a pure yield pickup
b. a substitution
c. a rate anticipation
d. an intermarket spread
Answer:
C) a rate anticipation
Explanation:
A rate anticipation swap can be regarded as a bond trading strategy that is used whereby there is exchange of exchanges of bond portfolio by trader in anticipation of expected interest rate movements.
Rate anticipation swap can be regarded as trading strategy involving
bonds swapping on the basis of varying maturity dates. this bond swapping are done according to their present period as well as their movement rate prediction.
To determine whether the goal of stable prices is being achieved, the Federal Reserve monitors the ________; to determine whether the goal of maximum employment is being achieved, the Federal Reserve monitors ________.
Answer:
Core PCE deflator inflation rate;
the Output gap
Explanation:
Goals of Monetary Policy
There are several goals of monetary policy. They includes maximum employment, stable prices, and moderate long-term interest rates. Usually in the long run, the above goals works in harmony and empower each other, but in the short run, they might be in conflict. The main goal of this policy is price stability as it is the source of maximum employment and moderate long-term interest rates.
The Fed has two possible instruments:they includes;
1. Monetary base
2. Federal funds rate
Output Gap
When this gap is positive, an inflationary gap, the inflation rate increases drastically or accelerate. This will make the Fed to consider raising the federal funds rate. It is said that If the output gap is negative, a recessionary gap, inflation might ease. Thereby making the Fed to consider lowering the federal funds
The Stables Prices Goal
The Fed do put close attention to the CPI removing fuel and food which is the core CPI. The rate of increase in the core CPI is simply termed core inflation rate. The Fed do believes that the core inflation rate provides a better measure of the underlying inflation patterns and a better prediction of future CPI inflation.
firm has 2,000,000 shares of common stock outstanding with a market price of $2 per share. It has 2,000 bonds outstanding, each selling for $1,200. The bonds mature in 25 years, have a coupon rate of 10%, and pay coupons annually. The firm's beta is 1.5, the risk-free rate is 5%, and the market risk premium is 7%. The tax rate is 34%. Calculate the WACC.
Answer:
A Firm
The firm's WACC is:
= 12.16%
Explanation:
a) Data and Calculations:
Common Bonds
Stock
Outstanding shares/bonds 2,000,000 2,000
Market price per unit $2 $1,200
Total market value $4,000,000 $2,400,000
Total value of debt and equity = $6,400,000
Weight 62.5% 37.5% ($2,400/$6,400*100)
Cost of bonds (coupon rate) = 10%
Tax rate = 34%
Firm's beta = 1.5
Risk-free rate = 5%
Market risk premium = 7%
After-tax cost of bonds = 6.6% (1 - 0.34) * 10%
Cost of common stock =
Risk Free Rate + Beta x (Market Return - Risk Free Rate)
= 5% + 1.5 x (7%)
= 5% + 10.5%
= 15.5%
WACC = 15.5% * 62.5% + 6.6% * 37.5%
= 0.096875 + 0.02475
= 0.1216
= 12.16%
In order to remain certified, I have to:
Submit a renewal form.
Complete a seller training course every 2 years.
Complete a 30 minute refresher course.
Do nothing, the certificate never expires.
In order to remain certified, you have to complete a seller training course every 2 years. Option B. This is further explained below.
What is the training course?Generally, the training course is simply defined as several types of training courses, and each one teaches a certain set oaf abilities.
In conclusion, Every two years, you must retake a seller training course to keep your certification current.
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Makers Corp. had additions to retained earnings for the year just ended of $553,000. The firm paid out $191,000 in cash dividends, and it has ending total equity of $4.96 million. The company currently has 240,000 shares of common stock outstanding. a. What are earnings per share
Answer:
$1.51
Explanation:
Calculation to determine the earnings per share
Using this formula
Earnings per share = (Retained Earnings + Dividend paid out) / Common stock outstanding
Let plug in the formula
Earnings per share= ($553,000+$191,000)/240,000
Earnings per share=$362,000/240,000
Earnings per share= $1.51
Therefore Earnings per share is $1.51
All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.
Depreciation $1,224 per month
Advertising $153 per month
Insurance $1,683 per month
Weed and feed materials $10 per lawn
Direct labor $8 per lawn
Fuel $2 per lawn
All That Blooms charges $50 per treatment for the average single-family lawn.
Determine the company
Answer and Explanation:
The computation is shown below:
Total fixed costs is
= depreciation + advertising + insurance
= 1224 + 153 + 1683
= $3060 per month
Now
Total variable cost per unit
= weed + direct labor + fuel
= 10 + 8 + 2
= $20/ per lawn
Now
Contribution margin ratio = (sales per unit - variable cost per unit) ÷ sales per unit
= ($50 - $20) ÷ 50
= 60%
Now
Breakeven sales is
= fixed costs ÷ contribution margin ratio
= $3,060 ÷ 60%
= $5100
And,
Breakeven sales units is
= breakeven sales ÷ sales per unit
= 5100 ÷ 50
= 102 lawns
Miller and Sons' static budget for 10,500 units of production includes $41,000 for direct materials, $50,300 for direct labor, variable utilities of $7,600, and supervisor salaries of $14,600. A flexible budget for 12,100 units of production would show Round your final answer to the nearest dollar. Do not round interim calculations. a.the same cost structure in total b.direct materials of $47,248, direct labor of $57,965, utilities of $8,758, and supervisor salaries of $14,600 c.direct materials of $47,248, direct labor of $57,965, utilities of $8,758, and supervisor salaries of $17,520 d.total variable costs of $113,500
Answer:
b.direct materials of $47,248
Direct labor=$57,965
Variable Utilities=8,758
Supervisor salaries $14,600
Explanation:
Computation of flexible budget
FLEXIBLE BUDGET
Direct materials
$41,000/10,500*12,100
Direct materials= $47,248
Direct labor=50,300/10500*12100
Direct labor=$57,965
Variable Utilities
=7600/10500*12100
Variable Utilities=8,758
Supervisor salaries $14,600 Fixed cost
How does unemployment impact a society
unemployment promotes poverty in the society
Explanation:
as people don't earn an income poverty is promoted which causes problems in economy
A date with Alex costs you $100 and gives you an additional 1000 units of utility. A date with Kelly costs you $200 and an additional 4,000 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would:
Answer:
Based only on the information you have, using the theory of rational choice, you most likely would:
O date Kelly.
Explanation:
a) Data and Calculations:
Cost of date with Alex = $100
Marginal utility with Alex = 1,000 units
Marginal utility cost with Alex per unit = $0.10 ($100/1,000)
Cost of date with Kelly = $200
Marginal utility with Kelly = 4,000 units
Marginal utility cost with Kelly per unit = $0.05 ($200/4,000)
b) The theory of rational choice states that individuals are more likely to make choices to satisfy their self-interests and provide them with the greatest benefit. This implies that people weigh their options and make decisions that serve them best.
Company XYZ is working on a marketing strategy for a new oral hygiene product and just discovered that XYZ's biggest competitor is launching a very similar product a month later. In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
a. True
b. False
Answer:
XYZ Company
In conducting a SWOT analysis, the launch of the competitor's product represents an opportunity.
b. False
Explanation:
The launch of the competitor's product represents a threat to XYZ Company. It reduces XYZ Company's market competitiveness and profitability. XYZ Company may even be driven out of the market by the competitor, thus leading to massive loss for the company. However, threats must be overcome and turned into opportunities for future product development.
A company is considering eliminating a department that has an annual contribution margin of $33,000 and $66,000 in annual fixed costs. Of the fixed costs, $16,500 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: Multiple Choice ($33,000) $33,000 ($16,500) $16,500
Answer:
($16,500)
Explanation:
Calculation to determine The annual financial advantage (disadvantage) for the company of eliminating this department would be
First step is calculate the Avoidable fixed costs
Avoidable fixed costs = $66,000 − $16,500
Avoidable fixed costs = $49,500
Now let determine Segment Margin
Contribution Margin $33,000
Less Avoidable fixed costs $49,500
Segment Margin ($16,500)
Therefore The annual (disadvantage) for the company of eliminating this department would be ($16,500)
K Company estimates that overhead costs for the next year will be $2,967,000 for indirect labor and $860,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 86,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 6 direct labor hours
Answer:
$267.00
Explanation:
First and foremost, it should be borne in mind that the overhead per direct labor hour is the total forecast overhead costs for next year divided by the planned direct labor hours, in essence, we simply determine plantwide overhead allocation rate, which is the basis for determining the amount of direct to be assigned to 6 direct labor hours
plantwide overhead allocation rate=(indirect labor overhead+factory utilities)/planned direct labor
indirect labor overhead cost=$2,967,000
factory utilities=$860,000
planned direct labor hours=86,000
plantwide overhead allocation rate=($2,967,000+$860,000)/86000
plantwide overhead allocation rate=$44.50
overhead allocation to a product requiring 6 direct labor hours=6*$44.50
overhead allocation to a product requiring 6 direct labor hours=$267.00
An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center's average operating assets were $800,000. How much is the return on investment
Answer: 25%
Explanation:
Contribution margin = $400,000
Fixed costs = $200,000
Sales = $2,000,000
Average operating assets = $800,000
The return on investment will be:
= (contribution margin - fixed cost) / average operating assets
= (400000 - 200000) / 800,000
= 200000 / 800000
= 25%
The return in investment is 25%.
The most common measure of inflation is a static called the _____
1. Nominal measurement
2. Consumer price index
3. Anual rate
4. US Bureau of Labor Statistic
Explanation:
The most common measure of inflation is a statistic called the Consumer Price Index (CPI).
Read the following request message, and then answer the question.
To: Customer Support
From: Helen Martin
Subject: Warranty Information for Netbook Computer
Dear Customer Service,
I need this information by noon tomorrow at the latest. My team has an important presentation to give, and my netbook crashed while we were working on the presentation. I can’t find the warranty information anywhere. So I have a few questions. Where is my warranty information? How long does it normally take to repair these machines? Do I have to mail the netbook to you, or can I bring it to your local repair shop? Will you please answer these questions in a timely manner? Thank you in advance for your help.
Regards,
Helen Martin
Revision A:
1. Where do I find my warranty information?
2. How long does the average netbook repair take?
3. Do I need to mail in my netbook for repairs or bring it to your local repair shop?
Revision B:
Where is my warranty information? How long does the average repair take? Do I have to mail in my netbook?
Revision C:
Where do I find the information?
How long does it take?
Can I take it to my local shop?
Which of the preceding revisions is the best revision for the body of this message?
A. Revision B
B. Revision C
C. Revision A
In addition to making requests, you will have to respond to requests in the business world.
Complete the following sentence with the dropdown menu.
Direct response messages might _______?
a. include long, flowery descriptions
b. use the "me" view
c. supply explanations and additional information
Answer:
?
Explanation:
Complete the following table:
Exhibit 15-1 Disposable income and consumption data Income (Y) Change in Disposable Income Consumption (C) 0 500 1,000 1,000 1,400 2,000 1,000 2,200 3,000 1,000 2,900 4,000 1,000 3,500 5,000 1,000 4,000 In Exhibit 15-1, when disposable income is increased from $2,000 to $3,000 to $4,000,
Answer: e. the marginal propensity to consume decreases from 0.7 to 0.6
Explanation:
Calculate the marginal propensity to consumer when the disposable income is increased from $2,000 to $3,000 to $4,000.
The Marginal propensity to consume is calculated by the formula:
= Change in consumption / Change in income
When disposable income increased from $2,000 to $3,000.
= (2,900 - 2,200) / (3,000 - 2,000)
= 0.7
When disposable income increased from $2,000 to $3,000.
= (3,500 - 2,900) / (4,000 - 3,000)
= 0.6
The marginal propensity to consume decreased from 0.7 to 0.6.
Warren Co. recorded a right-of-use asset of $820,000 in a 10-year finance lease. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after two years will be:
Answer:
$656,000
Explanation:
Calculation to determine what The balance in the right-of-use asset after two years will be
Using this formula
Right-of-use asset after 2 years balance=Value of Asset- (Value of Asset*Used year)/Estimated Life
Let plug in the formula
Right-of-use asset after 2 years balance= $820,000 - ($820,000 / 10) * 2
Right-of-use asset after 2 years balance=$820,000-$164,000
Right-of-use asset after 2 years balance= $656,000
Therefore The balance in the right-of-use asset after two years will be:$656,000
Bold Stapler Sales Company (BSS) began 2019 with cash of $80,000, inventory of $7,200 (400 staplers that cost $18 each), $2,000 of common stock, and $2,000 of retained earnings. The following events occurred during 2019.
1. BSS purchased additional inventory twice during 2019. The first purchase consisted of 1,600 staplers that cost $21 each, and the second consisted of 2,400 staplers that cost $25 each. The purchases were on account.
2. The company sold 4,220 staplers for cash at a selling price of $45 each.
Required: Determine the ending inventory and cost of goods sold using the three different cost flow assumptions: FIFO, LIFO, and Weighted Average.
Answer:
Bold Stapler Sales Company (BSS)
FIFO LIFO Weighted Average
Ending inventory $4,500 $3,240 $4,122
Cost of goods sold $96,300 $97,560 $96,678
Explanation:
a) Data and Calculations:
Beginning balances in 2019:
Cash $80,000
Inventory $7,200
Common stock $2,000
Retained earnings $2,000
Description Units Unit Cost Total
Beginning inventory 400 $18 $7,200
The first purchase 1,600 $21 33,600
The second purchase 2,400 $25 60,000
Goods available 4,400 $100,800
Sales of units (4,220) $45 $189,900
Ending inventory 180
FIFO:
Ending inventory = $4,500 ($25 * 180)
Cost of goods sold = $96,300 ($100,800 - $4,500)
LIFO:
Ending inventory = $3,240 ($18 * 180)
Cost of goods sold = $97,560 ($100,800 - $3,240)
Weighted Average:
Weighted average cost per unit = $22.91 ($100,800/4,400)
Ending inventory = $4,122 (22.91 * 180)
Cost of goods sold = $96,678 ($100,800 - $4,122)
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement. Sales revenue $ 340,000 Income tax expense $ 39,000 Interest expense 10,000 Cost of goods sold 129,000 Salaries expense 32,000 Advertising expense 24,000 Utilities expense 42,000 Prepare a multiple-step income statement.
Answer:
Beasley, Inc.
Beasley, Inc.
Income Statement
For the year ended December 31, 2021:
Sales revenue $ 340,000
Cost of goods sold 129,000
Gross profit $211,000
Operating Expenses:
Salaries expense 32,000
Advertising expense 24,000
Utilities expense 42,000
Total operating expenses $98,000
Operating income (EBIT) $113,000
Interest expense 10,000
Income before taxes $103,000
Income tax expense $ 39,000
Net income $64,000
Explanation:
a) Data and Calculations:
Beasley, Inc.
Income Statement
For the year ended December 31, 2021:
Sales revenue $ 340,000
Cost of goods sold 129,000
Salaries expense 32,000
Advertising expense 24,000
Utilities expense 42,000
Interest expense 10,000
Income tax expense $ 39,000
Sheridan Company purchased a delivery truck. The total cash payment was $43,718, including the following items. Negotiated purchase price $34,800 Installation of special shelving 2,880 Painting and lettering 930 Motor vehicle license 280 Two-year insurance policy 2,740 Sales tax 2,088 Total paid $43,718 Calculate the cost of the delivery truck.
Answer:
the cost of the delivery truck is $40,698
Explanation:
The computation of the cost of the delivery truck is given below:
Negotiated purchase price $34,800
Installation of special shelving $2,880
Painting and lettering $930
Sales tax $2,088
Cost of the delivery truck $40,698
Hence, the cost of the delivery truck is $40,698
The same should be considered and relevant
Calculate gross profit for the following situation: National Storage Company had sales of $1,000,000, sales discounts of $2,500, sales returns and allowances of $15,000, and a cost of goods sold of $525,000.
Answer:
$475,500
Explanation:
Sales is $1,000The discountscount is $2500
Sales return and allowances are $15,000
The cost of goods sold is $525,000
Therefore the gross profit can be calculated as follows
= 1,000,000-2,500-15,000-525,000
= 457,500
Hence the gross profit is $475,500
Consider the market for orange juice. Suppose two events occurred last week. During the course of this past week, the price of oranges (used in the production of orange juice) decreased. At the same time, the price of coke (a substitute for orange juice) doubled. What are the likely effects of these TWO events on the equilibrium quantity Q* and price P* of orange juice
Answer:
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
Explanation:
As a result of the decrease in the price of oranges which is use in the production of orange juice, there would be a rightward shift of the supply curve for orange juice. A a result, the supply of orange juice would increase and price of orange juice would fall
Substitute goods are goods that can be used in place of another good.
The doubling of the price of coke would lead to a decrease in the demand for coke and an increase in the demand for orange juice. This would shift the dead curve for orange juice to the right. As a result, both equilibrium price and quantity increases
these two events would lead to an increase in equilibrium quantity and have an indeterminate effect on equilibrium price
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 510 $ 2.38 Apr. 20 Purchase 370 2.63 Dunbar sold 650 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimal places and final answer to the nearest dollar amount.) Multiple Choice
Answer:
$572
Explanation:
The calculation of the ending inventory under weighted average cost is given below:
But before that the average cost per unit should be
= (510 × $2.38 + 370 × $2.63) ÷ (510 units + 370 units)
= ($1,213.80 + $973.10) ÷ (880 units)
= $2.4851
Now the ending inventory should be
= (510 + 370 - 650) × $2.4851
= $572
How is a monopolistically competitive market similar to a perfectly competitive market? A. Producers with market power set their own prices. B. Both have differentiated products with close substitutes. C. There are no restrictions on the entry of new firms. D. Both have homogeneous products with no close substitutes. Which of the following common features do monopolistically competitive markets and monopolies share? A. Barriers restrict new firms from entering. B. Consumers with market power set prices. C. Firms face downward-sloping demand curves. D. Producers with no market power set their own prices.
Answer:
c
c
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopolistic competition has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.
An example of monopolistic competition are restaurants
When firms are earning positive economic profit, in the long run, firms enter into the industry. This drives economic profit to zero
If firms are earning negative economic profit, in the long run, firms leave the industry. This drives economic profit to zero
in the long run, only normal profit is earned
A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.
An example of a monopoly is a utility company
MC Qu. 160 Webster Corporation's monthly... Webster Corporation's monthly projected general and administrative expenses include $4,300 administrative salaries, $1,700 of other cash administrative expenses, $2,200 of depreciation expense on the administrative equipment, and .5% monthly interest on an outstanding bank loan of $27,000. Compute the total general and administrative expenses to be reported on the general and administrative expense budget per month.
Answer:
the total general and admin expense is $8,200
Explanation:
The computation of the total general and admin expense is given below:
Administrative salaries $4,300
Other cash administrative expenses $1,700
Depreciation $2,200
General and administrative expenses budget $8,200
hence, the total general and admin expense is $8,200
We simply added the above 3 items so that the correct value could come
Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.
Statement Consumer Surplus Producer Surplus Neither
Even though I was willing to pay up to $83 for a watch, I bought a watch for only $75.
I sold a used textbook for $55, even though I was willing to go as low as $47 in order to sell it.
A local store was having a sale on sweaters, so I bought a jersey sweater for my brother.
Answer:
Consumer surplus
producer surplus
neither
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
The willingness to pay for the watch was $83 but the watch was bought for $75. There is a consumer surplus from the purchase
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
The least price the seller was willing to accept for the purchase was $47 but he was paid $55 for the textbook. This is a producer surplus
