one of the major predictions of the rothschild-stiglitz model is a positive correlation between risk and insurance coverage. this has never been observed in practice due to the confounding influence of moral hazard.

Answers

Answer 1

One of the major predictions of the Rothschild-Stiglitz model is a positive correlation between risk and insurance coverage. However, this has never been observed in practice due to the confounding influence of moral hazard.

What is the Rothschild-Stiglitz model?

The Rothschild-Stiglitz model is a statistical theory that aims to predict individual behavior and insurance plan behavior. The model was proposed by Michael Rothschild and Joseph Stiglitz in 1976 and describes the connection between an individual's chance of a loss and their insurance coverage's depth and price.

What is moral hazard?

Moral hazard is a situation in which an individual has an incentive to conduct or pursue riskier behavior because the cost of doing so will be borne by others.

In insurance, moral hazard occurs when the insured person has a high-risk activity that they want to undertake, but they are protected by an insurance policy that will cover the cost if anything goes wrong.

The major predictions of the Rothschild-Stiglitz model are:

High-risk people are more likely to purchase full coverage, and low-risk people are more likely to purchase low coverage.There is a positive correlation between risk and the amount of insurance coverage.Higher-risk activities have a higher insurance rate due to greater expected losses.In practice, the positive correlation between risk and insurance coverage has never been observed due to the confounding effect of moral hazard.

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Related Questions

the units in ending wip inventory were 75% complete for materials and 50% complete for conversion costs. what are the total equivalent units for direct materials?

Answers

The equivalent units for materials that should be used to allocate costs is 110,875 units.

To calculate the equivalent units for materials using the weighted average method, you need to consider the units in the beginning work-in-progress (WIP), units started during the month, and units in the ending WIP.

Beginning WIP inventory: 15,500 units (75% complete for materials)

Units started during the month: 90,000 units

Units finished during the month: 87,000 units

Ending WIP inventory: 18,500 units (50% complete for materials)

To calculate the equivalent units, we'll consider the following steps:

Calculate the equivalent units for the beginning WIP inventory:

Beginning WIP units * Percentage complete = Equivalent units for beginning WIP

15,500 units * 75% = 11,625 equivalent units for beginning WIP

Calculate the equivalent units for the units started during the month:

Units started during the month * Percentage complete = Equivalent units for units started

90,000 units * 100% = 90,000 equivalent units for units started

Calculate the equivalent units for the ending WIP inventory:

Ending WIP units * Percentage complete = Equivalent units for ending WIP

18,500 units * 50% = 9,250 equivalent units for ending WIP

Sum up the equivalent units calculated in steps 1, 2, and 3:

Equivalent units for beginning WIP + Equivalent units for units started + Equivalent units for ending WIP

11,625 + 90,000 + 9,250 = 110,875 equivalent units for materials

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The following question may be like this:

Beginning WIP inventory is 15,500 units, 75% complete for materials. During the month, 90,000 units were started; 87,000 were finished; and ending WIP was 18,500 units that were 50% complete for materials.

How many equivalent units should be used to allocate costs for materials? (Assume that the weighted average method is used, not FIFO.)

Last month, Tech Industries sold its product for $50 per unit. Fixed production costs were $25,000, and variable production costs amounted to $10.50 per unit. Fixed selling and administrative costs totaled $15,000, and variable selling and administrative costs amount to $2.00 per unit. Tech Industries produced and sold 5,000 units last month.

Answers

Answer:

Operating profit = $147,500

Explanation:

Missing question is "What is the total operating profit?

Operating profit = Sale unit(Selling price - Variable Cost) - Fixed expenses

Operating profit = 5,000 * ($50 - $10.50 - $2.00) - $25,000 - $15,000

Operating profit = 5,000*$37.5 - $40,000

Operating profit = $187,500 - $40,000

Operating profit = $147,500

4. Now that you've had this experience, do you feel compelled to follow this person on Twitter? Why
or why not?

Answers

Answer:

No.

Explanation:

I know nothing about this person.

Question 5 of 10
The total yearly cost of a loan is called the
A Rule of 72
B. annual fee
C. compound interest rate
D. annual percentage rate
answer: d apr

Answers

Annual percentage rate !

Do firms really calculate marginal cost and marginal revenue to find the profit-maximizing output? If you examine the accounting records of most small businesses, you will be hard pressed to find explicit calculations of marginal cost and marginal revenue. So, why do economists develop rather elaborate, formal models of profit maximization when no one seems to do what we say they do?

Answers

It is a true statement that firms calculate their marginal cost and marginal revenue to find the profit-maximizing output.

What is marginal cost?

A Marginal cost refers to the change in total cost when output is increased by one unit.

What is marginal revenue?

A Marginal revenue refers to the change in total revenue when output is increased by one unit.

In conclusion, generally, a total profit is maximized where marginal revenue equals marginal cost, thus, they need to be calculated to realize that.

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which of the following are true about countries with a low power distance? (choose every correct answer.)

Answers

Low power distance countries exhibit egalitarianism, participatory decision-making, open communication, reduced emphasis on hierarchy, and flatter organizational structures. The correct answers are a, c, e and f.

Countries with a low power distance typically exhibit the following characteristics

Equalitarianism: Low power distance cultures emphasize equality and minimize social and hierarchical gaps between individuals. There is a tendency to promote a more egalitarian society where power and decision-making are distributed more evenly.

Participatory Decision-Making: In societies with low power distance, decision-making processes are often more participatory and inclusive. Power and authority are shared among individuals, and there is a greater emphasis on teamwork and collaboration.

Open Communication: There is a greater emphasis on open and direct communication in low power distance cultures. Individuals feel more comfortable expressing their opinions and challenging authority figures, fostering a more transparent and democratic environment.

Less Emphasis on Status and Hierarchy: Low power distance societies tend to place less importance on status and social hierarchy. People are generally more willing to interact with individuals from different social backgrounds and may have a more casual approach to authority figures.

Flatter Organizational Structures: Organizations in low power distance cultures often have flatter hierarchies, with fewer layers of management. Decision-making authority is distributed more widely, and there is a greater focus on empowering employees and fostering a collaborative work environment.  The correct options are a, c, e and f.

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--The given question is incomplete, the complete question is given below "which of the following are true about countries with a low power distance?

a, Equalitarianism

b, Authoritarianism

c,  Open Communication

d, Limited Communication

e,  Participatory Decision-Making

f, Flatter Organizational Structures "--

Jose's Pizza Parlor, Inc., recently acquired controlling interest in Mariana's Pizza Parlor, Inc. This acquisition is called:
(A) Monopoly.
(B) Vertical merger.
(C) Conglomerate merger.
(D) Horizontal merger.

Answers

(D) Horizontal merge


Question :Which statement best describes displacement? Check all that apply


Answer:2 , 3 5

Answers

Answer:

2

Explanation:

thats my guess

When constructing the production budget, the desired ending inventory for the first period is
A the beginning inventory for the second period.
B often expressed as a percentage of the first period's sales.
C generally more than the beginning inventory for the first period.
D not a factor in the production budget.

Answers

B often expressed as a percentage of the first period's sales.

When constructing the production budget, the desired ending inventory for the first period is often expressed as a percentage of the first period's sales. This helps determine the level of inventory that the company wishes to maintain at the end of the period.

The desired ending inventory serves as a buffer to meet customer demand and account for any production or supply chain uncertainties. It ensures that there is sufficient inventory available to fulfill customer orders and avoid stockouts.

Option A is incorrect because the desired ending inventory for the first period is not necessarily the same as the beginning inventory for the second period. The desired ending inventory can be higher or lower than the beginning inventory for the next period, depending on factors such as sales forecasts and production plans.

Option C is incorrect because the desired ending inventory for the first period can be equal to, less than, or greater than the beginning inventory for the first period. It depends on factors such as sales forecasts, desired stock levels, and production plans.

Option D is incorrect because the desired ending inventory is indeed a factor in the production budget. It helps determine the amount of production needed to meet the desired ending inventory level and fulfill customer demand.

When constructing the production budget, the desired ending inventory for the first period is often expressed as a percentage of the first period's sales. This approach helps align inventory levels with expected demand and ensures sufficient stock availability for customer orders.

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answers for question 11!!!!

answers for question 11!!!!

Answers

Answer:

C!!

Explanation:

Two Major Types of Markets • Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them. Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others.

which of the following is not an operating activity? group of answer choices cash collections from credit customers cash payments for operating expenses cash receipts for interest earned cash payments for dividends to stockholders

Answers

Cash payments for dividends to stockholders are not an operating activity. Operating activities refer to the day-to-day business operations that generate revenue and expenses.

Examples of operating activities include cash collections from credit customers, cash payments for operating expenses, and cash receipts for interest earned.

Dividends to stockholders, on the other hand, are not considered operating activities because they are a distribution of profits to investors.

Dividends are typically paid out of the company's retained earnings and are not directly related to the company's day-to-day operations. Instead, they are a way to reward shareholders for investing in the company.

While dividends are an important consideration for investors, they do not directly affect the company's ability to generate revenue or control expenses.

Therefore, they are classified as a financing activity in the cash flow statement, which tracks how cash moves in and out of the company.

In summary, cash payments for dividends to stockholders are not an operating activity, but a financing activity, because they represent a distribution of profits to investors and are not directly related to the company's day-to-day business operations.

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Question 10 of 20
Which is an example of a professional interview?
A. Janelle has an interview with the director of a foundation that
offers college scholarships.
B. Marci interviews a city council member about placing new stop
signs in her neighborhood.
C. Pavi interviews the school athletics director about an uptick in
sports injuries.
D. Tasha interviews her grandfather about growing up in a different
country.

Answers

Answer: B. Marci interviews a city council member about placing new stop signs in her neighborhood.

Explanation:

The pipe located underneath Jiro’s kitchen sink was leaking and he did not know how to fix it. He called a plumber who agreed to come fix the leaking pipe in exchange for $125 plus the cost of any parts. The plumber went to Jiro’s home, removed the old pipe that was leaking, and replaced it with a new pipe that the plumber brought with her. When the plumber was finished, she told Jiro that the total cost was $140 and Jiro promptly paid her. Was this a voluntary exchange? Why or why not?

A
Yes, because both parties willingly entered the exchange and benefited from it.

B
Yes, because one party exchanged money with another party for a good or service.

C
No, because Jiro was not aware of the final cost before he agreed to the exchange.

D
No, because the plumber’s service was not equal in value to the money paid by Jiro.

Answers

Answer:

A

Explanation:

It’s not b

The given statement clearly states that it was a voluntary exchange because both parties willingly entered the exchange and benefited from it.  Hence, Option A is correct.

What is a voluntary exchange?

Buyers and sellers engaging in market exchanges voluntarily and freely is known as voluntary exchange. A basic tenet of both classical and neoclassical economics, which serve as the foundation for modern mainstream economics, is voluntary exchange.

A transaction when two persons freely exchange products or services is referred to as a voluntary exchange. This happens in a market economy, a form of economy where both parties to an interaction benefit from it and come out ahead than they did before.

Given that both parties  entered the voluntary exchange and benefited from it, it is apparent that the transaction was voluntary.

Therefore, Option A is correct.

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What would be the total cost of software F
over time?
$[?]
$6,000
Software E
Software F
$10,000
Satisfaction 75%.$0
Not Satisfied
Satisfaction,
Not Satisfied
25% $12,500
90%-$0
10% $5,000
Enter

Answers

The total cost of software F over time is - $3000.

The total cost of software E over time is $1,900.

Data and calculations:

Software cost F = 10,000

Satisfaction rate with F software = 75%

Cost of satisfaction level = 0

Dissatisfaction level cost = 12,500

Percentage of unsatisfied = 25%

The total cost of F software over time is - $3000 {($10,000 x $75% - $0) + ($10,000 x $25% - $12,500)}.

Software cost X = 6,000

Satisfaction rate with software X=90%

Cost of satisfaction level = 0

Dissatisfaction level cost = 5,000

Percentage of unsatisfied = 10%

The total cost of E software over time is $1,900 {($6,000 x 90% - $0) + ($6,000 x 10% - $5,000)

What is total cost?

Total cost refers to the amount of economic cost of production and consists of variable cost, which varies depending on the quantity of a good produced with inputs such as labor and raw materials, plus fixed cost, which is independent of the quantity of a good produced plus inputs that cannot be varied in the short term such as buildings and machinery, together with possibly sunk costs.

Therefore, the correct answer is as given above.

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What were the four primary criminal justice officials in early England that were adopted in American and still exist (or existed until recently)

Answers

The four primary criminal justice officials in early England that were adopted in America and still exist are constable, justice of the peace, sheriff, and coroner.

They were instrumental in maintaining law and order and upholding the justice system. The primary role of constables in early England was to maintain law and order in their local communities. They were the chief law enforcement officers in their towns or parishes and were tasked with keeping peace and preventing crime. Constables were responsible for apprehending wrongdoers and bringing them before a magistrate for trial.

The role of a justice of the peace in early England was to oversee criminal cases in their local areas. They had the power to arrest and try individuals accused of criminal activity. Justices of the peace were also responsible for administering oaths, taking affidavits, and performing other legal duties.

The role of a sheriff in early England was to act as the chief law enforcement officer in their county. They were responsible for apprehending criminals and ensuring that they were brought to justice. Sheriffs were also responsible for collecting taxes, maintaining the county jail, and serving as an officer of the court.

The role of a coroner in early England was to investigate suspicious deaths. They were responsible for determining the cause of death and whether or not foul play was involved. Coroners were also tasked with ensuring that property was properly accounted for and that the deceased's assets were distributed according to their wishes.

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When a company is looking for growth opportunities, which of these steps should it take first?

a. Consider whether it could gain more market share with its current products in their current markets using a marketpenetration strategy
b. Consider considers whether it can find or develop new markets for its current products using a market-development strategy
c. Consider whether it can develop new products for its current markets with a product-development strategy
d. Consider whether it should develop new products for new markets through a diversification strategy Consider whether it should strengthen its brands by consolidating diverse product lines

Answers

When a company is looking for growth opportunities, which of these steps should it take first b. Consider considers whether it can find or develop new markets for its current products using a market-development strategy.

market development strategy is a increase strategy put in area with the aid of groups or companies to introduce their product or technique to target audiences they've no longer yet reached or aren't yet currently serving.

for example, permit’s say your software corporation has a brand new product offering available.

so one can come up with a marketplace improvement method, you need to research who the brand new product would paintings great for, and the quality manner to goal them — that, in a nutshell, could be your marketplace development method. There are numerous factors to don't forget when figuring out in case your organization is ready to broaden a new marketplace development approach to your product.

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If a company pays an energy consultant just for a set period to complete a
job, the consultant is not actually a permanent employee.
True
False

Answers

This is true
........

Activity-based costing eliminates the need for overhead allocation rates. True False

Answers

Activity-based costing eliminates the need for overhead allocation rates. This statement is false.

What is the purpose of activity-based costing?

ABC is a technique for allocating overhead and indirect costs, such salaries and utilities, to goods and services. The ABC system of cost accounting is built around activities, which are defined as any occasion, project, or task with a clear objective.

According to ABC, costs are produced by resource-consuming activities, not by outcomes. All cost accumulation methods, including task order and process costing, are compatible with ABC.

Activity-based costing offers a more precise way to calculate the costs of goods and services, which results in more precise price decisions. By making expensive and non-value-adding operations more visible, it improves understanding of overheads and cost drivers and enables managers to decrease or eliminate them.

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Because you cannot make both marketing and production happy with your decision about the new toy design, you have to engage in when making the decision.

Answers

I have to engage in suboptimization to make the decision, in order to make both marketing and production happy with the decision about the new toy design.

The marketing department works closely with the assembly department to confirm that: adequate research and development is planned to satisfy current and future customer needs. The item is manufactured to the standard and style desired by the patron.

Marketing is vital to manufacturing because marketing's job is to market the manufactured product. While manufacturing's job is to make the merchandise, marketing's primary responsibility is to realize a customer, and keep a customer. The link between marketing and production could be a dual one.

On one hand, production capabilities determine the quantity and sort of products which might be marketed, and, on the other hand, a more accurate prediction of sales forecast for every product and merchandise line is important for efficient production operations.

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how can the law of demand be represented

Answers

The demand curve, a graph that illustrates the law of demand, has the amount desired on the x-axis and the price on the y-axis. The law of demand states that demand curves are by definition downward sloping. A demand curve is a graphical representation of the demand schedule.

It demonstrates the relationship between an item's price and the quantity of that commodity that a consumer is willing to buy. The relationship between price and quantity desired for a single consumer is represented by the individual demand curve. The link between price and quantity desired by each market consumer is represented by the market demand curve.

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Many nations restrict hedging of their currencies due to their national and international policies and interests.

Answers

Answer: False

Explanation:

Currency hedging is defined as plan to reduce the influence of foreign exchange on international investment. Many nation's partake in hedging of their currency in order to protect or reduce foreign exchange effect on their currency. They do these by either foreign currency option, forward contracts or spot contracts. It is a safe measure that should be applied by countries for their currency.

Part A Include an equals approach in each the CreditCard and DebitCard lessons to examine gadgets.
Part B - Wallet magnificence Write a category referred to as Wallet to save statistics approximately the present day country of a pockets. A pockets has special cubicles for the greenback payments, free alternate, credit score / debit playing cards and ID playing cards.
Data Members have to include: • Amount of coins - preserve song of fee of greenback payments and fee of alternate separately. • Array of ChargeCards – it may include each CreditCards and DebitCards. • Array of ID playing cards – this will be definitely an array of Strings. It’s as much as you the way to save this statistics.
Methods have to include: • at the least constructors • accessor, mutator methods • TotalCashOnHand - overall fee of greenback payments and alternate • TotalCanSpend - consists of each coins and quantity that may be spent on credit score / debit playing cards. • a technique that tells you what number of ID Cards are withinside the pockets • a technique that tells you what number of credit score / debit playing cards are withinside the pockets • a technique that helps you to upload a credit score / debit card to the set • a technique to append an ID card to the set • toString approach - have to delegate to CreditCard magnificence to print statistics approximately every credit score card and DebitCard magnificence to print statistics approximately every debit card.
Remember to preserve the layout paradigms of records hiding and encapsulation in thoughts as a whole lot as feasible. Delegate responsibilities to the factor lessons (of ChargeCard, DebitCard, CreditCard) every time you can.
Perform enter validation as appropriate.
Part C - Menu Driven Program Write a menu-pushed application that lets in the person to have interaction with a unmarried Wallet object.
1. Print all statistics approximately Wallet. [This should call the toString method of the Wallet class.]
2. Add a Credit Card. [Prompt the user for information about the Credit Card]
3. Add a Debit Card. [Prompt the user for information about the Debit Card.]
4. Add an ID Card. [Prompt the user for information about the ID card.]
5. Add Cash. [Prompt the user for the value of additional coins or dollar bills.]
6. Make a purchase. [Should ask for purchase amount. Then let the user choose whether to pay with cash or charge card. If cash, make sure there is sufficient cash in the wallet to cover the purchase, and then deduct accordingly. If charge card, there should be a submenu in which the user chooses a card from the list to use. Then the system should check that the card can be used for that purchase, i.e., that there are sufficient funds available on that card, and actually process the purchase on the selected ChargeCard.]
Part D Use an ArrayList to save the units of ChargeCards and ID playing cards withinside the Wallet. Incorporate those adjustments to your menu-pushed application in order that the person can save an infinite wide variety of playing cards withinside the Wallet.
Part E The debit and credit score playing cards have to put into effect the Comparable interface. This manner the listing of playing cards may be looked after earlier than they're exhibited to the person. You can use the Collections.type approach to type an ArrayList.
It is as much as you to determine how the gadgets have to be compared. The fields that appear significant for ordering gadgets are ID wide variety and present day balance. It is as much as you to determine whether or not the interface have to be applied withinside the ChargeCard magnificence or in every of the subclasses.
Extra credit score: 1. Add extra capability in your primary application in order that the person can get rid of an ID card or debit / credit score card from the Wallet. Let the person choose the cardboard he would really like to get rid of. This is feasible given that they're saved in ArrayLists and an ArrayList can develop and reduce as necessary.
2. Design a GiftCard magnificence that still extends ChargeCard and combine it withinside the Wallet magnificence. Gift playing cards come preloaded with a selected sum of money and the person can by no means spend greater than that predetermined quantity.

Answers

The task requires implementing classes and methods related to a wallet, including storing information about cash, credit/debit cards, and ID cards.

To complete the task, you need to implement several classes, including Wallet, Credit Card, Debit Card, and ID Card. The Wallet class will have data members such as the amount of cash, arrays of Charge Cards and ID cards, and methods for calculating total cash on hand, total spendable amount, and adding cards. The menu-driven program will allow users to interact with a Wallet object by selecting various options. The program should display wallet information, add credit/debit cards, add ID cards, add cash, and make purchases. Additional functionality, such as removing cards and implementing a Gift Card class, can be implemented for extra credit.

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How does M&S keep existing customers happy?​

Answers

Answer:

Im not sure

Explanation:

competition in the context of capitalism means that the marketplace

Answers

Competition in the context of capitalism means that the marketplace has rivalry among sellers in the market who strive to offer better products, services, and prices to attract customers.

In a capitalist system, businesses and individuals are motivated to compete by the desire for profit, which drives innovation, efficiency, and productivity. This competition can lead to economic growth, as businesses seek to create better products at lower costs, and consumers are provided with a variety of options to choose from. Competition also creates incentives for businesses to improve their customer service, marketing, and other aspects of their operations to attract and retain customers.

However, competition can also have negative effects, such as the possibility of monopolies emerging in which a single company controls a large share of the market, potentially leading to higher prices and lower quality for consumers. Therefore, government regulation and antitrust laws are in place to prevent unfair business practices and ensure that competition remains fair and open.

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Complete Question : Competition in the context of capitalism means that the marketplace has?

PLEASE HELP!!!!!!!!!!!!!!

Type the correct answer in the box. Spell all words correctly.
Alisha appears to be overconfident which makes her unapproachable to her employees. Which negative quality is she displaying?

Alisha is displaying the negative quality of___.

Answers

As Alisha appears to be overconfident which makes her unapproachable to her employees, the negative quality that she is displaying is known as arrogance.

What is an arrogance?

It refers to the personality trait whereby a person has an obnoxiously elevated sense of self-worth. An arrogant individual is one who acts as if they are more superior, worthy, and important than others. So, they tend to disrespect and put others down.

While an arrogance can make someone feel strong and be a coping strategy for low self-esteem initially, the long term arrogance is harmful as it can contributes to loneliness, depression, lack of direction and success. It can also impact the physical health if its pushes you to take unnecessary risks. It is possible to change arrogant ways of thinking, when we feel stuck or have noticed arrogant tendencies, then, the mindfulness, gratitude and focusing on curtailing these thoughts can help.

Therefore, as Alisha appears to be overconfident which makes her unapproachable to her employees, the negative quality that she is displaying is known as arrogance.

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2. The first draft of the project charter is as follows:
Project Manager
Project Sponsor
Start Date
Project Mission
PROJECT CHARTER
Annual Clothing Drive
Talar Adams
Activities Committee
April 21
Deliver clothes to local shelters
a. Does this charter contain enough information for Talar to get started? Why or why
not?

2. The first draft of the project charter is as follows:Project ManagerProject SponsorStart DateProject

Answers

Answer:

The charter provides some basic information about the project, such as the project manager, sponsor, start date, and mission. However, it does not provide enough details about the project's scope, objectives, budget, timeline, stakeholders, and risks. Talar needs more information to understand the project's requirements, constraints, and expectations. She also needs to define the project's deliverables, milestones, and success criteria. Without a clear and comprehensive project charter, Talar may face difficulties in planning, executing, and controlling the project, as well as communicating with stakeholders and managing their expectations. Therefore, Talar should revise the project charter to include all the necessary information and obtain approval from the project sponsor before proceeding with the project.

Earley Corporation issued perpetual preferred stock with a 8% annual dividend. The stock currently yields 10%, and its par value is $100. What is the stock's value? Round your answer to two decimal places. $_____

Answers

The value of Earley Corporation's perpetual preferred stock can be calculated using the formula: Value = Annual Dividend / Required Rate of Return. Therefore, the value of Earley Corporation's perpetual preferred stock is $80.

In this case, the annual dividend is 8% of the par value of $100, which equals $8. The required rate of return is the current yield of 10%.

So, Value = $8 / 0.10 = $80.

Therefore, the value of Earley Corporation's perpetual preferred stock is $80.

It's important to note that the value of a stock can fluctuate based on changes in market conditions and the company's performance. The current yield and required rate of return can also change over time, affecting the stock's value.

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what life? and how are you

Answers

Answer:

life is evrthing on earth that is living or requires certain things to live and If you want a lie im awsome.

List three market practices that the govemment

regulates or bans to protect competition

Answers

Three market practices that the government regulates or bans to protect competition are Price fixing, Monopolies and Predatory Pricing.

Price fixing: As price fixing techniques are anticompetitive and detrimental to consumers, the government regulates them. Price fixing may result in increased costs, decreased output, and inefficient markets. The government may levy penalties or even bring legal action against the businesses and people involved in this conduct.

Monopolies: To stop them from exploiting their dominant market position, the government may regulate or even dismantle monopolies. Monopolies can result in increased costs, less innovation, and less consumer choice. Governments may limit mergers and acquisitions or control the actions of powerful companies.

Predatory Pricing: When a business sets prices below what it actually costs to produce a good or service, it is engaging in predatory pricing, which the government may outlaw. In the long term, higher prices may result from this technique since the dominant firm can increase prices after driving out its rivals, which hurts competition. The government may fine or prosecute businesses that engage in this conduct.

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Leopardstown Fitness Centre in Dublin is considering the purchase of some new training equipment which has a retail price of €8,600. The club has only €600 available to fund the purchase at this time. Following discussions with its local bank, as well as a sales representative from the suppliers, the centre is faced with the following possibilities.

Rental: Pay a monthly rental of €140 for five years, plus an annual maintenance payment of €150.

Hire purchase: Pay a deposit of €600, plus 60 monthly instalments of €150.
A final payment of €480 must then be paid.


Bank loan: Borrow the amount needed for five years on which interest is charged at a flat rate of 7% per annum.

Calculate the total cost of each option over a five-year period.​

Answers

Answer:

The cost of each option is as below

Explanation:

Option A: Rental

monthly rental for five years: each month €140

Each year has a maintenance fee of €150.

The total of the rental will be monthly rent plus yearly charges.

One year has 12 months; five years will have = 12 x 5 = 60 months

For 60 months, rental payments will total 60 x €140= €8,400

Yearly charges = €140 x 5 = €700

Total for rental = €700 + €8,400

Total cost for rental = €99, 1100

Option B: Hire purchase

Total for hire purchase will be the deposit plus the total of monthly installments plus the final payment.

The deposit is €600

Total for monthly installments: 60 x €160= €9,600

the final payment is €480

Total for hire purchase= €600 + €9,600, + €480

Total cost for hire purchase=€10,680

Option Bank loan:

cost of the loan will be the principal amount plus the interest charged. Interest is 7% per year for five years. Principal amount is

€8,600

Interest = P x r x t,, since interest on a flat rate

=8600 x 7/100 x 5

=8600 x 0.07 x 5

=€3,010

The cost of the loan is €3,010+€8,600

=€11,610

Other Questions
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