Economics, Accounting & Business: Post your doubts here!

[husnain99]

Need explanation for this Mcq :

 

[azaanahsan]

But u did tel me about debentures :O lol

because its in accounting as well

 

[Sana Adnan]

hi can anyone help me with NOV04 P4 Q3.b

Analyse what effects an increase in investment might have on an economy? (13)

For this particular question you can discuss three major effects of investment for 4 marks each. or 4 points for 3 marks each.

1. Start by explaining investment and discuss domestic and foreign investment.
2. Discuss effects of investment as an injection and how it effects Aggregate Demand and Economic growth and how it can create inflation.
3. You can discuss investment in relation to inflationary and deflationary gaps using the Keynsian 45 degree graph.
4. You can discuss effects of investment on employment and Balance of Payments and the impact investments can have a greater impact on the economy under the accelerator principle.

For further help about dealing with similar essay questions please refer to my Paper Tips and Answer Guide on the links below.

Good Luck!!

Paper Tips: https://sanaadnan.wordpress.com/guides-and-other-resouces/scoring-high-in-an-economics-exam/
General Answer Guide: https://sanaadnan.files.wordpress.com/2014/10/answer-guide.pdf

 

[Ram97]

Help please
http://maxpapers.com/syllabus-mater...hment/9706_may-june-2011_all-question-papers/
June 2011 P 22
Q.1 part b

 

[Maher K]

Hey guys. I need help. I don't have notes for business studies and I don't know what to do. If I start making notes it will take too long and waste time. How do you guys think I should prepare for it? I'm giving composites. If any of you have notes, could you share them?

 

[lxelle]

Sana Adnan Hi Could you please help me with this?
The government imposes a specific tax equal to $0.20 per unit on the output of a monopoly producer.
what will be the effect on the price charged by the monopoly and on the quantity it produces?
The answer is:
Price: Increases by less than $0.20
Quantity: decreases

why cant the quantity be unchanged? isnt monopoly can only control price or output and not both?

 

[Sana Adnan]

Hey guys. I need help. I don't have notes for business studies and I don't know what to do. If I start making notes it will take too long and waste time. How do you guys think I should prepare for it? I'm giving composites. If any of you have notes, could you share them?

Hi. You should not waste time on making notes. That will waste time. Just read the book thoroughly and solve past papers. IGCSE students can use the quick revision guide on this link https://sanaadnan.wordpress.com/business-studies-2/igcse-study-guide/

 

[Sana Adnan]

Sana Adnan Hi Could you please help me with this?
The government imposes a specific tax equal to $0.20 per unit on the output of a monopoly producer.
what will be the effect on the price charged by the monopoly and on the quantity it produces?
The answer is:
Price: Increases by less than $0.20
Quantity: decreases

why cant the quantity be unchanged? isnt monopoly can only control price or output and not both?

Hi,
See you can get this concept of you will sketch a curve for monopoly showing effect of MC, MR and AR. I am attaching a rough sketch (sorry its untidy but hope this will help). The profit maximizing monopolist was originally producing an output of Q1 (MC=MR) and was charging a price at P1. When the government imposes an output tax of $0.20, it causes the MC curve to shift upwards to MC1. Now the producer will produce at MC1 = MR therefore the new output to be Qn (shown by arrow). This will automatically effect the price as it will move from P1 to P2 though by a very small proportion (shown by the shaded triangle). So the monopolist is only moving his output to a new quantity but it causes an auto effect on the price. Please see the attached curve.

 

[Sana Adnan]

Sana Adnan Hi Could you please help me with this?
The government imposes a specific tax equal to $0.20 per unit on the output of a monopoly producer.
what will be the effect on the price charged by the monopoly and on the quantity it produces?
The answer is:
Price: Increases by less than $0.20
Quantity: decreases

why cant the quantity be unchanged? isnt monopoly can only control price or output and not both?

lxelle
Hi,
See you can get this concept of you will sketch a curve for monopoly showing effect of MC, MR and AR. I am attaching a rough sketch (sorry its untidy but hope this will help). The profit maximizing monopolist was originally producing an output of Q1 (MC=MR) and was charging a price at P1. When the government imposes an output tax of $0.20, it causes the MC curve to shift upwards to MC1. Now the producer will produce at MC1 = MR therefore the new output to be Qn (shown by arrow). This will automatically effect the price as it will move from P1 to P2 though by a very small proportion (shown by the shaded triangle). So the monopolist is only moving his output to a new quantity but it causes an auto effect on the price. Please see the attached curve.

 

[lxelle]

Hi,
See you can get this concept of you will sketch a curve for monopoly showing effect of MC, MR and AR. I am attaching a rough sketch (sorry its untidy but hope this will help). The profit maximizing monopolist was originally producing an output of Q1 (MC=MR) and was charging a price at P1. When the government imposes an output tax of $0.20, it causes the MC curve to shift upwards to MC1. Now the producer will produce at MC1 = MR therefore the new output to be Qn (shown by arrow). This will automatically effect the price as it will move from P1 to P2 though by a very small proportion (shown by the shaded triangle). So the monopolist is only moving his output to a new quantity but it causes an auto effect on the price. Please see the attached curve.

Oh so your'e saying it's an automatic effect? Ohh. What about "can only control price or quantity only and not both"? How does this work?

 

[Sana Adnan]

Oh so your'e saying it's an automatic effect? Ohh. What about "can only control price or quantity only and not both"? How does this work?

Look carefully at the curve. When the government imposed tax, the producer didnt do anything to the price. He just moved his output to a new profit maximizing position (which occured due to a shift in MC). This means that the producer controlled the output. Automatically the corresponding price level also moved to a new position.

 

[Sana Adnan]

Oh so your'e saying it's an automatic effect? Ohh. What about "can only control price or quantity only and not both"? How does this work?

lxelle
A monopoly producer "can ONLY control either price OR output but NOT both. This is because the producer's decision is constrained by the demand curve. If the producer decides what quantity to supply, then the consumer will decide the price at which they want to buy the quantity. Likewise, if the producer decides what price to charge, the consumers will decide what quantity to buy at that price level. In either case any of the variable (price or quantity) that the producer decides to control will have an automatic corresponding effect on the other variable due to constraints of the demand curve.

 

[Sana Adnan]

Hello guys. I'm doing A2 business privately. Would really like some good links where i could find online notes. I shall be very thankfull
Regards

SaifKhan01
Hi
Please check out this link. Resources are uploaded here from time to time.
https://sanaadnan.wordpress.com/

 

[lxelle]

lxelle
A monopoly producer "can ONLY control either price OR output but NOT both. This is because the producer's decision is constrained by the demand curve. If the producer decides what quantity to supply, then the consumer will decide the price at which they want to buy the quantity. Likewise, if the producer decides what price to charge, the consumers will decide what quantity to buy at that price level. In either case any of the variable (price or quantity) that the producer decides to control will have an automatic corresponding effect on the other variable due to constraints of the demand curve.

I don't understand the kinked demand curve of oligopoly. Could you please explain? I know that it's for price stability, MC=MR, but other market structure also mc=mr there why isn't it kinked then?

 

[azaanahsan]

Help please
http://maxpapers.com/syllabus-mater...hment/9706_may-june-2011_all-question-papers/
June 2011 P 22
Q.1 part b

In part b we have to find goods destroyed by fire. just follow these steps to understand concept.

- Closing Inventory of 20600 is given in question, this is actual closing inventory which we have after goods lost by fire. Now we will find full closing inventory in which goods destroyed by fire will also be included and then we will take difference b/w actual and full closing inventory to find how much is destroyed by fire.

- Now to find full closing inventory we can use normal formula for COGS:

Opening inventory + Purchases - Closing Inventory = Cost of Good Sold

If we have to find Closing inventory Formula will become:

Opening Inventory + Purchases - Cost Of Good Sold = Closing Inventory (Simply shifting Closing inventory and Cost of Good Sold - Grade 6 maths ) ----- (1)

Now we have Opening inventory = 33000 & Purchases we found from part a = 95600, So we only have to find of cost of good Sold.

Now to find Cost of Good sold we have to divide sales in to different components because some of them are sold on margin 33.33%, some of them sold on cost ( Clearance Sale) and some of them are sold on cost plus 25% (Sales to Staff). We have to find Cost of all these sales as we are finding cost of Good sold.
So now how to find cost:
its v simple
lets first take Sales to Staff which is 10750 (given in question) & they told us that sales to staff is cost plus 25%, So If cost is 100 then sale should be (100 + 25 = 125)

So Cost : Sale
100 : 125
x : 10750

Cross multiplication ( again grade 6 maths )

x * 125 = 10750 * 100

x = 10750 * 100 / 125 = 8600 ( so this is cost of good sold to staff)

Now Clearance sale is already on cost so no need to convert = 29700 (Cost of clearance sale)

Now Normal sale, total credit sale from part a is 128900...

128900 - 9200 (sale return) - 29700 (clearance sale already mentioned above) = 90,000 ( so we have to find cost of these normal sales )

We know that normal sales are sold at sales margin of 33.33 so this mean ( Now Sale is 100 and cost will be 100 - 33.33 = 66.67 )

So Cost : Sale
66.67 : 100
x : 90,000

Cross multiplication

x * 100 = 90,000 * 66.667

x = 90,000 * 66.667 / 100 = 60,000 (So this is cost of normal sales)

Now Add cost of good sold which u found above 8600 + 29700 + 60000 = 98300

Put them in formula (1)

Opening Inventor + Purchases - Cost Of Good Sold = Closing Inventor

33000 (given) + 95600 (given) - 98300 (Found above) = 30300

Wow u got closing Inventory 30300 but actually it is 20600 (Given in question)

So my friend inventory lost by fire is 30300 - 20600 = 9700 ( u got 11 marks )

Please feel free to ask any question but do remember I didn't subtracted cash sales 10750 from 128900 because it is cash sale and 128900 is credit sale

& also remember when u are given cost plus something this mean cost will be 100 and sale 100 + x

& If it says that sale margin then sales will be 100 and cost will be 100 - x

Hope it helps

 

[Sana Adnan]

I don't understand the kinked demand curve of oligopoly. Could you please explain? I know that it's for price stability, MC=MR, but other market structure also mc=mr there why isn't it kinked then?

lxelle
Oligopoly is a very different kind of a market structure compared to the other. In Oligopoly there are very few producers each having a degree of their own influence over the price they want to charge. Also, due to difference in each of there market shares, each of them lie at a different point on the demand curve (remember, elasticities vary along the demand curve). An oligopolist would usually be tempted to enter a price war if its cost of production are lower than its competitors. However, whenever an oligopolist decides to cut down its prices to increase its revenue, it can trigger a response action from competitors that will decide the ultimate impact on the market. This can be explained by the kinked demand curve (Please see attached JPEG).
Suppose a firm X has a relatively higher PED below the existing price level in the market. Therefore this firm X gets tempted to cut down its prices so that it can increase revenues. This particular firm X believes that since it has a high elasticity, cutting down prices would increase its quantity demanded and therefore it can get larger market share. However, any attempt of price reduction from this firm is likely to trigger a response from the competitors and that will decide the ultimate outcome. If the competing firm also cuts off the price, then firm X will only be able to increase its quantity sold by a little proportion. In fact, firm X can even be worse off than what it was selling before the price cut.
Likewise, if the firm X chooses to raise its price and the competitors do not copy that price increase, then firm X can lose its existing quantity sold to its low-priced competitors. This makes pricing decisions tricky for Oligopoly markets and MC=MR theory does not apply in essence here. This can be better explained with the help of 'Game Theory.'
In such situations firms are better off competing through non-price competition such as agressive marketing, product innovation, brand image etc.

 

[lxelle]

lxelle
Oligopoly is a very different kind of a market structure compared to the other. In Oligopoly there are very few producers each having a degree of their own influence over the price they want to charge. Also, due to difference in each of there market shares, each of them lie at a different point on the demand curve (remember, elasticities vary along the demand curve). An oligopolist would usually be tempted to enter a price war if its cost of production are lower than its competitors. However, whenever an oligopolist decides to cut down its prices to increase its revenue, it can trigger a response action from competitors that will decide the ultimate impact on the market. This can be explained by the kinked demand curve (Please see attached JPEG)
Suppose a firm X has a relatively higher PED below the existing price level in the market. Therefore this firm X gets tempted to cut down its prices so that it can increase revenues. This particular firm X believes that since it has a high elasticity, cutting down prices would increase its quantity demanded and therefore it can get larger market share. However, any attempt of price reduction from this firm is likely to trigger a response from the competitors and that will decide the ultimate outcome. If the competing firm also cuts off the price, then firm X will only be able to increase its quantity sold by a little proportion. In fact, firm X can even be worse off than what it was selling before the price cut.
Likewise, if the firm X chooses to raise its price and the competitors do not copy that price increase, then firm X can lose its existing quantity sold to its low-priced competitors. This makes pricing decisions tricky for Oligopoly markets and MC=MR theory does not apply in essence here. This can be better explained with the help of 'Game Theory.'
In such situations firms are better off competing through non-price competition such as agressive marketing, product innovation, brand image etc.

Great! Thanks a bunch!

 

[Ram97]

In part b we have to find goods destroyed by fire. just follow these steps to understand concept.

- Closing Inventory of 20600 is given in question, this is actual closing inventory which we have after goods lost by fire. Now we will find full closing inventory in which goods destroyed by fire will also be included and then we will take difference b/w actual and full closing inventory to find how much is destroyed by fire.

- Now to find full closing inventory we can use normal formula for COGS:

Opening inventory + Purchases - Closing Inventory = Cost of Good Sold

If we have to find Closing inventory Formula will become:

Opening Inventory + Purchases - Cost Of Good Sold = Closing Inventory (Simply shifting Closing inventory and Cost of Good Sold - Grade 6 maths ) ----- (1)

Now we have Opening inventory = 33000 & Purchases we found from part a = 95600, So we only have to find of cost of good Sold.

Now to find Cost of Good sold we have to divide sales in to different components because some of them are sold on margin 33.33%, some of them sold on cost ( Clearance Sale) and some of them are sold on cost plus 25% (Sales to Staff). We have to find Cost of all these sales as we are finding cost of Good sold.
So now how to find cost:
its v simple
lets first take Sales to Staff which is 10750 (given in question) & they told us that sales to staff is cost plus 25%, So If cost is 100 then sale should be (100 + 25 = 125)

So Cost : Sale
100 : 125
x : 10750

Cross multiplication ( again grade 6 maths )

x * 125 = 10750 * 100

x = 10750 * 100 / 125 = 8600 ( so this is cost of good sold to staff)

Now Clearance sale is already on cost so no need to convert = 29700 (Cost of clearance sale)

Now Normal sale, total credit sale from part a is 128900...

128900 - 9200 (sale return) - 29700 (clearance sale already mentioned above) = 90,000 ( so we have to find cost of these normal sales )

We know that normal sales are sold at sales margin of 33.33 so this mean ( Now Sale is 100 and cost will be 100 - 33.33 = 66.67 )

So Cost : Sale
66.67 : 100
x : 90,000

Cross multiplication

x * 100 = 90,000 * 66.667

x = 90,000 * 66.667 / 100 = 60,000 (So this is cost of normal sales)

Now Add cost of good sold which u found above 8600 + 29700 + 60000 = 98300

Put them in formula (1)

Opening Inventor + Purchases - Cost Of Good Sold = Closing Inventor

33000 (given) + 95600 (given) - 98300 (Found above) = 30300

Wow u got closing Inventory 30300 but actually it is 20600 (Given in question)

So my friend inventory lost by fire is 30300 - 20600 = 9700 ( u got 11 marks )

Please feel free to ask any question but do remember I didn't subtracted cash sales 10750 from 128900 because it is cash sale and 128900 is credit sale

& also remember when u are given cost plus something this mean cost will be 100 and sale 100 + x

& If it says that sale margin then sales will be 100 and cost will be 100 - x

Hope it helps

Thanks a bunch!
I added up all the sales and then calculated it

 

[azaanahsan]

Thanks a bunch!
I added up all the sales and then calculated it

U r warmly welcome Bro.

 

[asadalam]

Why is the ans B?Wouldnt an increase in interest rate only increase demand,hence shifting that?why shift the supply curve?

Is it because the interest increase would give incentive to save for domestic people too and hence they would also not import much,and that will reduce supply?Am i right in this?