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Economics of Enterprise
What is the rationale behind a tradable emissions allowance scheme?
a. to create a market for externalities: the scheme brings together buyers and sellers of
marketable permits
b. to raise revenue for the government through the sale of emission permits and at the
same time set an emissions target
c. to provide firms with the incentive to consider less costly alternatives to pollution
reduction by making firms pay for the right to pollute beyond their specified allowance
d. to discipline polluting firms by specifying the maximum amount of emissions allowed
and giving them permits to pollute up to their allowance
a. to create a market for externalities: the scheme brings together buyers and sellers of
marketable permits
b. to raise revenue for the government through the sale of emission permits and at the
same time set an emissions target
c. to provide firms with the incentive to consider less costly alternatives to pollution
reduction by making firms pay for the right to pollute beyond their specified allowance
d. to discipline polluting firms by specifying the maximum amount of emissions allowed
and giving them permits to pollute up to their allowance
Economics of Enterprise
Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment requirements are
$1,000,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10.
b) Assuming all other factors remain unchanged, determine how the firm’s breakeven point is affected by each of the following:
i) The firm finds it necessary to reduce the price per unit because of increased foreign competition
ii) The firm’s direct labor costs are increased as a result of a new labor contract
iii) The Occupational Safety and Health Administration (OSHA) requires the firm to install new ventilating equipment in its plant. (assume that this action has no effect on worker productivity)
$1,000,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10.
b) Assuming all other factors remain unchanged, determine how the firm’s breakeven point is affected by each of the following:
i) The firm finds it necessary to reduce the price per unit because of increased foreign competition
ii) The firm’s direct labor costs are increased as a result of a new labor contract
iii) The Occupational Safety and Health Administration (OSHA) requires the firm to install new ventilating equipment in its plant. (assume that this action has no effect on worker productivity)
Economics of Enterprise
4. The following information are available in respect of companies M and N
Company M Company N
` `
Equity share capital (`10 each) 20,00,000 10,00,000
14% Debentures 5,00,000 15,00,000
EBIT 5,00,000 5,00,000
Return on capital employed 20% 20%
Tax rate 40% 40%
From the above information, calculate:
a) Financial leverage
b) Rate of return on equity share capital
c) Earnings per share
Also state which company's shareholders are in a better position financially?
Company M Company N
` `
Equity share capital (`10 each) 20,00,000 10,00,000
14% Debentures 5,00,000 15,00,000
EBIT 5,00,000 5,00,000
Return on capital employed 20% 20%
Tax rate 40% 40%
From the above information, calculate:
a) Financial leverage
b) Rate of return on equity share capital
c) Earnings per share
Also state which company's shareholders are in a better position financially?
Economics of Enterprise
3. The following information are related to Sun Ltd.
Paid-up equity capital ` 10,00,000
Earnings of the company ` 1,00,000
Dividend paid ` 80,000
Price - Earning ratio (PIE) ` 20
No. of equity shares ` 1,00,000
Find out whether the dividend payout of Sun Ltd., is optimal. [Use Walter's model].
Paid-up equity capital ` 10,00,000
Earnings of the company ` 1,00,000
Dividend paid ` 80,000
Price - Earning ratio (PIE) ` 20
No. of equity shares ` 1,00,000
Find out whether the dividend payout of Sun Ltd., is optimal. [Use Walter's model].
Economics of Enterprise
what might happen in an economy if a government increases income tax rates.
Economics of Enterprise
Many firms employ salespeople who are assigned exclusive territories. No salesperson may enter another’s territory and attempt to sell the manufacturer’s product there. Construct a theory to explain why firms adopt this practice. Does your theory suggest what kinds of products will be sold in this way and what kinds will not be?
Economics of Enterprise
Many firms employ salespeople who are assigned exclusive territories. No salesperson may enter another’s territory and attempt to sell the manufacturer’s product there. Construct a theory to explain why firms adopt this practice. Does your theory suggest what kinds of products will be sold in this way and what kinds will not be? thanks
Economics of Enterprise
What factor determine the intensity of rivalry in any industry? is the intensity of rivalry in the movie rental industry high or low? Why?
Net Flix movie rental business
Net Flix movie rental business
Economics of Enterprise
TEST QUESTION!
Economics of Enterprise
A store selling clothing and shoes has monthly revenue of $100,000 from clothing and $50,000 from shoes. Own price elasticity of demand for clothes is -2 and cross price elasticity of demand between clothes and shoes is -0.5. if the store increases the price of clothes by 5%, what will be the change in revenue?
