Question: 1.1. Consider Figure 2.1. Between
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 college.
1.3. Arrow up or down: An increase in the market interest rate __________ the economic cost of holding a $500 collectible for a year.
1.4. You just inherited a house with a market value of $200,000 and do not expect the market value to change. Each year, you will pay $1,800 for utilities and $1,000 in taxes. You can earn 4 percent interest on money in a bank account. Your cost of living in the house for a year is $__________.
1.5. What is the cost of a pair of warships purchased by Malaysia?
1.6. Conservationists have a new strategy for preserving rainforests: __________ loggers and other developers for the land, paying as little as $ __________ per hectare per year.
1.7. The Cost of a Toy Store Business. Tom left a job paying $50,000 per year to start his own toy store in a building he owns. The market value of the building is $300,000. He pays $60,000 per year for toys and other supplies, and has a bank account that pays 3 percent interest. The annual economic cost of Tom’s business is __________.
1.8. The opportunity cost of a Mission to Mars. The United States has plans to spend billions of dollars on a mission to Mars. List some of the possible opportunity costs of the mission. What resources will be used to execute the mission, and what do we sacrifice by using these resources in a mission to Mars?
1.9. Interest Rates and ATM Trips. Carlos, who lives in a country where interest rates are very high, goes to an ATM every day to get $10 of spending money. Art, who lives in a country with relatively low interest rates, goes to the ATM once a month to get $300 of spending money. Why does Carlos use the ATM more frequently?
1.10. Correct the Cost Statements. Consider the following statements about cost. For each incorrect statement, provide a correct statement about the relevant cost.
a. One year ago, I loaned a friend $100, and she just paid me back the whole $100. The loan didn’t cost me anything.
b. An oil refinery bought a million barrels of oil a month ago, when the price was only $75 per barrel, compared to $120 today. The cost of using a barrel of oil to produce gasoline is $75.
c. Our new football stadium was built on land donated to the university by a wealthy alum. The cost of the stadium equals the $50 million construction cost.
d. If a commuter rides a bus to work and the bus fare is $2, the cost of commuting by bus is $2.
1.11. Production Possibilities Curve. Consider a nation that produces baseball mitts and soccer balls. The following table shows the possible combinations of the two products.
a. Draw a production possibilities curve with mitts on the horizontal axis and balls on the vertical axis.
b. Suppose the technology for producing mitts improves, meaning that fewer resources are needed for each mitt. In contrast, the technology for producing soccer balls does not change. Draw a new production possibilities curve.
c. The opportunity cost of the first 2 million mitts is __________ million soccer balls and the opportunity cost of the last 2 million mitts is __________ million soccer balls.
1.12. Cost of Antique Furniture. Cost of Antique Furniture. Colleen owns antique furniture that she bought for $5,000 ten years ago. Your job is to compute Colleen’s cost of owning the furniture for the next year. To compute the cost, you need two bits of information: __________ and __________.
Transcribed Image Text:
700 650 300 120 10 20 60 70 Tons of wheat per year Tons of steel per year Baseball mitts (millions) 2 4 6| 8 Soccer balls (millions) 30 24 18 | 10
> Complete the following descriptions by filling in the blanks. 1. The controlling investor is called the ______, and the investee is called the ______. 2. A long-term investment classified as equity securities with controlling influence implies that the i
> Which of the following statements a through g are true of long-term investments? ______ a. They are held as an investment of cash available for current operations. ______ b. They can include funds earmarked for a special purpose, such as bond sinking fun
> 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
> 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
> 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. Shoul
> 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?
