Buchanan Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Buchanan will lose the case and that a reasonable estimate of damages to be paid by Buchanan is $300,000. In light of this case, Buchanan is considering establishing a $100,000 self-insurance allowance. What entry(ies), if any, should Buchanan record to recognize this loss contingency

Answers

Answer 1

Answer: Debit: Litigation expense $300,000

Credit: Litigation liability $300,000

Explanation:

Loss contingency is typically a charge to expense for a future occurence in this case, a lawsuit. A loss contingency simply makes the economic entity to be aware at an early stage of the loss and its likely financial implication.

The entries that Buchanan should record to recognize this loss contingency will be to:

Debit: Litigation expense $300,000

Credit: Litigation liability $300,000


Related Questions

A college education fund is to be accumulated by twenty level semi-annual deposits, the first due on Jan. 1, 2011. The fund is to provide sixteen quarterly withdrawals of $1000 each, the first due on Oct 1, 2020. The nominal annual rate of interest is 10% convertible semi-annually. What is the amount of each deposit?

Answers

Answer:

$395.74

Explanation:

the college fund requires 20 equal semiannual payments starting January 1, 2011 and the last one should be made on July 1, 2020.

first we must determine the effective rate of the fund:

effective rate = (1 + 10%/2)² - 1 = 10.25%

now we must determine the quarterly rate:

quarterly rate = (1 + r)¹/⁴ - 1 = 2.47%

the present value of the annuity:

PV = distribution x annuity factor

distribution = $1,000PV annuity factor, 2.47%, 16 periods = 13.08553

PV = $1,000 x 13.08553 = $13,085.53

that means that by July 1, 2020, you need to have $13,085.53 in your college fund

FV of an annuity = contribution x annuity factor

FV = $13,085.53FV annuity factor, 5%, 20 periods = 33.066

contribution = FV / annuity factor = $13,085.53 / 33.066 = $395.74

In a monopolistically competitive industry, price:______

a. is most likely a bit higher than the competitive market price because of the cost of variety.
b. will exceed the monopoly price due to the destructiveness of competitive forces.
c. will be lower than the competitive price due to cost savings.
d. is contingent on the behavior of other firms because they are mutually interdependent.

Answers

Answer:

a

Explanation:

In a monopolistically competitive industry, price is most likely a bit higher than the competitive market price because of the cost of variety.

In a monopolistically competitive market, firms tend to set their prices to be higher than those of the marginal cost. This invariably translates to the fact that market is never really able to be productively efficient.

Firms in monopolistically competitive markets tend to wield the same power, since they're all price makers, they have a low degree of market power.

pencer Co. has a $300 petty cash fund. At the end of the first month the accumulated receipts represent 553 for delivery expenses, $167 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $58. The journal entry to record the reimbursement of the account includes a:_________.a) Debit to Petty Cash for $300. b) Debit to Cash Over and Short for $58 c) Credit to Cash for $242 d) Credit to Inventory for $167e) Credit to Cash Over and Short for $58.

Answers

Answer:

c) Credit to Cash for $242

Explanation:

Petty cash, beginning = $300

Delivery expense = $53

Merchandise inventory = $167

Miscellaneous expense = $22

Petty cash, Ending = $58

The journal to record the reimbursement of the accounts will be:

Event    Account Title and Explanation   Debit    Credit

1           Delivery expense                            $53  

           Merchandise inventory                   $167  

           Miscellaneous expense                  $22

                    Cash                                                   $242

Which of the following describes the purpose of the Federal Deposit
Insurance Corporation (FDIC)?
O A. To manage the economy by controlling the money supply.
B. To set the required reserve ratio for banks in the United States.
C. To prevent the demand for withdrawals from rising above 10
percent
D. To make sure customers don't lose money if their bank fails.

Answers

Answer:

D. To make sure customers don't lose money if their bank fails.

Explanation:

The Federal Deposit Insurance Corporation, or simply the FDIC,  is an independent agency whose mandate ensures customers do not lose their deposits should a bank or any other financial institution fails. The FDIC insures customer deposits up to a stated limit per person, per bank, per each account category.  The insurance coverage is automatic to all account holders in an FDIC insured bank.

The Federal Deposit Insurance Corporation is financed by the insurance premiums paid by banks and other institutions. The FDIC’s scope covers checking accounts and savings such as money market accounts and certificates of deposit (CDs).

D is the answer!

source : ay p ex

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will:

Answers

Answer:

Appreciate more

Explanation:

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will appreciate more. This is because the shift in demand and supply will cause an increase in the value of the dollar. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Van Hookie, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from the date of issue. If the bonds were issued at a premium, this indicates that:________

a. the effective yield or market rate of interest exceeded the stated (nominal) rate.
b. the stated rate of interest exceeded the market rate.
c. the market and stated rates coincided.
d. no necessary relationship exists between the two rates

Answers

Answer:

c

Explanation:

In a single period system, the target ________ is the balancing point between shortage costs and excess costs.

Answers

Answer: service level

Explanation:

A single period inventory model typically occurs to the organizations that order one-time items. In this case, such organizations can only get the right quantity when they order once in order to prevent loss.

In a single period system, the target service level is the balancing point between shortage costs and excess costs.

Joan has the following assets and liabilities: Credit card balance $1,000 Cash $200 Government bonds $3,000 Checking $300 Car loan balance $10,000 Car $15,000 What is Joan's money demand?A) $200 B) $300 C) $500 D) $1,000 E) $11,000

Answers

Answer:

C. $500

Explanation:

Money demand can be defined as the part of an assets in which a person is ready to hold as cash . The money can however be used to purchase goods or services.

Money demand can be denoted as

= Cash balance + Checking account balance.

Given that;

Cash balance = $200

Checking account balance = $300

Money demand = $200 + $300

Money demand = $500

Therefore, Joan's money demand is $500.

Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%

Answers

Answer:

the real rate of return is 2.88%

Explanation:

The computation of the real rate of return is shown below:

As we know that

Real rate of return is

= {(1 + nominal rate of return) ÷ (1 - inflation rate)} - 1

= {(1 + 0.07) ÷ (1 + 0.04)} - 1

= 2.88%

Hence, the real rate of return is 2.88%

We simply applied the above formula so that the correct value could come

And, the same is to be considered  

If the European subsidiary of a U.S. firm has net exposed assets of 750,000 Euros, and the euro drops in value from $1.30/euro to $1.20/ Euro the U.S. firm has a translation:__________

a. gain of $75,000
b. loss of $75,000
c. gain of $65,000
d. loss of 546,923

Answers

The correct answer is:

b. loss of $75,000

Identify an activity that may not affect independence of mind but is likely to affect independence in appearance.

a. Payment of high audit fees dependent upon profitable financials.
b. Engagement of the CPA and payment of audit fees by a third party.
c. Dependence upon a client for a large percentage of audit fees.
d. Ownership of an immaterial indirect financial interest in the audited client.
e. Performance of valuation services and actuarial services for the same company.

Answers

Answer:

c. Dependence upon a client for a large percentage of audit fees.

Explanation:

The independence in appearance means that the auditor integrity, objectivity is compromised and the people have the faith in the auditor and it is based on the other interpretation

While on the other hand, the independent of mind means the auditor is fully independent and unbiased for taking the decisions

Therefore according to the given options, the option c is correct as the appearance of independent is impacted due to the more percentage in the audit fees

4. When the actual price of a good is above its equilibrium market price, competition
among

A. buyers will force the actual price upward.
B. sellers will force the actual price upward.
C. sellers will force the actual price downward.
D. buyers will force the actual price downward.
E none of the above.

Answers

Answer:

C.

Explanation:

Because naturally within a market the equilibrium price is trying to be reached, (besides price ceilings and floors imposed by the government), Sellers will naturally push the price downwards because they must compete with each other to make a living. Thus answer C. is correct.

TIME REMAINING
29:35
What gives the US government the power to collect taxes?

the Constitution
laws passed by Congress
an executive order
common law

Answers

Answer:

The Constitution

Explanation:

In the United States, Article I, Section 8 of the Constitution gives Congress the power to "lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This is also referred to as the "Taxing and Spending Clause."

Economies of scale occur when a firm's long-run average total cost curve is ___________________. a. upward sloping.b. vertical.c. downward sloping.d. horizontal.

Answers

Answer:

The correct answer is the option C: Downward sloping.

Explanation:

To begin with, the concept known as "Economies of Scale" is a vary famously term in the microeconomics theory due to the fact that it refers to the particular situation that a company achieves when their costs are at the lowest possible point in the long run becuase of the great volumen in production that the organization is starting to handle so that means that the more they start to produce the less the amount that the company will have to spend in the costs. Therefore that the curve in the graphic will be downward sloping due to the decrease of the prices in the costs implicating the amount that the company is handling.

Pablo owns a record store. His total costs are $1.2 million per year, his variable costs are $750,000, and his fixed costs are $450,000 per year. Last year, Pablo sold 1,200 records. If Pablo sells 1,250 records this year (50 more than last year) and his average total cost increases to $1.28 million, we know that the: ________

a. average variable cost of selling records has decreased.
b. marginal cost of those 50 records is $80,000.
c. average fixed cost of selling records is unchanged.
d. marginal cost of those 50 records is $1.28 million.
e. average total cost of selling 1.250 records is $1,000.

Answers

Answer:

b. marginal cost of those 50 records is $80,000.

Explanation:

The computation is shown below:

The average cost of selling 1,200 records is

= $1,200,000 ÷ 1,200

= $1,000

Now

The average total cost of selling 1,250 records is

= $1,280,000 ÷ 1,250

= $1,024

Now for the extra 50 records, the marginal cost is

= $1,280,000 - $1,200,000

= $80,000

Hence, the correct option is b.

ABC company had 8,000 in accounts receivable on Dec. 31, 2019. However, the company estimated that 2,000 of them would become bad debt. The company recorded the 2,000 as bad debt. What is the impact on the financial statement?

Answers

Answer:

Net income is reduced by 2,000 and the net value of receivables on balance sheet reduced by 2,000

Explanation:

Since it is given that there is $8,000 in account receivable out of which $2,000 would be estimated and recorded as a bad debt

So here the bad debt expense is recorded that means the expenses are increased that ultimately reduced the net income also at the same time the amount of receivable would also decreased by $2,000

Therefore the same is to be considered

An increase in a firm's tax rate will__________ if the firm has debt capital in its capital structure:

a. increase both the cost of preferred stock and debt.
b. decrease the cost of preferred stock.
c. increase the firm's WACC.
d. decrease the firm's WACC.

Answers

Answer:

d. decrease the firm's WACC.

Explanation:

As per WACC formula

WACC = ( Weight of Common Equity x Cost of Common Equity ) + ( Weight of Common Debt x Cost of Common Debt x ( 1 - Tax rate ) ) + ( Weight of Preferred Equity x Cost of Preferred Equity )

By assuming the values to prove the answer

Weights

Common equity = 55%

Preferred Equity = 15%

Debt = 30%

Costs

Common equity = 15%

Preferred Equity = 8%

Debt = 12%

Tax rate is 15%

Placing values in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 15% ) ) + ( 15% x 8% )

WACC = 8.25% + 3.06% + 1.2% = 12.51%

Keeping others values constant, Now increase the Tax rate to 25% and placing vlaues in the formula

WACC = ( 55% x 15% ) + ( 30% x 12% x ( 1 - 25% ) ) + ( 15% x 8% )

WACC = 8.25% + 2.7 + 1.2% = 12.15%

Hence the WACC is decreased from 12.51% to 12.15% when the tax rate is increased from 15% to 25% keeping other values constant.

Bravo's complete assets and liabilities are Accounts Receivable $800, Equipment $10,000, Accounts Payable $4,200, Prepaid Rent $2,000, Supplies $400, Bank Loan $1,600, and Tools $300. Bravo's total assets are:_____.a. $11,100.b. $13,500.c. $11,500.d. $13,100.e. none of these.

Answers

Answer:

b $13,500

Explanation:

Assets are items that are used by a business organization for positive economic value .

Given that;

Accounts receivable = $800

Equipment = $10,000

Accounts payable = $4,200

Prepaid rent = $2,000

Supplies = $400

Bank loan = $1,600

Tools = $300

Total assets = Accounts receivable + Equipment + Prepaid rent + Supplies + Tools

Total assets = $800 + $10,000 + $2,000 + $400 + $300

Total assets = $13,500

Therefore, Bravo's total assets is $13,500.

If people's trust in the banking system is reduced due to a surge in bank failures, the money expansion resulting from a new deposit will:____________
a) increase
b) decline
c) not be affected
d) none of the above

Answers

Answer:

b) decline

Explanation:

If people's trust in the banking system is reduced due to a surge in bank failures, the money expansion resulting from a new deposit will decline. This happens because people lost trust and hastily withdrawn their money deposited with the bank.

Draw a correctly labeled loanable funds graph that shows what happens to real interest rates for each of the following situations: (You will have 3 graphs)
The government borrows money to fund a war.
Private investors become more optimistic about the economy.
The government raises personal income taxes (do not consider the change in consumer saving).
In the text box provided, enter the time and date you sent your graphs to your instructor. Please specify if you e-mailed or faxed the graph. Make sure your name and the assignment number are on your paper and that each graph is clearly marked with an a, b, or c. (30 points)

Answers

Answer:

1. a) War increases demand for loanable funds, demand curve shifts RIGHT. (Increase in real interest rate)

b) Private investors are optimistic about the economy (i.e. investment opportunities). Demand for loanable funds increases, demand curve shifts RIGHT. (Increase in real interest rate)

c) Tax increase means a decrease in the supply about loanable funds. Supply curve shifts LEFT. (Increase in real interest rate)

2. would most likely increase the supply of loanable funds. If Americans are saving more, then they are spending less money and investing more of it. Remember--saving does not mean "not using it". It means investing it instead of consuming.

3. The interest rate will fall. There is a surplus of loanable funds and the real interest rate will reflect this surplus by falling.

4. decrease in the demand for loanable funds. When output decreases, the return on investment for new projects decreases and investors are less in need of money to fund their ventures.

5. decrease the supply for loanable funds. If they are consuming more, they are saving less.

6. Increase / Decrease. When interest rates increase, growth is reduced because funding economic ventures is now more costly. Sometimes the fed will increase interest rates when it anticipates inflation to increase in order to mitigate economic growth.

Hope this was helpful!

Explanation:

Printers today have many features that include improved quality, photo printing capabilities, digital camera connectivity, built-in flash memory card readers, wireless connectivity, and faster speed. Suppose you are in the market for a new personal printer. Make a list of the most important features needed to meet your needs, and then research printers to identify the best printer for your needs. Be sure to consider both the price of the printer and the price of consumables (such as paper and ink/toner) in your evaluation process​

Answers

Answer:

A printer is a device that accepts text and graphic output from a computer and transfers the information to paper, usually to standard size sheets of paper. Printers vary in size, sophistication, speed, and cost. In general, more expensive printers are used for higher-resolution color printing.

Printers today have many features that include improved quality, photo printing capabilities, digital camera connectivity, built-in flash memory card readers, wireless connectivity, and faster speed.  

The Six important printer qualities are:

Color: It is important for users who need to print pages for presentations or maps, photos and other pages where color is part of the information. Color printers can also be set to print only in black-and-white. Color printers are more expensive to operate since they use two ink cartridges (one color and one black ink, toner) that need to be replaced after a certain number of pages. Users who don't have a specific need for color and who print a lot of pages will find a black-and-white printer cheaper to operate.  Resolution: Printer resolution (the sharpness of text and images on paper) is usually measured in dots per inch (dpi). Most inexpensive printers provide sufficient resolution for most purposes at 600 dpi. Speed: If you do much printing, the speed of the printer becomes important. Inexpensive printers print only about 3 to 6 sheets per minute. Color printing is slower. More expensive printers are much faster.Memory: Most printers come with a small amount of memory (for example, one megabyte) that can be expanded by the user. Having more than the minimum amount of memory is helpful and faster when printing out pages with large images or tables with lines around them (which the printer treats as a large image). Wireless connectivity : Specialized printer nowadays have wireless connectivity which allows user to communicate with the machine without physical operation. Like one can just give command to the printer to print their projects using their mobile phone while sitting on the couch. This feature might add extra bucks to the bill but its worth it. Printer languages The commands from the computer to the printer to tell the printer how to format the document being printed. These commands manage font size, graphics, compression of data sent to the printer, color, etc. The two most popular printer languages are Postscript and Printer Control Language.

Conclusively the best printer will be the one which will provide pleasant color contrast, good resolution, enough memory, wireless connectivity and have better language settings.

Which of the following best explains how the rise of machinery created an unfriendly relationship between industrialists and their employees?
A. The industrialist earned his income from the work of others.
B. There was a lack of unions.
C. The employees were underpaid.

Answers

Answer:

C

Explanation:

In as much as these are the only options given, then there has to be an answer there. Even though I fancy there being another answer.

But I'd say, the closest to the reason from the aforelisted is that the employees were underpaid. Since the advent of machineries, truth is that there wasn't going to be need for employees. This is because machines tend to have a much better output, better efficiency and won't need to be paid monthly in wages.

Since there isn't need for employees again, the industrialist tend to underpay the employees because they don't see their useful in the first instance

The rise of the use of machine is on the increase. The best explanation as to how the rise of machinery created an unfriendly relationship between industrialists and their employees is the employees were underpaid.

The industrialists did treat their workers bad.  They make sure to keep wages as low as ever. Their attitude towards their employee was like if employee did not like the pay, the long hours and other working conditions he could quit and go to other places.

They were super-rich, living in great homes, living life lavishly abut their employees were paid little sum as if they do not have any choice.

Learn more about Industrialist from

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Agency employees interact with Taco Bell employees across job types because they need knowledge about the products and plans, increasing their:________

a. boundary spanning.
b. hierarchical sensitivity.
c. decision informity.
d. staff validity.
e. task validity.

Answers

Answer:

c. decision informity.

Explanation:

Since in the question it is mentioned that there is a interaction of Agency employees with the employees of Taco bell for different types of job as they need the knowledge regarding the product and plans that increased the decision informity

As if you have great knowledge and information so you are able to take the right decision i.e. ultimately good for a company

Therefore the option c is correct

A portfolio has 70 shares of Stock A that sell for $30 per share and 125 shares of Stock B that sell for $17 per share. (a) What is the portfolio weight of Stock A?(b) What is the portfolio weight of Stock B?

Answers

Answer:

Portfolio weight of Stock A=49.70%

Portfolio weight of Stock A=50.29%

Explanation:

Calculation for the portfolio weight of Stock A and Stock B

First step is to calculate the total amount invested in both portfolio weight of Stock A and Stock B

Stock A and Stock B Total amount invested=

(A 70 shares*$30 per share)+ (B 125 shares*$17 per share)

Stock A and Stock B Total amount invested=$2,100+$2,125

Stock A and Stock B Total amount invested=$4,225

Now let calculate the PORTFOLIO WEIGHT OF STOCK A

Using this formula

Portfolio weight of Stock A=Stock A/Stock A and Stock B Total amount invested

Let plug in the formula

Portfolio weight of Stock A=(70 shares*$30 per share)/$4,225

Portfolio weight of Stock A=$2,100/$4,225

Portfolio weight of Stock A=0.4970*100

Portfolio weight of Stock A=49.70%

Therefore the Portfolio weight of Stock A

will be 49.70%

Calculation for PORTFOLIO WEIGHT OF STOCK B

Using this formula

Portfolio weight of Stock B=Stock B/Stock A and Stock B Total amount invested

Let plug in the formula

Portfolio weight of Stock B=(125 shares*$17 per share)/$4,225

Portfolio weight of Stock B=$2,125/$4,225

Portfolio weight of Stock B=0.5029*100

Portfolio weight of Stock B=50.29%

Therefore the Portfolio weight of Stock will be 50.29%

When operating in a constrained environment, which products should be produced? a. products with the highest contribution margin per unit b. products with the highest contribution margin per unit of the constrained process c. products with the highest selling price d. products with the lowest allocated joint cost

Answers

Answer: B. products with the highest contribution margin per unit of the constrained process.

Explanation:

When operating in a constrained environment, the products that should be produced are the products with the highest contribution margin per unit of the constrained process.

This is essential for the company to maximize its total contribution margin. This in turn will help the company in realizing revenue and also maximizing profit.

Match the jobs with the career clusters

FOR PLATO EXPLORING CAREER OPTIONS POST TEST!

Health Science


Hospitality and Tourism



Human Services


List of Careers:
- Radiologist
-Sociologist
-Concierge
-Nurse Practitioner
-Meeting Planner
-Adult Care Counselor

?

Answers

Answer:

Health Science - Radiologist, Nurse Practitioner

Hospitality and Tourism - Concierge, Meeting Planner

Human Services - Sociologist, Adult Care Counselor

There are different career: Health Science: Nurse Practitioner, radiologist. Hospitality and Tourism: meeting planner, concierge. Human Services: adult care counselor and sociologist.

Various occupations connected to healthcare and medicine are included in the health science career cluster. Radiologist and Nurse Practitioner are two professions that fall within this cluster.

The hospitality and tourism career cluster covers a variety of occupations that are connected to the management, marketing, and operation of eateries, accommodation, attractions, leisure activities, and travel-related services.

The human services career cluster encompasses a variety of occupations dedicated to helping people and communities.

Learn more about the career, here:

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State the 5 most important banking services and rank them in order that you feel most important.

Answers

Answer:

checking account, savings acc, debit and credit cards, insurance , wealth management

Explanation:

The most important banking services can be as follows:

Account openingCheck issuing facilityLoan facilityIssuing credit or debit cardsInsurance assistance

What is a bank?

The bank is a financial authority that is accountable to the account holders who have opened their accounts in their bank.

Banks provide various types of services which are described as follows:

Banks allowed every individual of a country to open their respective accounts in any bank as per their income source.Banks provided the account holders the permit to issue a check in respect of any transaction in his/her name.They are given loans to the holder at a certain interest rate in accordance with the amount held in their bank accounts.They offer credit or debit cards for making cashless transactions or buying something expensive product in installments.They also provide insurance facilities in collaboration with the insurance company for a time span of some years.

Therefore, the service being provided by banks are explained as above.

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Miller Nwagi will not ride in elevators because he perceives them to be confining boxes that could fall. He refused to visit a store, which was selling his favorite brand of pipe tobacco, because the store could only be reached with an elevator. This would be an example of how _____ influences determine consumer buying decisions

Answers

Answer:

Psychological influence

Explanation:

During consumption people sometimes experience Internal influences that are basically stemmed from their own lifestyle and also their way of thinking. These influences arise out of their personal thoughts, their self-concepts, their feelings and also attitudes, lifestyles, motivation and memory. We refer to these internal influences as psychological influences.

Psychological influences is why miller would not ride in elevators due to the perception he has formed internally about elevators. And hence the reason he wouldn't use one.

Donnegan Company reported operating expenses of $325,000 for 2020. The following data were extracted from the company’s financial records: 12/31/19 12/31/20 Prepaid Expenses $ 60,000 $69,000 Accrued Expenses 210,000 255,000 Accounts Payable 300,000 350,000 On a statement of cash flows for 2020, using the direct method, cash payments for operating expenses should be:___________.

Answers

Answer:

cash payments for operating expenses should be $329,000

Explanation:

Cash Payments for operating expenses is included in the Cash Flow from Operating Activity Section of the Statement of Cash Flows when the Direct Method of preparing this statement is selected.

This is calculated as follows :

Cash Payments for operating expenses

Operating expenses                                                               $325,000

Adjustment of changes in Working Capital

Increase in Prepaid Expenses ($69,000 - $ 60,000)              $9,000

Increase in Accrued Expenses ($255,000 - $210,000)        $45,000

Increase in Accounts Payable ($350,000 - $300,000)       ($50,000)

Cash payments for operating expenses                              $329,000

If a competitive firm can sell a bushel of soybeans for $25 and it has an average variable cost of $24 per bushel and the marginal cost is $26 per bushel, the firm should:_______

Answers

Answer: reduce output.

Explanation:

In a competitive market, firms do not have control over the price that they sell their goods in the market but they do have control over their costs. It is recommended to produce/ sell goods at a quantity where Marginal Revenue will equal Marginal cost (MR = MC).

In a Competitive Market, Price is the same as Marginal revenue which means that Marginal revenue here is $25 and the Marginal Cost is $26. At this quantity of output, the Marginal Cost is larger than the Marginal revenue.

Company should therefore reduce output to a quantity where Marginal Cost will equal Marginal revenue.

Other Questions
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