Answer:
Management of organizations
The management accountant at Jang Manufacturing Co. collected the following data in preparation for a life-cycle analysis on one of its products, a leaf blower: The stage of the sales life cycle the product is in is:
Complete Question:
The management accountant at Jang Manufacturing Co. collected the following data in preparation for a life-cycle analysis on one of its products, a leaf blower: Item This Year Change Over Last Year Average Annual Change Over the Last Four Years Annual sales $3,200,000 -2.4% +3.5% Unit sales price 500 -2.1% +3.3% Unit profit 100 -10.0% +2.0% Total profit 700,000 -1.2% +3.0% The stage of the sales life cycle the product is in is:
Answer:
Jang Manufacturing Co.
The stage of the sales life cycle the product is in is:
The introduction stage.
Explanation:
a) Life-Cycle Analysis of the Leaf Blower:
Item This Year Change Average Annual Change
Over Last Year Over the Last Four Years
Annual sales $3,200,000 -2.4% +3.5%
Unit sales price 500 -2.1% +3.3%
Unit profit 100 -10.0% +2.0%
Total profit 700,000 -1.2% +3.0%
b) The sales life cycle is a series of sales steps that the seller takes in order to convert a customer to make a buying decision. It starts with the introduction stage when the seller creates customer awareness. At this stage of the sales life cycle, the product can be likened to a potential STAR. Like Stars with potential, the initial sales efforts can eventually grow to become successful customer closes.
Consumer sovereignty and "dollar votes" are most related to which fundamental question about a competitive market system?
Answer:
What will be produced.
Explanation:
Consumer sovereignty is the theory that consumer preferences determine the production of goods and services. This means consumers can use their spending power as 'votes' for goods. In return, producers will respond to those preferences and produce those goods.
A competitive market system is one that involves many buyers and sellers. This is a system where the supply and demand for goods and services largely determines what is produced, how it's to be produced, how much is produced, how the output is to be distributed, and how the economy absorbs change.
What are benefits of a market economy?
Answer:
Explanation:
The advantages of a market economy include increased efficiency, productivity, and innovation. In a truly free market, all resources are owned by individuals, and the decisions about how to allocate such resources are made by those individuals rather than governing bodies.
There is a bond that has a quoted price of 98.613 and a par value of $2,000. The coupon rate is 6.66 percent and the bond matures in 18 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?
Answer:
The Yield to Maturity of the Bond (YTM) is 113.86 %
Explanation:
The Yield to Maturity of the Bond (YTM) can be determined using a Financial Calculator as follows :
Pv = -$98.613
Fv = $2,000
p/yr = 2
n = 18 × 2
Pmt = ($2,000 × 6.60%) ÷ 2 = $66
r = ?
Using a Financial Calculator r is 113.86 %.
Use the table to indicate which description characterizes economies of scale and which characterizes economies of scope.
Description Economies Economies
of Scale of Scope
Long-run average costs are lower for greater quantities
of output.
The cost of producing two products separately is greater
than the cost of producing both of those goods jointly.
Answer and Explanation:
The economics of scope refers to the total cost production cost i.e to be averaged for the various type of goods
While on the other hand, the economics of scale refers to the benefit of the cost than occurs when there is a higher production level at a time
Based on this, the classification is as follows
1, Economics of scale as the output rises that declines the LAC so automatically it goes downward
2. economics of scope
Low Fly Airline is expected to pay a dividend of $7 in the coming year. Dividends are expected to grow at the rate of 15% per year. The required return is 30%. What is the intrinsic value of the stock?
Answer:
Intrinsic value of the stock = $46.67
Explanation:
D1 = $7
Required return = 30%
Growth rate = 15%
Intrinsic value of the stock = D1 / (Required return - Growth rate)
Intrinsic value of the stock = $7/(0.3 - 0.15)
Intrinsic value of the stock = $7 / 0.15
Intrinsic value of the stock = $46.67
The minimum wage is an example of a Group of answer choices price ceiling. price door. price wall. price floor.
Answer:
price floor
Explanation:
A price ceiling is a limit that is established by the government that determines the highest price that can be charged for a product or service.
A price floor is a control that is established by the government that determines the lowest price for a product or service.
According to this, the answer is that the minimum wage is an example of a price floor because it determines the minimum amount that a company can pay to a worker.
The other options are not right because a price ceiling establishes the highest price for a product and price door and price wall are not price controls.
Fallingstar, Inc. has shares of common stock issued and outstanding, with a par value of per share. It declared a % common stock dividend; market value is per share. Which of the following is the correct journal entry to record the transaction?
a. debit Common Stock Dividend Distributable 51,154, debit Paid In Capital in Excess of Par-Common $196,606, and credit Retained Earnings $197.760.
b. debit Stock Dividends $197.760 and credit Cash $197.760.
c. debit Stock Dividends $197.760 and credit Paid - In Capital in Excess of Par-Common $197,760.
d. debit Stock Dividends $197.760, credit Common Stock Dividend Distributable 51.154, and credit Paid - In Capital in Excess of Par-Common $196,606.
Answer:
d. debit Stock Dividends $197.760, credit Common Stock Dividend Distributable $1.154, and credit Paid - In Capital in Excess of Par-Common $196,606.
Explanation:
the numbers are missing, but we can infer the answer because when a stock dividend is declared (not distributed), the correct journal entry should be:
Dr Stock dividends
Cr Common stock dividends distributable
Cr Additional paid in capital (if the stock price is higher than par value)
Once the stock dividends are distributed, the journal entry should be:
Dr Common stock dividends distributable
Cr Common stock
Since you used the stock dividends account instead of retained earnings, at the end of the year you will have to close it:
Dr Retained earnings
Cr Stock dividends
Smith Corporation has variable costs equal to $5.10 per unit, fixed costs of $11,000, and total output equal to 240 units. What is the total cost
Answer:
Total cost= $12,224
Explanation:
Giving the following information:
Smith Corporation has variable costs equal to $5.10 per unit, fixed costs of $11,000, and total output equal to 240 units.
To calculate the total cost, we need to use the following formula:
Total cost= fixed costs + unitary variable cost*number of units
Total cost= 11,000 + 5.1*240
Total cost= $12,224
at advice would you provide on mistakes and biases to avoid when selecting employees for available jobs? 10mks
Answer:
Explanation:
Avoid being biased, no matter the situation.
Favoritism should not be the order of the day, as you may end up employing a non chalant person.
Make sure they're are screened well enough and none is telling a lie.
It is wise to do background checks before employing them.
And as always, employ the best of the best so as to have optimum output.
Hire only qualified personnels, you don't want to tarnish your reputation
The following information pertains to Zion Company’s defined benefit pension plan:_______.
Net Pension liability, January 1, Year 1 $2,000
Service cost $17,000
Interest cost $40,000
Actual and expected retum on plan assets $22,000
Amortization of prior service cost arnising in a prior period $52,000
Employer contributions $40,000
In its December 31, Year 1, balance sheet, what amount should Zion report as the Net Pension Asset/Liability?
a. $7,000 asset
b. $15,000 liability
c. $45,000 liability
d. $52,000 liability
e. $5,000 asset
Answer:
c. $45,000 liability
Explanation:
Fair Value of Plan Asset = Return on asset + employer contribution - Benefit paid
= $22,000 + $40,000 - $0
= $62,000
Projected Benefits Obligation = Service cost + interest cost
= $17,000 + $40,000
= $57,000
Pension asset / (liability) = Opening pension asset/ Liability + Plan asset - Projected Benefit Obligation - Amortization
= $2,000 + $62,000 - $57,000 - $52,000
= -$45,000
= $45000 Pension Liability
Consider the following per unit data for Jennifer Company, a seller of tables and chairs: What is the weighted-average unit contribution margin for Jennifer Company?
Answer:
$28 per unit
Explanation:
since the information is missing, I looked for similar questions:
contribution margin per chair = $50 - $35 = $15
contribution margin per table = $200 - $120 = $80
sales mix: 4 chairs + 1 table
contribution margin per sales mix = (4 x $15) + $80 = $140
weighted average contribution margin = $140 / 5 = $28
" If a 1 percent increase in price results in less than a 1 percent decrease in quantity demand, demand is: "
Answer:
inelastic
Explanation:
when we are measuring hte price elasticity of demand (PED), we calculate it by dividing the ]% change in quantity by the % change in price.
If the price of a product increases by 1%, and the quantity demanded changes in a smaller %, the PED is < 1, so it is inelastic. If the price of a product increases by 1%, and the quantity demanded changes in a larger %, the PED is > 1, so it is elastic. If the price of a product increases by 1%, and the quantity demanded changes in same 1%, the PED is = 1, so it is unit elastic.Difference between information desired and information provided is:_______.
a. sampling error.
b. measurement error.
c. frame error.
d. random error.
Answer:
b. measurement error.
Explanation:
Measurement error is defined as the difference in the provided information and the desired information. It is also known as observational error. The value that is measured and the real value that brings out the differences. These errors can emerge and grow rapidly. Random error and systematic error are the two distinct parts of measurement errors.
A company issues a ten-year bond at par with a coupon rate of 6.5% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.6%. What is the new price of the bond
Answer:
$880.31
Explanation:
For computing the new price of the bond we need to apply the present value formula i.e to be shown in the attachment
Given that,
Assuming Future value = $1,000
Rate of interest = 8.6% ÷ 2 = 4.3%
NPER = 8 years × 2 =
PMT = $1,000 × 6.5% ÷ 2 = $32.5
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after applying the above formula, the present value is $880.31
Under which of the following conditions is job dissatisfaction not likely to translate into turnover?a. Employees have high education and ability. b. Employees have negative core self-evaluation. c. Employees have supportive relationships with their co-workers. d. Employment opportunities are scarce. e. Employees experience emotional contagion
Answer:
a. Employees have high education and ability.
Explanation:
There are various reasons for not satisfying with the job i.e. package, benefits, pressure, monotonous work, etc also it should be transform into a turnover in the case when the job opportunities are more
But when the employee has human capital i.e. in terms of high education and ability than this would not be transform into a turnover
Therefore in the given situation, the option B is correct
Madison Corporation purchased 40% of Jay Corporation for $460,000 on January 1. On June 20 of the same year, Jay Corporation declared total cash dividends of $115,000. At year-end, Jay Corporation reported net income of $575,000. The balance in Madison Corporation's Long-Term Investment-Jay Corporation account as of December 31 should be:___________.
a. $736,000.
b. $644,000.
c. $851,000.
d. $276,000.
e. $460,000.
Answer:
b. $644,000.
Explanation:
we must use the equity method:
January 1, 202x
Dr Investment in Jay Corporation 460,000
Cr Cash 460,000
June 30, 202x, cash dividends declared (and probably paid for sometime in the near future)
Dr Dividends receivable 46,000
Cr Investment in Jay Corporation 46,000
December 31, 202x, net income reported
Dr Investment in Jay Corporation 230,000
Cr Investment revenue 230,000
balance = $460,000 - $46,000 + $230,000 = $644,000
One role of marketing communications in the problem recognition stage of the purchase decision-making process is to:
Answer: help distribution partners identify product availability problems.
Explanation:
The options are:
a. alert the company about problems in conveying a message to target consumers.
b. resolve consumer problems with customer service outreach.
c. remind consumers of existing needs.
d. help distribution partners identify product availability problems.
e. educate consumers about features and benefits.
One role of marketing communications in the problem recognition stage of the purchase decision-making process is to help distribution partners identify product availability problems.
It should be noted that marketing communications can help identify the needs or problem that consumers have.
A year of unusually good rainfall has made it cheaper to irrigate farmlands. However, a popular new diet has persuaded some consumers to stop eating vegetable oil, a product often made from canola. What impact have these two changes had on the equilibrium price and quantity sold of canola?
Answer:
1)Price has decreased and the effect on quantity cannot be determined
Explanation:
As of good rainfall there is a rise in supply of canola that means the shifting o feh supply curve could be right also the demanded for the vegetable oil would decline that means the demand is falling so the demand curve would shift to the left
Therefore, the equilibrium would fall but it is unable to figure out whether the quantity would rise or not without considering the elasticities of the demand and the supply curve
Hence, the correct option is 1
I am having a diffiucult time figuring out the advertising expense. I have plugged in several solutions and they are all incorrect.
Listed below are several transactions that took place during the second and third years of operations for RPG Company.
Year 2 Year 3
Amounts billed to customers for services rendered $ 320,000 $ 420,000
Cash collected from credit customers 230,000 370,000
Cash disbursements:
Payment of rent 77,000 0
Salaries paid to employees for services rendered during the year 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 13,500 32,000
In addition, you learn that the company incurred advertising costs of $24,000 in year 2, owed the advertising agency $4,900 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
Required:
1. Calculate accrual net income for both years.
2. Determine the amount due the advertising agency that would be shown as a liability on RPG’s balance sheet at the end of year 2.
Answer:
RPG Company
1. Accrual Net Income for Year 2 and Year 3:
Year 2 Year 3
Amounts billed to customers for services $ 320,000 $ 420,000
Expenses:
Rent 38,500 0
Salaries paid to employees for services 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 24,000 16,600
Net Income $93,500 $170,900
2. Determination of the liability for Advertising:
Advertising Expense:
Year 1 balance = $4,900
Year 2 = $24,000
Cash paid (13,500)
Balance $15,400
Explanation:
a) Data and Calculations:
RPG Company.
Year 2 Year 3
Amounts billed to customers for services $ 320,000 $ 420,000
Cash collected from credit customers 230,000 370,000
Cash disbursements:
Payment of rent 77,000 0
Salaries paid to employees for services 137,000 157,000
Travel and entertainment 27,000 37,000
Advertising 13,500 32,000
Year 2 Year 3
Service Revenue: $ 320,000 $ 420,000
Accounts Receivable
Service revenue $320,000
Cash collected 230,000
Balance Year 2 $90,000
Service revenue 420,000
Cash collected 370,000
Balance Year 3 $50,000
Advertising Expense:
Year 1 balance = $4,900
Year 2 = $24,000
Cash paid (13,500)
Balance $15,400
Year 3 = 16,600
Cash paid 32,000
Balance 0
Which one of the below is the MAJOR responsibility of a businessperson:
A) Making as much money as possible to distribute in dividends to stockholders
B) Making the value of the company increase by generating increasing revenues and profits
C) Making as little income as possible that is taxable in order to minimize the government's cut
D) Making sure the company is legally compliant with all reporting and other regulatory requirements
E) Making as much money as possible for the employees to share in salary, bonus and benefits
Answer:
B) Making the value of the company increase by generating increasing revenues and profits
Explanation:
The main responsibility of a manager is to increase the company's value in order to increase the wealth of its owners. Of course this should be done in a legal way, e.g. a drug lord that makes millions can't be considered a good businessperson. The responsibility of a manager do not end there, they also have a duty with all the stakeholders of the company, starting with the employees, the government, the environment, their customers, and society as a whole.
The management of Penfold Corporation is considering the purchase of a machine that would cost $310,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $74,000 per year. The company requires a minimum pretax return of 12% on all investment projects.The net present value of the proposed project is closest to (Ignore income taxes.):__________
Answer:
NPV = $-43246.56103 rounded off to - $43246.56
Explanation:
The Net Present Value or NPV is a tool used to evaluate projects. It is used with various other tools to decide whether to undertake a project or not. To calculate the Net Present Value or NPV, we take the present value of the cash inflows provided by the project and deduct the initial cost of the project.
NPV = CF1 / (1+r) + CF2 / (1+r)^2 + ... + CFn / (1+r)^n - Initial Cost
Where,
CF1, CF2, ... represents cash flow in Year 1, Year 2 and so on.r is the required rate of returnNPV = 74000 (1+0.12) + 74000 (1+0.12)^2 + 74000 (1+0.12)^3 + 74000 (1+0.12)^4 + 74000 (1+0.12)^5 - 310000
NPV = $-43246.56103 rounded off to - $43246.56
Calculate total manufacturing overhead costs. First determine the formula, then calculate the total manufacturing overhead costs. (Enter currency amounts in thousands and not in dollars.) Total manufacturing + + = overhead costs
Answer:
1.
a. Airplane seats is classified as Direct material $220
b. Production supervisors' salaries is classified as Indirect Labour $100
c. Depreciation on forklift is classified as Other Manufacturing Overhead $30
d. Machine lubricants classified as Indirect Material $40
e. Factory janitors' wages classified as Indirect labour $35
f. Assembly workers' wages classified as Direct Labour $650
g. Property tax on corporate marketing offices classified as Period total $15
h. Plant utilities classified as other Manufacturing Overhead $190
I. Cost of warranty repairs classified as Period total $245
j. Machine operators' health insurance classified as Direct Labour $60
k. Depreciation on administrative offices classified as Period total $20
l. Cost of designing new plant layout classified as Period total $180
m. Jet engines classified as Direct material $1,700
1b.Total
Total Direct material $1,920
Total Direct labor $710
Total Indirect material$40
Total Indirect labor $135
Total Other Manufacturing Overhead $220
Total Period Total $460
2.Total manufacturing overhead costs $395
3.Total inventoriable product costs $3,025
4.Total prime costs $2,630
5.Total conversion costs $1,105
6.Total period costs $460
Explanation
1. Classification of each cost and the total for each type of cost
a. Airplane seats is classified as Direct material of the amount of $220
b. Production supervisors' salaries is classified as Indirect Labour of the amount of $100
c. Depreciation on forklift is classified as Other Manufacturing Overhead of the amount of $30
d. Machine lubricants classified as Indirect Material of $40
e. Factory janitors' wages classified as Indirect labour of $35
f. Assembly workers' wages classified as Direct Labour of $650
g. Property tax on corporate marketing offices classified as Period total of $15
h. Plant utilities classified as other Manufacturing Overhead of $190
I. Cost of warranty repairs classified as Period total of $245
j. Machine operators' health insurance classified as Direct Labour of $60
k. Depreciation on administrative offices classified as Period total of $20
l. Cost of designing new plant layout classified as Period total of $180
m. Jet engines classified as Direct material of $1,700
TOTAL for each of the costs
Total Direct material $1,920
($220+$1,700)
Total Direct labor $710
($650+$60)
Total Indirect material$40
Total Indirect labor $135
($100+$35)
Total Other Manufacturing Overhead $220 ($30+$190)
Total Period Total $460
($15+$245+$20+$180)
2.Calculation for the of the total manufacturing overhead costs
Using this formula
Manufacturing overhead costs=Indirect labor + Indirect materials + Other Manufacturing overhead
Let plug in the formula
Total manufacturing overhead costs=
$135 + $40 + $220
Total manufacturing overhead costs= $395
3.Calculation for the total inventory product costs.
Using this formula
Total inventoriable costs=Direct materials + Direct labor + Manufacturing overhead
Let plug in the formula
Total inventoriable product costs$1,920 + $710 + $395
Total inventoriable product costs= $3,025
4.Calculatation for total prime costs.
Using this formula
Prime costs=Direct materials + Direct labor
Prime costs=$1,920 + $710
Total prime costs=$2,630
5.Calculation for the total of the conversion costs.
Using this formula
Total conversion costs=Direct labor + Manufacturing overhead
Total conversion costs=$710 + $395
Total conversion costs= $1,105
6. Calculation for total period costs.
Using this formula
Total period costs=($15+$245+$20+$180)
Total period costs=$460
Property tax on corporate marketing offices classified as Period total of $15
Cost of warranty repairs classified as Period total of $245
Depreciation on administrative offices classified as Period total of $20
Cost of designing new plant layout classified as Period total of $180
The outstanding bonds of Tech Express have a face value of $1,000 and mature in 10 years. They are currently priced at $989. These bonds have a 6 percent coupon and pay interest annually. Ten-year Treasury bonds are currently yielding 3.4 percent. If the firm’s tax rate is 28 percent, what is the firm's after-tax cost of debt? (round answer to whole number with two decimal points: i.e., use 1.23 percent instead of 0.0123)
Answer:
the firm's after-tax cost of debt is 4.43 %.
Explanation:
Cost of Debt is the return required by providers of debt capital to the company.
First Determine the yield of the Tech Express bonds, r
Pv = - $989
pmt = $1,000 × 6.00 % = $60
p/yr = 1
n = 10
Fv = $1,000
r = ?
Using a Financial Calculator, the yield of the Tech Express bonds, r is 6.1505 %.
Therefore,
Cost of Debt = Interest × ( 1 - tax rate)
= 6.1505 % × ( 1 - 0.28)
= 4.43 %
What term is used to mean employee expertise and politeness and their ability to convey trust?
Answer:
The term is Assurance
Explanation:
Assurance is the term that is used to mean employee expertise and politeness and their ability to convey trust. It refers to the employee's knowledge and courtesy and thereby shows his ability to convey trust.
Employees that possess the virtue of assurance in the workplace give their employers the opportunity to trust them. Such employees perform well at work.
At the beginning of October, Cozier Corporation had $34,000 of raw materials on hand. During the month, the company purchased an additional $78,000 of raw materials. During October, $92,000 of raw materials were removed from the storeroom for use in production. The credits to the Raw Materials account for the month of October total:
Answer:
$92,000
Explanation:
As we know that the raw material inventory debited by the starting balance amount, purchase amount but it would be credited by the material used or transferred amount to the WIP inventory
As we can see that the $92,000 is requisitioned i.e. transferred to the WIP inventory so the same is to be reflected in the credit amount
Hence, the credit to the raw material account is made for $92,000
We assume that requisitioned word is used instead of removal
Brockton Carpet Cleaning prepares a bank reconciliation at the end of every month. At the end of July, the balance in the general ledger checking account was $2,750 and the bank balance on the bank statement was $2,980. Outstanding checks totaled $680 and deposits in transited were $400. The bank statement revealed that a check written for $120 was incorrectly recorded by Brockton as a $220 disbursement. The bank statement listed service charges and NSF check charges totaling $150. The corrected cash balance is:
A. $2,270.
B. $2,550.
C. $2,470.
D. $2,700.
The corrected cash balance is $2,550. Hence the correct answer is option B.
We must perform a thorough bank reconciliation process, adjusting the balances along the way, in order to determine the corrected cash amount.
Starting with the balance on the bank statement
Bank Statement Balance: $2,980
Step 1: Add deposits in transit
Deposits in Transit: +$400
Adjusted Bank Statement Balance: $2,980 + $400 = $3,380
Step 2: Deduct outstanding checks
Outstanding Checks: -$680
Adjusted Bank Statement Balance: $3,380 - $680 = $2,700
Now, let's move on to the general ledger (GL) checking account balance:
General Ledger Checking Account Balance: $2,750
Step 3: Deduct the incorrect recording of the check
Incorrect Recording: -$100 ($220 - $120)
Adjusted GL Checking Account Balance: $2,750 - $100 = $2,650
Step 4: Add service charges and NSF check charges
Service Charges and NSF Charges: -$150
Adjusted GL Checking Account Balance: $2,650 - $150 = $2,500
Now, we compare the adjusted balances:
Adjusted Bank Statement Balance: $2,700
Adjusted GL Checking Account Balance: $2,500
Since the corrected cash balance should be the same in both the bank statement and the general ledger, the correct answer is $2,550.
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To achieve the human resource management goal of promoting individual growth and development, organizations should:
Answer:
implement wide range of human engagement activities
Explanation:
In order to increase or at-least maintain the individual growth in any organisation the company shall engage each and every human in various activities.
This not only ensures human engagement in the company, but also a mental and physical boost to the employees.
When an employee is involved in several areas or activities he considers himself to be of vital importance as the organisation considers his views in various areas.
Further with multiple areas to perform the employee enhances his capacities and areas to grow as an individual.
why is it necessary to maintain a fixed asset register and what does it enable you to do?
Answer:
There is financial consequence to not maintaining an accurate asset register. Every business should know at any given time where their assets are and in what condition they are in. The tracking of assets can prevent theft and loss and the maintenance of assets can extend the life of the asset. There are major tax benefits to any business tracking their assets correctly. In most cases it is a statutory requirement to have an asset register.
Explanation:
Market failure can be caused by low consumer demand. externalities and market power. equilibrium prices. high prices and foreign competition.
Answer:
Externalities and market power.
Explanation:
Market failure is the economic situation defined by an inefficient distribution of goods and services in the free market.
A good has positive externality if the benefits to third parties not involved in production is greater than the cost. an example of an activity that generates positive externality is research and development. Due to the high cost of R & D, they are usually under-produced. Government can encourage the production of activities that generate positive externality by granting subsidies.
A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation
When a firm has market power, he usually sell above equilibrium price so that there is no equilibrium in the market. This can lead to inefficiency and market failure