What kind of economy is least likely to see the benefits of prices?

Answers

Answer 1

Market economy is least likely to see the benefits of prices .

What is meant by market economy?

In a market economy, the majority of the resources are owned by people rather than the government. This pertains to labor, capital, and land. In a market economy, people regulate the usage and cost of these resources by their free choices in the market.

A market economy, sometimes referred to as a free market or free enterprise economy, is a system in which supply and demand dictate economic decisions, such as the prices of goods and services.

We refer to this as a market economy. People, not the government, are in charge of the economy. The market economy of the United States is capitalist.

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Related Questions

You have been asked by the CEO of Mountaineer Co. To assist in analyzing product costs. This analysis is used in internal decision making and in reporting to investors. The following Tableau Dashboard provides data needed for the analysis. Prepare an income statement for the company. Note: use cost of goods sold calculated in part 1.

Rent Expense Factory 45,000

Repairs Expense Factory 11. 500

Factory Utilities 9,500

Factory supplies used 14,000

Indirect labor 38,000

Raw Materials Beginning: 60,000

Raw Materials purchases: 140,000

Raw Materials Used: solve for this value

Raw materials ending: 64,000

Answers

The raw materials used were $76,000. This Cost of goods sold is calculated by subtracting ending raw materials from the beginning balance and adding purchased raw materials.

In this case, beginning raw materials were $60,000, purchased raw materials were $140,000, and ending raw materials were $64,000. So the raw materials used were $76,000 ($60,000 - $64,000 + $140,000). This value was subsequently added to the price of the goods sold. Total costs were then subtracted from net income to determine the company's net income.

Mountaineer Company Income Statement

Gross income: $500,000

Less: Cost of goods sold: $236,000

Net income: $264,000

Factory rental cost: $45,000

Cost of factory repairs: $11,500

Factory Service: $9,500

Factory material used: $14,000

Indirect labor: $38,000

Raw materials used: $76,000

Total cost: $194,000

Net income: $70,000

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g Suppose you buy a share of stock today for $5,000 and sell it for $9,000 at the end of four years. What interest rate will you have earned on your investment

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You will have earned 7.62% interest on your money with the investment for $5,000 and sell it for $9,000 at the end of four years.

What is the interest rate?

Interest rate is the amount of interest paid each month, expressed as a percentage of the amount lent, invested, or borrowed. Borrowed money and total interest on borrowed money depend on the principal, the annual interest rate, the consistency of compounding interest, and the term of the loan, deposit, or borrowing.

Stock today = $5,000

Stock value after 8 years = $9,000

Future value = Present value × (1 + Rate of Interest)^Year

9,000 = 5,000 × (1 + Rate of Interest)⁸

1.80125 = (1 + Rate of Interest)⁸

1.0762 = (1 + Rate of Interest)⁸

Rate of Interest = 0.0762 which is 7.62%

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The full question is,

Suppose you buy a share of stock today for $5,000 and sell it for $9,000 at the end of eight years. What interest rate will you have earned on your investment?

8.95%

7.62%

6.87%

9.21%

Other things the same, as the maturity of a bond becomes longer, the bond will pay...
a. a lower interest rate because it has less risk.
b. a lower interest rate because it has more risk.
c. a higher interest rate because it has more risk.
d. the same interest rate, because there is no relationship between term and risk.

Answers

The interest rate on the bond will often be higher and less erratic in the secondary bond market as the period to maturity gets longer.

What does a bond's maturity have to do with anything?

When a bond matures, its principal and interest are repaid. For instance, a bond with a 10-year maturity period will be paid out to the holder when it matures. Time to maturity, which calculates how long it will be until a bond matures, is another term used frequently by investors. The issuer is required to pay the bond's owner the bond's face value plus any accumulated interest on the maturity date. Most bonds have periodic interest payments, with the sole interest paid at maturity being the amount earned since the last payment.

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On January 1, 2020, Riverbed Company makes the two following acquisitions. 1. Purchases land having a fair value of $370,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $561,686. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $550,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Riverbed Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method

Answers

Discount on Payable Notes, Payable Interest, and Interest Expense are each $22,000, $15,000, and $20,424 accordingly.

What is the interest payable ?

1. January 1, 2020, Account Titles and Explanation, Credit, Debit, Land, Discount on Notes Payable, Notes Payable, 337,012.                                 2. January 1, 2020, Notes Payable 250,000, Equipment 185,673, Discount on Notes Payable 64,327, and Account Titles and Explanation Debit Credit. A. 2. Calculation of the discount on payable notes is then performed: Present value of $250,000 due in 8 years at 11% of maturity value equals $250,000 x 0.43393, which is $108,483.

Present value of $15,000 payable every year for 8 years at a rate of 11% per year equals $15,000 x 5.14612 to 77,192. Discounted from the note's present value of $165,675 is $64,325. Discount on Notes Payable: ($200,000 x 11%) Equals $22,000 (a) (b) 2. The cost of interest is ($185,675 x 11%) = $20,424 , Interest Payable = (15%) ($250,000 x 6%)

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What is an internment camp in America?

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A facility used to house prisoners of war, foreign enemies, political captives, etc. a facility built by the government of the United States to hold Japanese Americans following the assaults on Pearl Harbor as a internment camp for civilians, particularly those who had connections to an enemy during a conflict.

Internment of Japanese Americans refers to the forcible displacement of thousands of Japanese Americans to detention camps by the American government during World War II. The federal government's lengthy history of racist and discriminatory treatment of Asian immigrants and their descendants, which started with restrictive immigration rules in the late 1800s, reached its apex with that action.

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Indra is an employee who is required to be on-call at her employer's site once per month for eight hours. She earns a salary of $58,750 per year for a 45-hour workweek and is paid biweekly. What is Indra's gross pay for a pay period that includes on-call time

Answers

Indra's gross pay for a pay period that includes on-call time is  $247.84 + regular pay for the pay period

The term "gross income" is used to describe an individual's total income before any deductions are applied. First, calculate the hourly rate by dividing the annual salary by the number of hours worked per year: $58,750 / (45 hours/week x 52 weeks/year) = $30.96/hour

Then, multiply the hourly rate by the number of on-call hours to determine the pay for the on-call time: $30.96/hour x 8 hours = $247.84

Finally, add the on-call pay to the regular pay for the pay period to calculate the gross pay: $247.84 + regular pay for the pay period = gross pay for the pay period.

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Paprus Inc. provided the following information for its manufacturing division: Revenues $650,000 Operating expenses $400,000 Service department charges $ 95,000 Invested assets $600,000 Assume that Paprus Inc. has established 20% as the minimum acceptable return on divisional assets. Determine the residual income for the manufacturing division.

Answers

Residual income for the manufacturing division is $155,000 - $31,000 = $124,000. Residual income for the manufacturing division can be calculated by subtracting operating expenses and service department fees from revenues to obtain net operating income.

Then multiply net operating income by the division's minimum acceptable return on assets (20%) and subtract that amount from net operating income. This difference is the residual income for the manufacturing division. In this case, net operating income is $650,000 - $400,000 - $95,000 = $155,000. Multiplying net operating income by the division's minimum acceptable return on assets (20%) yields $155,000 x 0.2 = $31,000.

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communication in work teams v. traditional organization (Communication patterns are different in successful team environments as compared with traditional organizational structures:)
-Trust building is the primary factor that changes the organization's communication patterns.
-Open meetings are an important method for enhancing communication, as they educate employees about the business while building bridges of understanding and trust.
-Shared leadership, which involves more direct and effective communication between management and its internal customers, is common.
-Listening, problem solving, conflict resolution, negotiation, and consensus become important factors in group communication.
-Information flows vertically up to management and down to workers, as well as horizontally among team members, other teams, and supervisors.

Answers

Information is exchanged through communication. Communication can be categorized as spoken, nonverbal, or written. Internal, external, group and public discourse are all examples of this type of communication. Correspondingly, communication patterns reveal the ebb and flow of information exchanged among members of a group. It is a fundamental skill in any group setting.

In a business setting, the ways in which information is shared are governed by established communication patterns. According to established procedures, they serve as vital communication ties between different departments and teams.

These regularities have to do with the distribution of responsibilities and communications inside a company. It's connected to the group's decision-making and members' happiness, too. This concept can be used for conversations between individuals, but it can also be generalized to groups.

All-to-one communication is when many people share information with one person, and one-to-all communication is when one person shares information with many others. Public speeches, for instance, might be interpreted as employing a one-to-many mode of discourse.

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An income producing property rents for $1,000 per month and the GRM is 84. What is the estimated market value of the property

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The property's estimated market value is 84 x $1,000 = $84,000.

What is Market value?

The price at which an item would trade in a competition auction environment is known as its market value, or OMV. Despite the fact that these phrases have different meanings under various standards and might have variations in some situations, market value is frequently interchangeable with open market value, fair value, and fair market value.

Market value is the amount that an asset would sell for on the open market or the estimation that the financial community makes of a certain equity or company. Market value is the price at which a home would ordinarily sell.

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What was one reason that the US Congress was unable to resolve the nation's economic problems while operating under the Articles of Confederation?

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One reason that the US Congress was unable to resolve the nation's economic problems while operating under the Articles of Confederation was that it lacked the authority to levy taxes or regulate interstate trade.

What is the interstate?

An interstate is a highway that is part of the United States National Highway System, which is a network of highways that are federally funded and managed by the U.S. Department of Transportation. Interstates are designed for high-speed travel between major cities, towns, and other destinations. Interstates are typically marked with an even number, and have a speed limit of 65 mph or higher. Interstates are usually divided into three or four lanes in each direction, with minimal access to side roads. Interstates also have median strips, which are designed to reduce the chance of head-on collisions. Interstates are constructed to have a minimum amount of curves and hills, and are generally safer than other roads due to their design.

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What type of type of resource biotic and abiotic and renewable and non-renewable resources are?

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Biotic resources are living or once-living organisms, such as plants, animals, and microorganisms.

What is Biotic?

Biotic refers to any living organism or part of an organism. This includes plants, animals, fungi, and microorganisms. Biotic components form the basis of all ecosystems and are essential for the maintenance of life on Earth. Biotic organisms interact with each other and with the physical environment, forming complex networks of energy and nutrients. These networks form food webs, in which organisms consume and are consumed by other organisms, while also providing a range of services to the environment, such as nutrient cycling and climate regulation.

Abiotic resources are non-living resources, such as air, water, and minerals. Renewable resources are resources that can be replenished naturally, such as solar energy, wind energy, and water. Non-renewable resources are resources that cannot be replenished, such as fossil fuels and minerals.

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What are the 3 most common economic systems ?

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The three main types of economic system are: free market, command, and mixed.

Free-Market Economies

In this type of economic system businesses and individuals have the freedom to pursue their own economic interests. It is often called capitalist economy. Here buying and selling goods happens on a competitive market. And the market here defines a fair price for goods and services.

Command Economy

It is also known as a Centrally Planned Economy because the central, or national, government plans the economy. Basically, communist states have command economies.

Mixed Economy

This system combines elements of free-market and command economies.

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Choose the most appropriate action for making a large purchase.
a. use a credit card with attractive perks and high interest
b. use a low interest credit card and wait until the last month to pay off debt
c. even if you have to make a few late payments, use a credit card for simplicity
d. pause before purchasing to ask yourself, "do i need this item and can i afford it?"
please select the best answer from the choices provided a b c d

Answers

The most appropriate action for making a large purchase is pause before purchasing to ask yourself, "Do I need this item and can I afford it?"

Hence, Option D is correct.

What do you mean by payment?

Cash (bills and change) is one of the most widely used payment methods.The buyer's account is used to order personal checks (US checks).Debit Card: When using a debit card to make a purchase, the money is taken right out of the customer's account. In general, using credit cards as a form of payment when shopping online is the safest and most secure option. Your accounts and personal information are protected using credit cards' online security features, such as fraud monitoring and encryption.An IRA or other qualified retirement plan can be funded before the age of 5912 without incurring IRS penalties by using a SEPP, or substantially equal periodic payment.

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Policies that affect the supply, demand, and value of a nation's currency are:
a. International standards policies.
b. Monetary policies.
c. Fiscal policies.
d. Social assistance policies.

Answers

Policies that affect the supply, demand, and value of a nation's currency are (B) Monetary policies.

The proportion of customers' purchases that were made at the retailer, or share of wallet. Customer loyalty refers to a customer's commitment to using the retailer's goods and services and their reluctance to participate in competitors' marketing campaigns.

Total revenue is the sum of money a company makes from sale in a specific time frame. Net income is the difference between a company's sales for a specific time period and its expenses for that same time period.

One-to-one marketing, often known as 1:1 marketing, is a tactic that places a strong emphasis on providing clients with a unique experience. The idea behind personalization is to increase client loyalty and generate a high yield on marketing expenditure. One-to-one instruction isn't inherently a novel idea.

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If employees do not honestly communicate about business issues, it can lead to Multiple choice question. poor financial performance. enhanced self-interest. transparent workplaces. greater personal values.

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Employees' self interest may increase if they don't openly discuss work-related difficulties.

What types of self interests are these?

Self-interest simply refers to the pursuit of one's own interests. You go over to work in order to earn money so you can purchase the items you want. You attend school in order to one day obtain a better position and earn more cash to fulfill your wants and needs.

Why is rational self-interest crucial?

By securing and preserving market share, recruiting and retaining a talented personnel, and guaranteeing that resources and natural resources are accessible in the future, enlightened self interest boosts corporate value.

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Farrah, a regional manager for an HVAC equipment retailer, received an e-mail from the CEO outlining the new goal of decreasing company costs over the next three years. This is an example of a strategic goal. (T/F)

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True, the goal of decreasing company costs over the next three years outlined in the e-mail from the CEO to Farrah, a regional manager for an HVAC equipment retailer, is an example of a strategic goal.

Strategic goals are high-level objectives that align with an organization's overall mission and vision. They are meant to guide the organization's decision-making and resource allocation over a longer period of time. In this case, the goal of decreasing company costs is a strategic goal that aligns with the organization's overall mission of being profitable and sustainable in the long term.

Strategic goals typically cover a longer time frame than operational goals, which focus on day-to-day activities. They also involve the entire organization and its different departments, which makes sure that all the operations are working together to achieve the goal.

Overall, the goal of decreasing company costs outlined in the e-mail from the CEO is an example of a strategic goal, as it is a high-level objective that aligns with the organization's overall mission, covers a longer time frame, and involves the entire organization.

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The bookkeeper prepared a check for $58 but accidentally recorded it as $85. When preparing the bank reconciliation, this should be corrected by: Select one:

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The book balance is increased by $27. The cheque was written for $58 but was mistakenly recorded as $85. reconciling the bank statements

What does it entail to reconcile?

the process of rekindling friendship between two parties or groups after a dispute or fight. [noncount] The conclusion of the trade deal was hailed as a sign of amity between the two nations.

What does the Bible mean by reconciliation?

The Greek word for "reconciliation" actually implies to fully alter. The Bible says in Colossians 1:20–22 that sinners are enemies of God and one another in their hearts because of their evil deeds, but that God has made restitution through the sacrifice of Jesus.

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The annual budget resolutions required by the Congressional Budget Act of 1974 are based on recommendations from the Office of Budget Management and the __________.

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The annual budget resolutions required by the Congressional Budget Act of 1974 are based on recommendations from the Office of Budget Management and the President of the United States.

An enterprise budget is a spending plan in your enterprise based on your income and prices. It identifies your to-be-had capital, estimates your spending, and enables you are expecting sales. Finances assist you to plan your enterprise activities and may act as a yardstick for setting up financial dreams.

Finance is a plan you write down to determine how you may spend your money every month. A budget allows you to ensure you will have sufficient money each month. without a budget, you may run out of cash before your subsequent paycheck. Finance shows you: how a whole lot of cash you make. In-depth and practical finances are one of the maximum vital tools for steering your commercial enterprise.

A budget provides important records for working inside your manner, managing surprising demanding situations, and turning a profit. A proper price range will pick out to be had capital, estimate prices, and anticipate sales.

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________ includes the tasks, activities, and responsibilities required to execute each step in a business process. Multiple Choice Automation Swim lane Streamlining Workflow

Answers

The correct option to the given question about business process is option d) Work Flow.

An organized and repetitive pattern of activity is referred to as a workflow, which is made possible by the methodical division of resources into operations that perform material transformation, service provision, or information processing. It can be represented as a series of processes, the work of an individual or group, the work of a staffing agency, or one or more basic or sophisticated procedures. Workflow may be viewed or interpreted as a view or representation of actual work from a more abstract or higher-level perspective. The document, service, or product being transferred from one phase to another may be the subject of the flow being discussed. Workflows can be thought of as a basic building block that can be integrated with other organizational structure elements like information technology, teams, projects, and hierarchies.

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What is known as environment?

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Environment is the physical and biological conditions that exist in a particular area or region. It includes climate, physical features, terrain, flora and fauna, and available resources. The environment is affected by both natural and human activities.

It is important to maintain a balance between human activity and the environment in order to preserve the delicate balance of life on Earth. Human activities such as deforestation, overgrazing and pollution can have a detrimental impact on the environment, while sustainable development practices such as conservation, afforestation and renewable energy sources can help protect the environment. It is up to us to ensure that we contribute to the protection and preservation of the environment for future generations.

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The workers in a factory produce widgets and whoosits. For each product, production time is constant and identical for all workers, but not necessarily equal for the two products. In one hour, 100 workers can produce 300 widgets and 200 whoosits. In two hours, 60 workers can produce 240 widgets and 300 whoosits. In three hours, 50 workers can produce 150 widgets and $m$ whoosits. Find $m$.

Answers

In three hours, 50 workers can produce 150 widgets and 250 whoosits.

We can begin solving the problem by using the information given in the problem to set up equations and then solve for the unknown variable.

We know that in one hour, 100 workers can produce 300 widgets and 200 whoosits. So, the production rate for widgets is 300 widgets per 100 workers per hour and the production rate for whoosits is 200 whoosits per 100 workers per hour.

In two hours, 60 workers can produce 240 widgets and 300 whoosits. So, the production rate for widgets is 120 widgets per 60 workers per hour and the production rate for whoosits is 150 whoosits per 60 workers per hour.

In three hours, 50 workers can produce 150 widgets and $m$ whoosits. So, the production rate for widgets is 50 widgets per 50 workers per hour and the production rate for whoosits is m/50 whoosits per 50 workers per hour.

Now we have the production rate for the three-time frames and two products, We can set up equations using this information:

$\frac{300}{100}=\frac{240}{60}=\frac{150}{50}$ for widgets

$\frac{200}{100}=\frac{300}{60}=\frac{m}{50}$ for whoosit

From this we can solve for m:

$\frac{m}{50}=\frac{300}{60}$

$m = \frac{300}{60} * 50$

$m = 250$

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the touring of star athletes and teams to promote the popularity of a particular sport were

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The touring of star athletes and teams to promote the popularity of a particular sport were Sports Management/marketing agencies.

What are marketing agencies?

A marketing agency, often known as a creative agency or an ad agency, is a company that specializes in developing, organizing, and managing to advertise and occasionally other forms of promotion and marketing for its customers. Marketing agencies are often independent of the clients they work with; marketing agenciescould be an internal division or agency that lends a fresh perspective to the attempt to market the clients' goods or services, or they could be an external company. For its customers, an agency can also manage their whole marketing and branding initiatives, which may also include sales.

Business and corporate entities, non-profit institutions, and private agencies make up the typical clientele of advertising companies. Advertising production companies can be engaged to create radio, online, in-store, out-of-home, mobile, and augmented reality (AR) advertisements.

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Interruptions in the supply of goods and services in a supply chain caused by an internal or external event that disrupts supply chain operations, causing potential reductions in service levels, product quality, and sales are referred to as:

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Supply chain risks Any stoppage in the flow of a process involving any of the organizations involved in the manufacturing, sales, and distribution of a particular products or service is known as a supply chain disruption.

Maintaining product quality from beginning to end and ensuring that all resources used are of the highest caliber need a well-organized supply chain. A supply chain is a system for acquiring raw materials or component purchases, operations management (which ensures the production of high-quality goods quickly, with good flexibility, and at a low cost), logistics, and marketing channels so that the raw materials can be transformed into finished goods and delivered to the final consumer. Used goods can re-enter the supply chain at any point where there is recyclable residual value in complex supply chain systems. Linking value networks are supply chains. In a supply chain, suppliers are frequently ranked by tier.

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true or false : when you query a database, there is a defined order in which the results are displayed.

Answers

It's true that when you query a database, the order in which the results are displayed is fixed.

ORDER BY statement in SQL is used to sort retrieved data in ascending or descending order by one or more columns. By default, ORDER BY sorts data in ascending order. You can use the DESC keyword to sort the data in descending order and the ASC keyword to sort in ascending order.

You can use the ASC and DESC keywords to sort in ascending or descending order respectively. To sort by multiple columns, separate the column names with the (,) operator. You can tell the system to sort the data in a particular order by adding an ORDER BY clause to your SELECT statement. The ORDER BY clause is a list of column names from remote or local tables or views. You can define a sequence of columns in the select statement's column list. Sometimes it is necessary to sort the result set based on specific column values, conditions, etc. You can use the ORDER BY clause in your select statement to sort the results in ascending or descending order.

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In which of the following instances is being a first-mover not particularly advantageous? When the first-mover already has a sizable global market share OWhen a pioneer is already the industryâTMs low-cost provider or best-cost provider When the first-mover is pioneering a new technology rather than a new product When first-time customers do not remain strongly loyal to pioneering firms in making repeat purchases When the first-mover is employing a blue ocean strategy

Answers

When first-mover customers are not strongly loyal to repeat-buying pioneers.

Early mover disadvantage (or late mover advantage) rarely occurs when: The market response is strong, allowing Pioneer to gain a monopoly position and recoup its investment. First-mover advantages include economies of scale, or time to develop cost-effective ways to manufacture or deliver a product. First mover disadvantages include the risk that the product will be copied or improved by competitors. Even latecomers have a competitive advantage if the cost of copying a product is low.

For example, one study found that in the chemical, pharmaceutical, electronics, and machinery industries, the "cost of imitation" is about two-thirds of the product development cost incurred by the pioneers.

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Jasmine has played basketball since she was six years old. Each winter, she starts practicing for her local team. This year, she has decided to take a job at a supermarket. Jasmine is not able to do both activities, because her shift at the supermarket would begin before the team's practices would end. Based on what you have read, if Jasmine works at the supermarket, what is her opportunity cost

Answers

Answer:

Based on the information provided, if Jasmine chooses to work at the supermarket, her opportunity cost would be giving up her ability to participate in her local basketball team's practices.Opportunity cost is the cost of an alternative that must be foregone in order to pursue a certain action. In other words, it's the second best option or alternative you give up when you choose to pursue a specific goal or objective. In Jasmine's case, if she chooses to take the job at the supermarket, she will not be able to attend the team's practices which is her alternative option. Therefore, her opportunity cost is the benefit she would have gained from participating in the basketball practices.

Explanation:

hope this helps

Answer: D. missing out on playing basketball

Explanation: just got it right on the assignment on edge 2023.

Which product attributes in Shopping campaign ads are important for giving shoppers the most meaningful information needed, all at a single glance

Answers

Prices, product images, and store names are important attributes for advertising in Shopping campaigns, giving shoppers the most meaningful information they need at a glance.

Shopping campaigns help you promote your products by giving users more information about your offers before they click on your ads. You can then track product performance over time using retail-specific reporting tools.

A type of ad that provides detailed information about a specific product for sale. To create a Shopping ad, he sets up product information in Merchant Center a Shopping campaign. Smart Shopping campaigns automatically pull product data from your feed and use it to create Shopping ads specifically designed for your customers. The campaign intelligently places those ads on different faces using the bid strategy of your choice.

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Convergence of lifestyles worldwide makes it ______ for companies to _______.

Answers

Convergence of lifestyles worldwide makes it easier for companies to treat the world as a single market.

What is the convergence of global consumer tastes?

Convergence is a key component for identifying how similar or different consumer spending patterns are developing across countries. The degree of similarity in consumer buying behavior is important in shaping a company's marketing strategy.

How is Convergence Used in Marketing?

In short, convergence turns traditional marketing into yet another set of data points to collect. An example of the fusion of online and offline marketing is Target, a discount service in the United States. Target, like many companies, has spent time building customer profiles based on big data.

What is a convergence strategy?

Strategic convergence means being able to operate with more flexibility, more communication, more interdependencies, more innovation...more than anyone could create on their own. for the possibility

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AOL, Qwest Corporation, and Bristol-Myers Squibb were examples of what accounting gimmick or issue in the accounting scandal craze of the early 2000s?
a. Inflated sales or revenues
b. Illegal payments
c. Round trip trades
d. Understated earnings
e. Conflict of interest

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A - AOL, Qwest Corporation, and Bristol-Myers Squibb were examples of Inflated sales or revenues.

During the accounting scandal craze of the early 2000s, some companies resorted to accounting gimmicks in order to manipulate their financial statements. One of the most common techniques was inflating sales or revenues, which involved recording revenues that had not actually been earned.

For example, AOL, Qwest Corporation, and Bristol-Myers Squibb were found to have inflated their sales or revenues by improperly recognizing revenue from sales that had not yet been completed. This allowed them to report higher sales figures than actually existed, which made their financial statements look more favorable to investors and other stakeholders.

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On July 1, Year 3, Lundy Company issued for $438,000 500 of its 8%, $1,000 bonds. The bonds were issued to yield 10%. The bonds are dated July 1, Year 3, and mature on July 1, Year 13. Interest is payable semiannually on January 1 and July 1. Using the interest method, how much of the bond discount should be amortized for the 6 months ended December 31, Year 3

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Lundy Company will have a bond discount that should be amortized and will be $1,900.

$21,900 worth of interest was paid in the first six months after the bonds were issued [$438,000 carrying amount x 10% effective rate x (6 x 12)]. The regular cash payment equals $20,000 [$500,000 face amount x 8% stated rate x (6 + 12)] every period. The amount of the discount that needs to be amortised over this 6-month interest term is the $1,900 ($21,900 - $20,000) difference.

A bond's bond discount is the difference between the market price and the principal that will be due when the bond matures. Because the higher face value is paid when the bond matures, a bond that was issued at a discount has a market price below its face value. This results in capital growth over time. When a bond offers a coupon rate that is less than the going rate of interest, it will trade at a discount. Investors will pay less for a bond with a coupon rate lower than the going rate because they want a larger yield; the initial discount offsets the lower coupon rate.

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