Eco 372 Week 2 Research Paper
Week Two
Individual Exercises
14-1. What are financial markets? What function do they perform? How would an economy be worse off without them?
Financial markets are the instutions and procedures that enable transactions in all types of financial securities. The function of financial markets is to distribute the savings supply in an economyto those who demand the savings. Economic wealth would decrease and capital formation would be less if our economy didn't have financial markets.
14-3. Distinguish between the money and capital markets.
The maturity period of the securities traded within a market is the distinguishing factor between the money and capital markets. Short term debt instruments issued to borrowers with high credit …show more content…
(Break-even point and operating leverage) Allison Radios manufactures a complete line of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year.
a. What is the break-even point in units for the company?
Total Income = 180x and Total cost = 126x + 540000
At break-even, 180x = 126x + 540000
54x = 540000 x = 10000 units
b. What is the dollar sales volume the firm must achieve in order to reach the break-even point?
Sales volume = 180 * 10000 = $1800000
c. What would be the firm’s profit or loss at the following units of production sold: 12,000 units? 15,000 units? 20,000 units?
Profit = Income - Cost = 180x - 126x - 540000 = 54x - 540000
P(x) = 54x -
Individual Exercises
14-1. What are financial markets? What function do they perform? How would an economy be worse off without them?
Financial markets are the instutions and procedures that enable transactions in all types of financial securities. The function of financial markets is to distribute the savings supply in an economyto those who demand the savings. Economic wealth would decrease and capital formation would be less if our economy didn't have financial markets.
14-3. Distinguish between the money and capital markets.
The maturity period of the securities traded within a market is the distinguishing factor between the money and capital markets. Short term debt instruments issued to borrowers with high credit …show more content…
(Break-even point and operating leverage) Allison Radios manufactures a complete line of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year.
a. What is the break-even point in units for the company?
Total Income = 180x and Total cost = 126x + 540000
At break-even, 180x = 126x + 540000
54x = 540000 x = 10000 units
b. What is the dollar sales volume the firm must achieve in order to reach the break-even point?
Sales volume = 180 * 10000 = $1800000
c. What would be the firm’s profit or loss at the following units of production sold: 12,000 units? 15,000 units? 20,000 units?
Profit = Income - Cost = 180x - 126x - 540000 = 54x - 540000
P(x) = 54x -