Solution-What is the marginal opportunity cost to the

What is the marginal opportunity cost to the corporation

Reference no: EM131086519

Assignment

1. Many corporations allow CEOs to use the firm's corporate jet for personal travel (see the Mini-Case "Company Jets" in Chapter 7 for more details). The Internal Revenue Service (IRS) requires that the firm report personal use of its corporate jet as taxable executive income, and the Securities and Exchange Commission (SEC) requires that publicly traded cor-porations report the value of this benefit to share-holders. An important issue is the determination of the value of this benefit. The IRS values a CEO's personal flight at or below the price of a first-class ticket. The SEC values the flight at the "incremental" cost of the flight: the additional costs to the corpora-tion of the flight. The third alternative is the market value of chartering an aircraft. Of the three methods, the first-class ticket is least expensive and the char-tered flight is most expensive.

a. What factors (such as fuel) determine the mar-ginal explicit cost to a corporation of an execu-tive's personal flight? Does any one of the three valuation methods correctly determine the marginal explicit cost?

b. What is the marginal opportunity cost to the corporation of an executive's personal flight?

2. Three firms have identical revenue and profit functions with the same general shape as those in Figure 7.3. Firm 1 is a private sector firm operated by an owner-manager who wishes to maximize profit. Firm 2 is managed by an income-maximizing manager whose pay is proportional to the firm's revenue. Firm 3 is a government-owned firm that has been instructed to maximize the amount of employment, L ,subject to the constraint that revenue must not be negative. To increase q , L must increase. Which of these firms produces the most, which the least, and which is in the middle? Show the output level of each firm in a diagram.

Reference no: EM131086519

Questions Cloud

Analyzing the role that health care leaders should have : Write a 1,400- to 1,750-word paper analyzing the role that health care leaders should have in dealing with the threechallenges at the local and national levels

Identify the potential sources of finance : HND Diploma in Business - MANAGING FINANCIAL RESOURCES AND DECISIONS Understand the sources of finance available to a business and understand the implications of finance as a resource within a business

Briefly describe the accounting for esos : Briefly describe the accounting for ESOs. Why is there a cost when a company grants ESOs with an exercise price equal to the current market price?

Calculate the expected path length : 1. Calculate the expected path length, variance and standard deviation of path length 2. Calculate the probability that the path length exceeds 3.0 µm

What is the marginal opportunity cost to the corporation : What is the marginal opportunity cost to the corporation of an executive's personal flight? What factors (such as fuel) determine the mar-ginal explicit cost to a corporation of an execu-tive's personal flight?

Which is performed in operating room after administration : A 60-year-old patient was admitted with emphysematous nodules. A thoracoscopic wedge resection was performed in the left lung to remove the nodules. This resection was performed on the upper and lower lobes. Report code(s) _____.

Write a subroutine that can count the number of characters : Write a subroutine that can count the number of characters

Write a subroutine that can multiply two 32-bit unsigned : The pointer to the buffer to hold the product is passed in index register X.

Invested in bank now to obtain same benefit : The company expects the project will produce a one-time benefit of $850,000 two years from now. The interest rate at a local bank is 9% per year. How much would need to be invested in the bank now to obtain the same benefit?

User Account

All Pages

What is the marginal opportunity cost to the corporation

Reference no: EM131086519

Reference no: EM131086519

Questions Cloud

Reviews

Write a Review

Microeconomics Questions & Answers

What is the cost ratio for the two products

Graph the museums average total cost curve and its

Game theory and rival strategies

What is meant by opportunity cost write the opportunity

A policy of maintaining a fixed interest

Ontrast the broadband methods for home internet access

If q=k^1/3l^2 the mpl is what

Information on production and cost

Why does insurer frequently need permission of insured to

Intermediate microeconomic theory

Describe and explain the performance trends

At the consumers optimum

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT