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1. What is the difference between a static (master) budget and a flexible budget?
Ans: static budget is where a budget doesn't change a volume changes. An example could be that if the budget started out at $300,000, yet sales were $500,000, the budget would remain at $300,000. A flexible budget would adjust for changes in activity and volume either via an increase or decrease in price.
Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by Qd=100-3P. The annual market supply is given by Qs=P. In both
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