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#### Flashcard 1428234833164

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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4 #summary
Question
[...] auctions sell items that have the same value to all bidders, but bidders can only estimate that value before the auction is completed.
Common value

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Sometimes auctions are used to seek equilibrium prices. Common value auctions sell items that have the same value to all bidders, but bidders can only estimate that value before the auction is completed. Overly optimistic bidders overestimate the true va

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SUMMARY
ven price, the quantity demanded exceeds the quantity supplied, there is excess demand and price will rise. If, at a given price, the quantity supplied exceeds the quantity demanded, there is excess supply and price will fall. <span>Sometimes auctions are used to seek equilibrium prices. Common value auctions sell items that have the same value to all bidders, but bidders can only estimate that value before the auction is completed. Overly optimistic bidders overestimate the true value and end up paying a price greater than that value. This result is known as the winner’s curse. Private value auctions sell items that (generally) have a unique subjective value for each bidder. Ascending price auctions use an auctioneer to call out ever increasing prices until the last, highest bidder ultimately pays his/her bid price and buys the item. Descending price, or Dutch, auctions begin at a very high price and then reduce that price until one bidder is willing to buy at that price. Second price sealed bid auctions are sometimes used to induce bidders to reveal their true reservation prices in private value auctions. Treasury notes and some other financial instruments are sold using a form of Dutch auction (called a single price auction) in which competitive and non-competitive bids are arrayed in descending price (increasing yield) order. The winning bidders all pay the same price, but marginal bidders might not be able to fill their entire order at the market clearing price. Markets that work freely can optimize society’s welfare, as measured by consumer surplus and producer surplus. Consumer surplus is the difference between the total value

#### Flashcard 1428241911052

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4 #summary
Question
[...] auctions use an auctioneer to call out ever increasing prices until the last, highest bidder ultimately pays his/her bid price and buys the item.
Ascending price

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y optimistic bidders overestimate the true value and end up paying a price greater than that value. This result is known as the winner’s curse. Private value auctions sell items that (generally) have a unique subjective value for each bidder. <span>Ascending price auctions use an auctioneer to call out ever increasing prices until the last, highest bidder ultimately pays his/her bid price and buys the item. Descending price, or Dutch, auctions be

#### Original toplevel document

SUMMARY
ven price, the quantity demanded exceeds the quantity supplied, there is excess demand and price will rise. If, at a given price, the quantity supplied exceeds the quantity demanded, there is excess supply and price will fall. <span>Sometimes auctions are used to seek equilibrium prices. Common value auctions sell items that have the same value to all bidders, but bidders can only estimate that value before the auction is completed. Overly optimistic bidders overestimate the true value and end up paying a price greater than that value. This result is known as the winner’s curse. Private value auctions sell items that (generally) have a unique subjective value for each bidder. Ascending price auctions use an auctioneer to call out ever increasing prices until the last, highest bidder ultimately pays his/her bid price and buys the item. Descending price, or Dutch, auctions begin at a very high price and then reduce that price until one bidder is willing to buy at that price. Second price sealed bid auctions are sometimes used to induce bidders to reveal their true reservation prices in private value auctions. Treasury notes and some other financial instruments are sold using a form of Dutch auction (called a single price auction) in which competitive and non-competitive bids are arrayed in descending price (increasing yield) order. The winning bidders all pay the same price, but marginal bidders might not be able to fill their entire order at the market clearing price. Markets that work freely can optimize society’s welfare, as measured by consumer surplus and producer surplus. Consumer surplus is the difference between the total value

#### Flashcard 1428875250956

Tags
#derecho #introduccion-al-derecho #legislacion-y-proceso-legislativo
Question

La iniciativa de ley es un proyecto que se presenta al Poder Legislativo para éste lo estudie, analice y, en su caso, siguiendo el proceso que señala la Constitución Política de los Estados Unidos Mexicanos, se convierta en ley; a la Cámara que primero recibe el proyecto de ley se le llama [...].

Cámara de Origen

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l Poder Legislativo para éste lo estudie, analice y, en su caso, siguiendo el proceso que señala la Constitución Política de los Estados Unidos Mexicanos, se convierta en ley; a la Cámara que primero recibe el proyecto de ley se le llama <span>Cámara de Origen. <span><body><html>

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2.1 CLASIFICACIÓN DE LAS FUENTES DEL DERECHO

#### Flashcard 1429084179724

Tags
#sister-miriam-joseph #trivium
Question

This was the training that formed the intellectual habits of Shakespeare and other Renaissance writers...
Exercising in the reading of the Latin classics and in the composition of Latin prose and verse

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It was systematically and intensively exercised in the reading of the Latin classics and in t he composition of Latin prose and verse by boys in the grammar schools of England and the continent during the sixteenth century. This was the training that formed the int ellectual habits of Shakespeare and other Renaissance writers.

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#### Flashcard 1435006012684

Tags
#algebra-baldor
Question
Una misma letra puede representar distintos valores diferenciándolos por medio de [...]
comillas; por ejemplo: a a "

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Una misma letra puede representar distintos valores diferenciándolos por medio de comillas; por ejemplo: a a " , a'", que se leen a prima, a se gunda, a tercera, o también por medio de subíndices; por ejemplo: alt a2, (h, que se leen a subuno, a subdos, a subtres.

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#### Annotation 1435710131468

 Skeletal muscle typi- cally accounts for 30% to 50% of the total body mass.

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#### Annotation 1435711704332

 The motor unit consists of a single motor neuron and all the muscle fi bers that it activates.

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#### Annotation 1435713277196

 small motor units that are recruited during sustained activity contain a high proportion of type I muscle fi bers, which are highly oxidative and resistant to fatigue. In contrast, the large motor units that are recruited for brief periods—for rapid, powerful activity—typically consist of type IIa and IIb

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#### Annotation 1435714850060

 During contraction, the force exerted by a muscle depends on (1) how many motor units are recruited and (2) how frequently each of the active motor neurons fi re action potentials.

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#### Annotation 1435716422924

 Motor units are recruited in a progressive order, from the smallest (i.e., fewest number of muscle fi bers) and therefore the weakest motor units to the largest and stron- gest. This intrinsic behavior of motor unit recruitment is known as the size principle and refl ects inherent differences in the biophysical properties of respective motor neurons.

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#### Annotation 1435719568652

 Storleksprincipen #has-images Storlektsprincipen beror på att mindre motorneuroner innerverar ett mindre antal Ia muskelfibrer medan större neuroner innerverar typ II muskelfibrer. De mindre neuroenerrna rekryteras först eftersom att de har lägst resistans och därmed exciteras lättast.

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#### Annotation 1435723762956

#2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4

### 2.1.3. Economic Rent

The surplus value known as economic rent results when a particular resource or good is fixed in supply (with a vertical supply curve) and market price is higher than what is required to bring the resource or good onto the market and sustain its use. Essentially, demand determines the price level and the magnitude of economic rent that is forthcoming from the market. Exhibit 1 illustrates this concept, where P1 is the price level that yields a normal profit return to the business that supplies the item. When demand increases from Demand1 to Demand2, price rises to P2, where at this higher price level economic rent is created. The amount of this economic rent is calculated as (P2P1) × Q1. The firm has not done anything internally to merit this special reward: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an increase in quantity when price rises.

Exhibit 1. Economic Rent

Because of their limited availability in nature, certain resources—such as land and specialty commodities—possess highly inelastic supply curves in both the short run and long run (shown in Exhibit 1 as a vertical supply curve). When supply is relatively inelastic, a high degree of market demand can result in pricing that creates economic rent. This economic rent results from the fact that when price increases, the quantity supplied does not change or, at the most, increases only slightly. This is because of the fixation of supply by nature or by such artificial constraints as government policy.

How is the concept of economic rent useful in financial analysis? Commodities or resources that command economic rent have the potential to reward equity investors more than what is required to attract their capital to that activity, resulting in greater shareholders’ wealth. Evidence of economic rent attracts additional capital funds to the economic endeavor. This new investment capital increases shareholders’ value as investors bid up share prices of existing firms. Any commodity, resource, or good that is fixed or nearly fixed in supply has the potential to yield economic rent. From an analytical perspective, one can obtain industry supply data to calculate the elasticity of supply , which measures the sensitivity of quantity supplied to a change in price. If quantity supplied is relatively unresponsive ( inelastic ) to price changes, then a potential condition exists in the market for economic rent. A reliable forecast of changes in demand can indicate the degree of any economic rent that is forthcoming from the market in the future. When one is analyzing fixed or nearly fixed supply markets (e.g., gold), a fundamental comprehension of demand determinants is necessary to make rational financial decisions based on potential economic rent.

EXAMPLE 1 Economic Rent and Investment Decision Making

The followin

...

2. OBJECTIVES OF THE FIRM

#### Annotation 1435728219404

 #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 Essentially, demand determines the price level and the magnitude of economic rent that is forthcoming from the market.

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plus value known as economic rent results when a particular resource or good is fixed in supply (with a vertical supply curve) and market price is higher than what is required to bring the resource or good onto the market and sustain its use. <span>Essentially, demand determines the price level and the magnitude of economic rent that is forthcoming from the market. Exhibit 1 illustrates this concept, where P 1 is the price level that yields a normal profit return to the business that supplies the item. When demand increases from Demand 1 to Dema

#### Original toplevel document

2. OBJECTIVES OF THE FIRM

#### Annotation 1435736870156

 Economic rent #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 The surplus value known as economic rent results when a particular resource or good is fixed in supply (with a vertical supply curve) and market price is higher than what is required to bring the resource or good onto the market and sustain its use. Demand determines the price level and the magnitude of economic rent that is coming from the market. Exhibit 1 shows it. P1 is the price level that yields a normal profit to the business that supplies the item. When demand increases from Demand1 to Demand2, price rises to P2, where at this higher price level economic rent is created. The amount of this economic rent is calculated as (P2 – P1) × Q1. The firm has not done anything internally to merit this special reward: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an increase in quantity when price rises.

#### Flashcard 1435738180876

Tags
#2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4

Question
P1 is the price level that yields a [...] to the business that supplies the item.

When demand increases from Demand1 to Demand2, price rises to P2, where at this higher price level [...] is created.
normal profit

economic rent

The firm has not done anything to get it: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an increase in quantity when price rises.

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Economic rent
ng the resource or good onto the market and sustain its use . Demand determines the price level and the magnitude of economic rent that is coming from the market. Exhibit 1 shows it. P 1 is the price level that yields a <span>normal profit to the business that supplies the item. When demand increases from Demand 1 to Demand 2 , price rises to P 2 , where at this higher price level economic rent is created.&#13

#### Flashcard 1435741064460

Tags
#2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4

Question

The amount of this economic rent is calculated as [...].
(P2P1) × Q1

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Economic rent
to the business that supplies the item. When demand increases from Demand 1 to Demand 2 , price rises to P 2 , where at this higher price level economic rent is created. The amount of this economic rent is calculated as <span>(P 2 – P 1 ) × Q 1 . The firm has not done anything internally to merit this special reward: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an in

#### Annotation 1435744210188

 #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 Because of their limited availability in nature, certain resources—such as land and specialty commodities—possess highly inelastic supply curves in both the short run and long run (shown in Exhibit 1 as a vertical supply curve).

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nternally to merit this special reward: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an increase in quantity when price rises. Exhibit 1. Economic Rent <span>Because of their limited availability in nature, certain resources—such as land and specialty commodities—possess highly inelastic supply curves in both the short run and long run (shown in Exhibit 1 as a vertical supply curve). When supply is relatively inelastic, a high degree of market demand can result in pricing that creates economic rent. This economic rent results from the fact that when price increases,

#### Original toplevel document

2. OBJECTIVES OF THE FIRM

#### Annotation 1435746307340

 #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 From an analytical perspective, one can obtain industry supply data to calculate the elasticity of supply , which measures the sensitivity of quantity supplied to a change in price.

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conomic endeavor. This new investment capital increases shareholders’ value as investors bid up share prices of existing firms. Any commodity, resource, or good that is fixed or nearly fixed in supply has the potential to yield economic rent. <span>From an analytical perspective, one can obtain industry supply data to calculate the elasticity of supply , which measures the sensitivity of quantity supplied to a change in price. If quantity supplied is relatively unresponsive ( inelastic ) to price changes, then a potential condition exists in the market for economic rent. A reliable forecast of changes in dema

#### Original toplevel document

2. OBJECTIVES OF THE FIRM

#### Annotation 1435748404492

 #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 When one is analyzing fixed or nearly fixed supply markets (e.g., gold), a fundamental comprehension of demand determinants is necessary to make rational financial decisions based on potential economic rent.

#### Parent (intermediate) annotation

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onsive ( inelastic ) to price changes, then a potential condition exists in the market for economic rent. A reliable forecast of changes in demand can indicate the degree of any economic rent that is forthcoming from the market in the future. <span>When one is analyzing fixed or nearly fixed supply markets (e.g., gold), a fundamental comprehension of demand determinants is necessary to make rational financial decisions based on potential economic rent. EXAMPLE 1 Economic Rent and Investment Decision Making The following market data show the global demand, global supply, and price on an annual basis for gold over the

#### Original toplevel document

2. OBJECTIVES OF THE FIRM
er competing firms to compete away any economic profit over the long run. Economic profit that exists over the long run is usually found where competitive conditions persistently are less than perfect in the market. <span>2.1.3. Economic Rent The surplus value known as economic rent results when a particular resource or good is fixed in supply (with a vertical supply curve) and market price is higher than what is required to bring the resource or good onto the market and sustain its use. Essentially, demand determines the price level and the magnitude of economic rent that is forthcoming from the market. Exhibit 1 illustrates this concept, where P 1 is the price level that yields a normal profit return to the business that supplies the item. When demand increases from Demand 1 to Demand 2 , price rises to P 2 , where at this higher price level economic rent is created. The amount of this economic rent is calculated as (P 2 – P 1 ) × Q 1 . The firm has not done anything internally to merit this special reward: It benefits from an increase in demand in conjunction with a supply curve that does not fully adjust with an increase in quantity when price rises. Exhibit 1. Economic Rent Because of their limited availability in nature, certain resources—such as land and specialty commodities—possess highly inelastic supply curves in both the short run and long run (shown in Exhibit 1 as a vertical supply curve). When supply is relatively inelastic, a high degree of market demand can result in pricing that creates economic rent. This economic rent results from the fact that when price increases, the quantity supplied does not change or, at the most, increases only slightly. This is because of the fixation of supply by nature or by such artificial constraints as government policy. How is the concept of economic rent useful in financial analysis? Commodities or resources that command economic rent have the potential to reward equity investors more than what is required to attract their capital to that activity, resulting in greater shareholders’ wealth. Evidence of economic rent attracts additional capital funds to the economic endeavor. This new investment capital increases shareholders’ value as investors bid up share prices of existing firms. Any commodity, resource, or good that is fixed or nearly fixed in supply has the potential to yield economic rent. From an analytical perspective, one can obtain industry supply data to calculate the elasticity of supply , which measures the sensitivity of quantity supplied to a change in price. If quantity supplied is relatively unresponsive ( inelastic ) to price changes, then a potential condition exists in the market for economic rent. A reliable forecast of changes in demand can indicate the degree of any economic rent that is forthcoming from the market in the future. When one is analyzing fixed or nearly fixed supply markets (e.g., gold), a fundamental comprehension of demand determinants is necessary to make rational financial decisions based on potential economic rent. EXAMPLE 1 Economic Rent and Investment Decision Making The following market data show the global demand, global supply, and price on an annual basis for gold over the period 2006–2008. Based on the data, what observation can be made about market demand, supply, and economic rent? Year 2006 2007 2008 Percent Change 2006–2008 Supply (in metric tons) 3,569 3,475 3,508 –1.7 Demand (in metric tons) 3,423 3,552 3,805 +11.2 Average spot price (in US$) 603.92 695.39 871.65 +44.3 Source: GFMS and World Gold Council. Solution: The amount of total gold supplied to the world market over this period has actually declined slightly by 1.7 percent during a period when there was a double-digit increase of 11.2 percent in demand. As a consequence, the spot price has dramatically increased by 44.3 percent. Economic rent has resulted from this market relationship of a relatively fixed supply of gold and a rising demand for it. 2.2. Comparison of Profit Measures All three types of profit are interconnected because, according to Equation 4, acco #### Annotation 1435749453068 #2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4 EXAMPLE 1 Economic Rent and Investment Decision Making The following market data show the global demand, global supply, and price on an annual basis for gold over the period 2006–2008. Based on the data, what observation can be made about market demand, supply, and economic rent? Year200620072008Percent Change 2006–2008 Supply (in metric tons)3,5693,4753,508–1.7 Demand (in metric tons)3,4233,5523,805+11.2 Average spot price (in US$)603.92695.39871.65+44.3

Source: GFMS and World Gold Council.

Solution:

The amount of total gold supplied to the world market over this period has actually declined slightly by 1.7 percent during a period when there was a double-digit increase of 11.2 percent in demand. As a consequence, the spot price has dramatically increased by 44.3 percent. Economic rent has resulted from this market relationship of a relatively fixed supply of gold and a rising demand for it.

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#### Flashcard 1435752074508

Tags
#2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
Economic Rent and Investment Decision Making

The following market data show the global demand, global supply, and price on an annual basis for gold over the period 2006–2008. Based on the data, what observation can be made about market demand, supply, and economic rent?

Year200620072008Percent Change 2006–2008
Supply (in metric tons)3,5693,4753,508–1.7
Demand (in metric tons)3,4233,5523,805+11.2

#### Original toplevel document

2. OBJECTIVES OF THE FIRM

#### Flashcard 1435760200972

Tags
#2-1-3-economic-rent #2-1-types-of-profit-measures #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
From an analytical perspective, one can obtain industry supply data to calculate the [...] , which measures the sensitivity of quantity supplied to a change in price.

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From an analytical perspective, one can obtain industry supply data to calculate the elasticity of supply , which measures the sensitivity of quantity supplied to a change in price.

#### Original toplevel document

2. OBJECTIVES OF THE FIRM

#### Annotation 1435763346700

2.2. Comparison of Profit Measures
#2-2-comparison-of-profit-measures #cfa #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4

All three types of profit are interconnected because, according to Equation 4, accounting profit is the summation of normal and economic profit. In the short run, the normal profit rate is relatively stable, which makes accounting and economic profit the two variable terms in the profit equation. Over the longer term, all three types of profit are variable, where the normal profit rate can change according to investment returns across firms in the industry.

Normal profit is necessary to stay in business in the long run; positive economic profit is not. A business can survive indefinitely by just making the normal profit return for investors. Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise. Consequentially, the market value of equity and shareholders’ wealth deteriorates whenever risk to achieving normal profit materializes and the firm fails to reward investors for their risk exposure and for the opportunity cost of their equity capital.

To summarize, the ultimate goal of analyzing the different types of profit is to determine how their relationships to one another influence the firm’s market value of equity. Exhibit 2 compares accounting, normal, and economic profits in terms of how a firm’s market value of equity is impacted by the relationships among the three types of profit.

Exhibit 2. Relationship of Accounting, Normal, and Economic Profit to Equity Value
Relationship between Accounting Profit and Normal ProfitEconomic ProfitFirm’s Market Value of Equity
Accounting profit > Normal profitEconomic profit > 0 and firm is able to protect economic profit over the long runPositive effect
Accounting profit = Normal profitEconomic profit = 0No effect
Accounting profit < Normal profitEconomic profit < 0
implies economic loss
Negative effect

2. OBJECTIVES OF THE FIRM
quence, the spot price has dramatically increased by 44.3 percent. Economic rent has resulted from this market relationship of a relatively fixed supply of gold and a rising demand for it. <span>2.2. Comparison of Profit Measures All three types of profit are interconnected because, according to Equation 4, accounting profit is the summation of normal and economic profit. In the short run, the normal profit rate is relatively stable, which makes accounting and economic profit the two variable terms in the profit equation. Over the longer term, all three types of profit are variable, where the normal profit rate can change according to investment returns across firms in the industry. Normal profit is necessary to stay in business in the long run; positive economic profit is not. A business can survive indefinitely by just making the normal profit return for investors. Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise. Consequentially, the market value of equity and shareholders’ wealth deteriorates whenever risk to achieving normal profit materializes and the firm fails to reward investors for their risk exposure and for the opportunity cost of their equity capital. To summarize, the ultimate goal of analyzing the different types of profit is to determine how their relationships to one another influence the firm’s market value of equity. Exhibit 2 compares accounting, normal, and economic profits in terms of how a firm’s market value of equity is impacted by the relationships among the three types of profit. Exhibit 2. Relationship of Accounting, Normal, and Economic Profit to Equity Value Relationship between Accounting Profit and Normal Profit Economic Profit Firm’s Market Value of Equity Accounting profit > Normal profit Economic profit > 0 and firm is able to protect economic profit over the long run Positive effect Accounting profit = Normal profit Economic profit = 0 No effect Accounting profit < Normal profit Economic profit < 0 implies economic loss Negative effect <span><body><html>

Article 1435765181708

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4

To fully comprehend the dimensions of profit maximization, one must have a detailed understanding of the revenue and cost variables that determine profit. Revenue and cost flows are calculated in terms of total, average, and marginal. A total is the summation of all individual components. For example, total cost is the summation of all costs that are incurred by the business. Total revenue is the sum of the revenues from all the business’s units. In the theory of the firm, averages and marginals are calculated with respect to the quantity produced and sold in a single period (as opposed to averaging a quantity over a number of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total econo

#### Annotation 1435766492428

 #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4 Revenue and cost flows are calculated in terms of total, average, and marginal

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
To fully comprehend the dimensions of profit maximization, one must have a detailed understanding of the revenue and cost variables that determine profit. Revenue and cost flows are calculated in terms of total, average, and marginal. A total is the summation of all individual components. For example, total cost is the summation of all costs that are incurred by the business. Total revenue is the sum of the revenues

#### Annotation 1435767541004

 #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4 In the theory of the firm, averages and marginals are calculated with respect to the quantity produced and sold in a single period (as opposed to averaging a quantity over a number of time periods).

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
al, average, and marginal. A total is the summation of all individual components. For example, total cost is the summation of all costs that are incurred by the business. Total revenue is the sum of the revenues from all the business’s units. <span>In the theory of the firm, averages and marginals are calculated with respect to the quantity produced and sold in a single period (as opposed to averaging a quantity over a number of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in

#### Annotation 1435769113868

 #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4 For example, average revenue is calculated by dividing total revenue by the number of items sold.

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
the revenues from all the business’s units. In the theory of the firm, averages and marginals are calculated with respect to the quantity produced and sold in a single period (as opposed to averaging a quantity over a number of time periods). <span>For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. Exhibit 3 shows a summary of the terminology and formulas pertai

#### Annotation 1435770162444

 #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4 To calculate a marginal term, take the change in the total and divide by the change in the quantity number.

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
calculated with respect to the quantity produced and sold in a single period (as opposed to averaging a quantity over a number of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. <span>To calculate a marginal term, take the change in the total and divide by the change in the quantity number. Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that

#### Annotation 1435771211020

#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4

Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal.

Exhibit 3. Summary of Profit, Revenue, and Cost Terms
TermCalculation
Profit
(Economic) profitTotal revenue minus total economic cost; (TRTC)
Revenue
Total revenue (TR)Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(Pi × Qi)
Average revenue (AR)Total revenue divided by quantity; (TR ÷ Q)
Marginal revenue (MR)Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q)
Costs
Total fixed cost (TFC)Sum of all fixed expenses; here defined to include all opportunity costs
Total variable cost (TVC)Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q)
Total costs (TC)Total fixed cost plus total variable cost; (TFC + TVC)
Average fixed cost (AFC)Total fixed cost divided by quantity; (TFC ÷ Q)
Average variable cost (AVC)Total variable cost divided by quantity; (TVC ÷ Q)
Average total cost (ATC)Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC)
Marginal cost (MC)Change in total cost divided by change in quantity; (∆TC ÷ ∆Q

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
umber of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. <span>Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal. Exhibit 3. Summary of Profit, Revenue, and Cost Terms Term Calculation Profit (Economic) profit Total revenue minus total economic cost; (TR – TC) Revenue Total revenue (TR) Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i ) Average revenue (AR) Total revenue divided by quantity; (TR ÷ Q) Marginal revenue (MR) Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q) Costs Total fixed cost (TFC) Sum of all fixed expenses; here defined to include all opportunity costs Total variable cost (TVC) Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) Total costs (TC) Total fixed cost plus total variable cost; (TFC + TVC) Average fixed cost (AFC) Total fixed cost divided by quantity; (TFC ÷ Q) Average variable cost (AVC) Total variable cost divided by quantity; (TVC ÷ Q) Average total cost (ATC) Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC) Marginal cost (MC) Change in total cost divided by change in quantity; (∆TC ÷ ∆Q) 3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a hig

#### Flashcard 1435779599628

Tags
#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Question
Revenue and cost flows are calculated in terms of [...] [...] and [...]
total, average, and marginal

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Revenue and cost flows are calculated in terms of total, average, and marginal

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3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
To fully comprehend the dimensions of profit maximization, one must have a detailed understanding of the revenue and cost variables that determine profit. Revenue and cost flows are calculated in terms of total, average, and marginal. A total is the summation of all individual components. For example, total cost is the summation of all costs that are incurred by the business. Total revenue is the sum of the revenues

#### Flashcard 1435786153228

Tags
#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Question
Total fixed cost (TFC) are here defined to include [...];
all opportunity costs

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Total fixed cost (TFC)Sum of all fixed expenses; here defined to include all opportunity costs

#### Original toplevel document

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
umber of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. <span>Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal. Exhibit 3. Summary of Profit, Revenue, and Cost Terms Term Calculation Profit (Economic) profit Total revenue minus total economic cost; (TR – TC) Revenue Total revenue (TR) Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i ) Average revenue (AR) Total revenue divided by quantity; (TR ÷ Q) Marginal revenue (MR) Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q) Costs Total fixed cost (TFC) Sum of all fixed expenses; here defined to include all opportunity costs Total variable cost (TVC) Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) Total costs (TC) Total fixed cost plus total variable cost; (TFC + TVC) Average fixed cost (AFC) Total fixed cost divided by quantity; (TFC ÷ Q) Average variable cost (AVC) Total variable cost divided by quantity; (TVC ÷ Q) Average total cost (ATC) Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC) Marginal cost (MC) Change in total cost divided by change in quantity; (∆TC ÷ ∆Q) 3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a hig

#### Flashcard 1435789298956

Tags
#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Question
Average revenue (AR)[...]
Total revenue divided by quantity; (TR ÷ Q)

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#### Parent (intermediate) annotation

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Average revenue (AR)Total revenue divided by quantity; (TR ÷ Q)

#### Original toplevel document

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
umber of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. <span>Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal. Exhibit 3. Summary of Profit, Revenue, and Cost Terms Term Calculation Profit (Economic) profit Total revenue minus total economic cost; (TR – TC) Revenue Total revenue (TR) Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i ) Average revenue (AR) Total revenue divided by quantity; (TR ÷ Q) Marginal revenue (MR) Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q) Costs Total fixed cost (TFC) Sum of all fixed expenses; here defined to include all opportunity costs Total variable cost (TVC) Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) Total costs (TC) Total fixed cost plus total variable cost; (TFC + TVC) Average fixed cost (AFC) Total fixed cost divided by quantity; (TFC ÷ Q) Average variable cost (AVC) Total variable cost divided by quantity; (TVC ÷ Q) Average total cost (ATC) Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC) Marginal cost (MC) Change in total cost divided by change in quantity; (∆TC ÷ ∆Q) 3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a hig

#### Annotation 1435812891916

 #27-dic-2016 #mural #noticias Un incremento en los precios de la gasolina de entre 15 y 20 por ciento podría tener un efecto de crecimiento en la inflación de hasta 1.2 puntos porcentuales, según la Escuela de Negocios del Tec de Monterrey, campus Santa Fe.

Prevén mayor inflación por gasolinazo
Un incremento en los precios de la gasolina de entre 15 y 20 por ciento podría tener un efecto de crecimiento en la inflación de hasta 1.2 puntos porcentuales, según la Escuela de Negocios del Tec de Monterrey, campus Santa Fe. "No se nos olvide que todos se transportan y también se transportan las mercancías: alimentos, electrodomésticos, consumibles y a eso se suman los pasajeros", exp

#### Annotation 1435815513356

 #27-dic-2016 #mural #noticias la gasolina se grava con varios impuestos. El primero es el Impuesto Especial sobre Productos y Servicios (IEPS), que tiene una cuota fija de 4.16 pesos, luego el IVA, que se cobra sobre el precio final de la gasolina y ese incrementa según el tamaño de la venta, y finalmente los derechos que se cobran según el estado. "El componente de impuestos IEPS, IVA y derechos corresponde a 44 por ciento del precio del litro de la gasolina", puntualizó Tenorio.

Prevén mayor inflación por gasolinazo
os y por lo tanto demandan combustible. Asimismo, no es muy competitivo adquirir productos del exterior debido a la diferencia actual entre el peso y el dólar. Este incremento beneficiará a la recaudación tributaria, debido a que <span>la gasolina se grava con varios impuestos. El primero es el Impuesto Especial sobre Productos y Servicios (IEPS), que tiene una cuota fija de 4.16 pesos, luego el IVA, que se cobra sobre el precio final de la gasolina y ese incrementa según el tamaño de la venta, y finalmente los derechos que se cobran según el estado. "El componente de impuestos IEPS, IVA y derechos corresponde a 44 por ciento del precio del litro de la gasolina", puntualizó Tenorio. <span><body><html>

#### Flashcard 1435817086220

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
A model is a [...] of the real world phenomena we are trying to understand.
simplification

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A model is a simplification of the real world phenomena we are trying to understand.

#### Original toplevel document

3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
on, especially in cases of many complex options being offered to them. When we state these axioms, we are not saying that we believe them actually to be true in every instance, but we assume them for the sake of building a model. <span>A model is a simplification of the real world phenomena we are trying to understand. Necessarily, axioms must be at some level inaccurate and incomplete representations of the phenomena we are trying to model. If that were not the case, the “model” would not be a simpli

#### Flashcard 1435820756236

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
Because of the completeness assumption, there will be one indifference curve [...]