# on 13-Dec-2017 (Wed)

#### Flashcard 1425592421644

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Macroeconomics deals with aggregate economic quantities, such as [...] and [...]
national output

national income.

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Macroeconomics deals with aggregate economic quantities, such as national output and national income.

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1. INTRODUCTION
In a general sense, economics is the study of production, distribution, and consumption and can be divided into two broad areas of study: macroeconomics and microeconomics. Macroeconomics deals with aggregate economic quantities, such as national output and national income. Macroeconomics has its roots in microeconomics , which deals with markets and decision making of individual economic units, including consumers and businesses. Microeconomics is a logi

#### Flashcard 1426258267404

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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
In general, producers are willing to sell their product for a price as long as that price is at least as high as [...]
the cost to produce an additional unit of the product.

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In general, producers are willing to sell their product for a price as long as that price is at least as high as the cost to produce an additional unit of the product.

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3.3. The Supply Function and the Supply Curve
The willingness and ability to sell a good or service is called supply. In general, producers are willing to sell their product for a price as long as that price is at least as high as the cost to produce an additional unit of the product. It follows that the willingness to supply, called the supply function , depends on the price at which the good can be sold as well as the cost of production for an additional unit of t

#### Flashcard 1430334082316

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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
A change in the value of anyvariable other than own-price will shift the entire demand curve. This is referred to as a [...]
change in demand.

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A change in a good’s own-price causes a movement along the demand curve, this is referred to as a change in quantity demanded, A change in the value of any other variable will shift the entire demand curve. This is referred to as a <span>change in demand.<span><body><html>

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but the intercepts have both increased, resulting in an outward shift in the demand curve, as shown in Exhibit 2. Exhibit 2. Household Demand Curve for Gasoline before and after Change in Income <span>In general, the only thing that can cause a movement along the demand curve is a change in a good’s own-price. A change in the value of any other variable will shift the entire demand curve. The former is referred to as a change in quantity demanded, and the latter is referred to as a change in demand. More importantly, the shift in demand was both a vertical shift upward and a horizontal shift to the right. That is to say, for any given quantity, the household is now wil

#### Flashcard 1432888675596

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#19-dic-2016 #el-financiero #enrique-quintana #noticias
Question
México debe fortalecer su posición negociadora acercándose a la otra superpotencia comercial: [...]
China.

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México debe fortalecer su posición negociadora acercándose a la otra superpotencia comercial: China.

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Trump y el efecto de “huevo revuelto”
rimiendo cómo conseguir aumentar la competitividad de América del Norte, en particular en el contexto de un dólar fortalecido que le ha restado competitividad a su industria. Sin embargo, como le hemos comentado en otras ocasiones, <span>México debe fortalecer su posición negociadora acercándose a la otra superpotencia comercial: China. El arribo de la empresa petrolera china CNOOC, que invertirá cerca de 8 mil millones de dólares en el Golfo de México, multiplicará por 40 veces la inversión china acumulada

#### Flashcard 1433029709068

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#13-dic-2016 #el-financiero
Question
La mejor contribución que hace la política monetaria al crecimiento económico es [...], que se traduce en un ambiente de mayor confianza
mantener la inflación baja

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La mejor contribución que hace la política monetaria al crecimiento económico es mantener la inflación baja, que se traduce en un ambiente de mayor confianza

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Carstens fue muy importante, pero el Banxico va a seguir
mi salida. En ese contexto, puede destacarse en estos años una mayor apertura. Banxico ha publicado una serie de documentos que reflejan una mayor transparencia, en particular las minutas de las reuniones de política monetaria. <span>La mejor contribución que hace la política monetaria al crecimiento económico es mantener la inflación baja, que se traduce en un ambiente de mayor confianza También podemos hacer muy bien nuestro trabajo fortaleciendo la institución o hacerlo muy mal, debilitando la institución Son una pieza de informa

#### Flashcard 1435564641548

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#cfa #cfa-level-1 #economics #lol #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
Finance experts frequently reconcile profitability and risk objectives by stating that the objective of the firm is, or should be, [...]
shareholder wealth maximization (i.e., to maximize the market value of shareholders’ equity)

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Finance experts frequently reconcile profitability and risk objectives by stating that the objective of the firm is, or should be, shareholder wealth maximization (i.e., to maximize the market value of shareholders’ equity)

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2. OBJECTIVES OF THE FIRM
en be classified as focused on profitability (e.g., maximizing profits, increasing market share) or on controlling risk (e.g., survival, stable earnings growth); and c) managers in different countries may have different emphases. <span>Finance experts frequently reconcile profitability and risk objectives by stating that the objective of the firm is, or should be, shareholder wealth maximization (i.e., to maximize the market value of shareholders’ equity). This theory states that firms try, or should try, to increase the wealth of their owners (shareholders) and that market prices balance returns against risk. However, complex corporate

#### Flashcard 1435622837516

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#cfa #cfa-level-1 #economic-and-normal-profit #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-2-objectives-of-the-firm #study-session-4
Question
We can define a term, [...] , equal to the sum of total accounting costs and implicit opportunity costs.

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We can define a term, economic cost , equal to the sum of total accounting costs and implicit opportunity costs.

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2. OBJECTIVES OF THE FIRM

#### Flashcard 1450636872972

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#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
Any commodity, resource, or good that is fixed or nearly fixed in supply has the potential to yield [...].
economic rent

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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

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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 #### Flashcard 1450642377996 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 Under any form of imperfect competition, price to the firm declines when a [...] is offered to the market. Answer greater quantity That`s how it rolls, son status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it Under any form of imperfect competition, price to the firm declines when a greater quantity is offered to the market; price to the firm increases when a lower quantity is offered to the market. #### Original toplevel document 3. ANALYSIS OF REVENUE, COSTS, AND PROFITS zation requires that we examine both of those components. Revenue comes from the demand for the firm’s products, and cost comes from the acquisition and utilization of the firm’s inputs in the production of those products. <span>3.1.1. Total, Average, and Marginal Revenue This section briefly examines demand and revenue in preparation for addressing cost. Unless the firm is a pure monopolist (i.e., the only seller in its market), there is a difference between market demand and the demand facing an individual firm. A later reading will devote much more time to understanding the various competitive environments (perfect competition, monopolistic competition, oligopoly, and monopoly), known as market structure . To keep the analysis simple at this point, we will note that competition could be either perfect or imperfect. In perfect competition , the individual firm has virtually no impact on market price, because it is assumed to be a very small seller among a very large number of firms selling essentially identical products. Such a firm is called a price taker . In the second case, the firm does have at least some control over the price at which it sells its product because it must lower its price to sell more units. Exhibit 4 presents total, average, and marginal revenue data for a firm under the assumption that the firm is price taker at each relevant level of quantity of goods sold. Consequently, the individual seller faces a horizontal demand curve over relevant output ranges at the price level established by the market (see Exhibit 5). The seller can offer any quantity at this set market price without affecting price. In contrast, imperfect competition is where an individual firm has enough share of the market (or can control a certain segment of the market) and is therefore able to exert some influence over price. Instead of a large number of competing firms, imperfect competition involves a smaller number of firms in the market relative to perfect competition and in the extreme case only one firm (i.e., monopoly). Under any form of imperfect competition, the individual seller confronts a negatively sloped demand curve, where price and the quantity demanded by consumers are inversely related. In this case, price to the firm declines when a greater quantity is offered to the market; price to the firm increases when a lower quantity is offered to the market. This is shown in Exhibits 6 and 7. Exhibit 4. Total, Average, and Marginal Revenue under Perfect Competition Quantity Sold (Q) Price (P) Total Revenue (TR) Average Re #### Flashcard 1450665708812 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question Over an initial range of production, average variable costs, after reaching a minimum point, increases as the firm utilizes more of its [...]. Answer production capacity status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it Over an initial range of production, average variable cost declines and then reaches a minimum point. Thereafter, cost increases as the firm utilizes more of its production capacity. This higher cost results primarily from production constraints imposed by the fixed assets at higher volume levels. The minimum point on the AVC coincides with the lowest average varia #### Original toplevel document Open it Average variable cost (AVC) is derived by dividing total variable cost by quantity. For example, average variable cost at 5 units is (300 ÷ 5) or 60. Over an initial range of production, average variable cost declines and then reaches a minimum point. Thereafter, cost increases as the firm utilizes more of its production capacity. This higher cost results primarily from production constraints imposed by the fixed assets at higher volume levels. The minimum point on the AVC coincides with the lowest average variable cost. However, the minimum point on the AVC does not correspond to the least-cost quantity for average total cost. In Exhibit 13, average variable cost is minimized at 2 units, whereas average total cost is the lowest at 3 units. Average total cost (ATC) is calculated by dividing total costs by quantity or by summing average fixed cost and average variable cost. For instance, in Exhibit 13, at 8 un #### Flashcard 1450689301772 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question The minimum point on the ATC curve is consistent with [...] but it is not necessarily consistent with maximizing total profit. Answer maximizing profit per-unit, status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it The minimum point on the ATC curve is consistent with maximizing profit per-unit, but it is not necessarily consistent with maximizing total profit. #### Original toplevel document Open it cost. However, the minimum point on the AVC does not correspond to the least-cost quantity for average total cost. In Exhibit 13, average variable cost is minimized at 2 units, whereas average total cost is the lowest at 3 units. <span>Average total cost (ATC) is calculated by dividing total costs by quantity or by summing average fixed cost and average variable cost. For instance, in Exhibit 13, at 8 units ATC is 125 [calculated as (1,000 ÷ 8) or (AFC + AVC = 12.5 + 112.5)]. Average total cost is often referenced as per-unit cost and is frequently called average cost. The minimum point on the average total cost curve defines the output level that has the least cost. The cost-minimizing behavior of the firm would dictate operating at the minimum point on its ATC curve. However, the quantity that maximizes profit (such as Q 3 in Exhibit 17) may not correspond to the ATC-minimum point. The minimum point on the ATC curve is consistent with maximizing profit per-unit, but it is not necessarily consistent with maximizing total profit. In Exhibit 13, the least-cost point of production is 3 units; ATC is 75, derived as [(225 ÷ 3) or (33.3 + 41.7)]. Any other production level results in a higher ATC. Marginal cost (MC) is the change in total cost divided by the change in quantity. Marginal cost also can be calculated by taking the change in total variable cost and divi #### Flashcard 1450693496076 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question Marginal cost follows a [...] pattern. Answer J-shaped status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it Marginal cost follows a J-shaped pattern whereby cost initially declines but turns higher at some point in reflection of rising costs at higher production volumes. #### Original toplevel document Open it it is not necessarily consistent with maximizing total profit. In Exhibit 13, the least-cost point of production is 3 units; ATC is 75, derived as [(225 ÷ 3) or (33.3 + 41.7)]. Any other production level results in a higher ATC. <span>Marginal cost (MC) is the change in total cost divided by the change in quantity. Marginal cost also can be calculated by taking the change in total variable cost and dividing by the change in quantity. It represents the cost of producing an additional unit. For example, at 9 units marginal cost is 300, calculated as [(1,300 – 1,000) ÷ (9 – 8)]. Marginal cost follows a J-shaped pattern whereby cost initially declines but turns higher at some point in reflection of rising costs at higher production volumes. In Exhibit 13, MC is the lowest at 2 units of output with a value of 25, derived as [(175 – 150) ÷ (2 – 1)]. <span><body><html> #### Flashcard 1450720759052 Tags #cfa #cfa-level-1 #economics #has-images #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question [...] is defined as a situation in which the firm stops production but still confronts the payment of fixed costs in the short run as a business entity. Answer Shutdown status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it Shutdown is defined as a situation in which the firm stops production but still confronts the payment of fixed costs in the short run as a business entity. #### Original toplevel document Open it um point on ATC), such as point D, generates an economic profit. A firm’s shutdown point occurs when average revenue is less than average variable cost (any output below Q shutdown ), which corresponds to point A in Exhibit 17. <span>Shutdown is defined as a situation in which the firm stops production but still confronts the payment of fixed costs in the short run as a business entity. In the short run, a business is capable of operating in a loss situation as long as it covers its variable costs even though it is not earning sufficient revenue to cover all fixed cost #### Flashcard 1450748022028 Tags #cfa #cfa-level-1 #economics #has-images #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question Breakeven point is also defined as the quantity where [...] equals [...]. Answer total revenue total costs status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it In thecase of perfect competition, breakeven point is also defined as the quantity where total revenue equals total costs. Firms strive to reach initial breakeven as soon as possible to avoid start-up losses for any extended period of time. #### Original toplevel document Open it n where economic profit occurs because price is greater than ATC. In the case of perfect competition, the breakeven point is the quantity where price, average revenue, and marginal revenue equal average total cost. <span>It is also defined as the quantity where total revenue equals total costs. Firms strive to reach initial breakeven as soon as possible to avoid start-up losses for any extended period of time. When businesses are first established, there is an initial period where losses occur at low quantity levels. In Exhibit 17, the breakeven quantity occurs at output Q BE , which correspo #### Flashcard 1450784722188 Tags #cfa #cfa-level-1 #economics #has-images #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question A high initial [...] is riskier than a low point because it takes a larger volume and, usually, a longer time to reach. Answer breakeven point status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it A high initial breakeven point is riskier than a low point because it takes a larger volume and, usually, a longer time to reach. However, at higher output levels it yields more return in compensation for this greate #### Original toplevel document Open it mal production point that maximizes profit. Breakeven points, profit regions, and economic loss ranges are influenced by demand and supply conditions, which change frequently according to the market behavior of consumers and firms. <span>A high initial breakeven point is riskier than a low point because it takes a larger volume and, usually, a longer time to reach. However, at higher output levels it yields more return in compensation for this greater risk.<span><body><html> #### Flashcard 1451358031116 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question The firm must cover [...] before [...] cost. Answer variable cost fixed status measured difficulty not learned 37% [default] 0 Open it The firm must cover variable cost before fixed cost. In the short run, if total revenue cannot cover total variable cost, the firm shuts down production to minimize loss, which would equal the amount of fixed #### Flashcard 1451375332620 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question Revenue–Cost RelationshipShort-Run DecisionLong-Term Decision TR < TVC[...][...] Answer Shut down production to zero Exit market status measured difficulty not learned 37% [default] 0 #### Parent (intermediate) annotation Open it Revenue–Cost Relationship Short-Run Decision Long-Term Decision TR ≥ TC Stay in market Stay in market TR > TVC but TR < TFC + TVC Stay in market Exit market TR < TVC Shut down production to zero Exit market #### Original toplevel document Open it When total revenue is enough to cover total variable cost but not all of total fixed cost, the firm can survive in the short run but will be unable to maintain financial solvency in the long run. Exhibit 21 <span>Revenue–Cost Relationship Short-Run Decision Long-Term Decision TR ≥ TC Stay in market Stay in market TR > TVC but TR < TFC + TVC Stay in market Exit market TR < TVC Shut down production to zero Exit market <span><body><html> #### Flashcard 1451379264780 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question A business has revenue of$2 million

Total costs of $2.5 million, which are: Total fixed cost of$1 million

Total variable cost of $1.5 million. The net loss on the firm’s income statement is reported as$500,000 (ignoring tax implications).

1. What decision should the firm make regarding operations over the short term?

In the short run, the firm is able to cover all of its total variable cost but only half of its $1 million in total fixed cost. If the business ceases to operate, its loss is$1 million, the amount of total fixed cost, whereas the net loss by operating is minimized at $500,000. status measured difficulty not learned 37% [default] 0 Shutdown Analysis For the most recent financial reporting period, a business domiciled in Ecuador (which recognizes the US dollar as an official currency) has revenue of$2 million and total costs of $2.5 million, which are or can be broken down into total fixed cost of$1 million and total variable cost of $1.5 million. The net loss on the firm’s income statement is reported as$500,000 (ignoring tax implications). In prior periods, the firm had reported profits on its operations. What decision should the firm make regarding operations over the short term? What decision should the firm make regarding operations over the long term? Assume the same business scenario except that revenue is now $1.3 million, wh #### Flashcard 1451385556236 Tags #cfa #cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit Question A business has revenue of$2 million and total costs of $2.5 million, which are or can be broken down into total fixed cost of$1 million and total variable cost of $1.5 million. The net loss on the firm’s income statement is reported as$500,000 (ignoring tax implications).

1. Assume the same business scenario except that revenue is now $1.3 million, which creates a net loss of$1.2 million. What decision should the firm make regarding operations in this case?

The firm would minimize loss at $1 million of total fixed cost by shutting down compared with continuing to do business where the loss is$1.2 million.

#### Flashcard 1602898496780

Tags
#cfa-level-1 #financial-reporting-and-analysis #has-images #income-statement
Question
Gross profit margin = [...]

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7. ANALYSIS OF THE INCOME STATEMENT
earnings from discontinued operations, gains or losses from the sale of discontinued operations, and non-recurring income or expenses. Gross Profit Margin equals percent of sales available after deducting cost of goods <span>sold. This percentage is available to cover selling, general and administrative costs, and also earn a profit. It indicates the basic cost structure of a c

#### Flashcard 1603190000908

Tags
Question
[...] are contracts that give rise to both a financial asset of one company and a financial liability of another company.
Financial instruments

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Subject 3. Financial Instruments: Financial Assets and Financial Liabilities
Financial instruments are contracts that give rise to both a financial asset of one company and a financial liability of another company. Financial instruments come in a variety of forms which include derivatives, hedges, and marketable securities. Measured at fair market value: Financial assets:

#### Flashcard 1611499441420

Tags
#3-1-profit-maximization #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

[...] reflects goods most desired by society​

Profit

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#### Parent (intermediate) annotation

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sfy consumer demand. Allocates resources to their most-efficient use; input factors flow from sectors with economic losses to sectors with economic profit, where profit reflects goods most desired by society. Spurs <span>innovation and the development of new technology. Stimulates business investment and economic growth.<span><body><html>

#### Original toplevel document

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
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) <span>3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a higher standard of living, and creates wealth for investors. Profit motivates businesses to use resources efficiently and to concentrate on activities in which they have a competitive advantage. Most economists believe that profit maximization promotes allocational efficiency—that resources flow into their highest valued uses. Overall, the functions of profit are as follows: Rewards entrepreneurs for risk taking when pursuing business ventures to satisfy consumer demand. Allocates resources to their most-efficient use; input factors flow from sectors with economic losses to sectors with economic profit, where profit reflects goods most desired by society. Spurs innovation and the development of new technology. Stimulates business investment and economic growth. There are three approaches to calculate the point of profit maximization. First, given that profit is the difference between total revenue and total costs, maximum profit occurs at the output level where this difference is the greatest. Second, maximum profit can also be calculated by comparing revenue and cost for each individual unit of output that is produced and sold. A business increases profit through greater sales as long as per-unit revenue exceeds per-unit cost on the next unit of output sold. Profit maximization takes place at the point where the last individual output unit breaks even. Beyond this point, total profit decreases because the per-unit cost is higher than the per-unit revenue from successive output units. A third approach compares the revenue generated by each resource unit with the cost of that unit. Profit contribution occurs when the revenue from an input unit exceeds its cost. The point of profit maximization is reached when resource units no longer contribute to profit. All three approaches yield the same profit-maximizing quantity of output. (These approaches will be explained in greater detail later.) Because profit is the difference between revenue and cost, an understanding of profit maximization requires that we examine both of those components. Revenue comes from the demand for the firm’s products, and cost comes from the acquisition and utilization of the firm’s inputs in the production of those products. 3.1.1. Total, Average, and Marginal Revenue This section briefly examines demand and revenue in preparation for addressing cost. Unless the firm is a pu

#### Flashcard 1621222624524

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#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
Question
Failing to earn [...] over the long run has a debilitating impact on the firm’s ability to function properly as a business enterprise.
normal profits

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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.

#### Original toplevel document

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>

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 It is quite probable that a poet who becomes acquainted with a poem through oral transmission sometimes fails to recall the exact order of all of its components. Although such a conclusion is plausible, it can be neither proved nor disproved. Neither can the question whether both poets composed their naq¯ıd . as orally be clearly answered.

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para uma avaliação realista sobre a possibilidade de votação da reforma da Previdência na semana que vem

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Temer e aliados avaliam que base encolheu, cobram PSDB e já traçam estratégias para 2018 | Blog da Andréia Sadi | G1
3 Atualizado há 1 hora O presidente Michel Temer reuniu na noite desta terça-feira (12), no Palácio do Planalto, o ministro da Casa Civil, Eliseu Padilha, e o presidente da Câmara, Rodrigo Maia (DEM-RJ), <span>para uma avaliação realista sobre a possibilidade de votação da reforma da Previdência na semana que vem. Segundo o Blog apurou, a avaliação dos governistas que participaram da reunião foi a de que a base aliada "encolheu" após a votação das duas denúncias contra o pres

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The authenticity of pre-Islamic poetry is hardly a problem of recent formulation, for as early as 'Abbasid times effort was expended by Arab philologists in sorting out the authentic from the forged. In 1925 a frontal attack was launched, which claimed to show that all or practically all pre-Islamic poetry had been forged in Islamic times. The call to battle was sounded simultaneously yet independently by the Egyptian scholar Taha Husain and the British Orientalist [...] The former cut the Gordian knot by the publication of his book Fi sh-shi'r al-jdhili ('On Pre-Islamic Poetry'),2 and two years later he summed up his position that the general mass of what we call 'pre-Islamic' literature had nothing to do with the pre- Islamic period, but was simply fabricated after the coming of Islam...
D. S. Margoliouth.

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s launched, which claimed to show that all or practically all pre-Islamic poetry had been forged in Islamic times. The call to battle was sounded simultaneously yet independently by the Egyptian scholar Taha Husain and the British Orientalist <span>D. S. Margoliouth. The former cut the Gordian knot by the publication of his book Fi sh-shi'r al-jdhili ('On Pre-Islamic Poetry'),2 and two years later he summed up his position that the general mass of w

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L'abbaye Saint-Paul de Cormery est une ancienne abbaye bénédictine située sur la commune de Cormery dans le département d'Indre-et-Loire, en France
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ut améliorer Version pour appareil mobile Wikipédia en bref Principes fondateurs Portails thématiques Accueil de la communauté Comment contribuer ? Poser une question Article labellisé du jour [imagelink] <span>L'abbaye Saint-Paul de Cormery est une ancienne abbaye bénédictine située sur la commune de Cormery dans le département d'Indre-et-Loire, en France. Simple fondation monastique d'Ithier en 791, elle se voit dotée par Alcuin en 800 du statut d'abbaye et adopte la règle de saint Benoît. Elle est dès lors rattachée à l'abbaye de Sai

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e, elle compte de nombreuses possessions dans plusieurs provinces françaises et ses
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bbaye de Saint-Martin à Tours et le reste jusqu'à sa fermeture. Malgré des dommages causés par les Normands dans la seconde moitié du IX e siècle, l'abbaye se développe rapidement — et autour d'elle le bourg de Cormery. Au milieu du Moyen Âg<span>e, elle compte de nombreuses possessions dans plusieurs provinces françaises et ses bateaux peuvent naviguer librement sur tous les cours d'eau du royaume ; c'est alors l'une des plus puissantes abbayes tourangelles. Elle connaît par la suite des jours plus difficiles

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 L'abbaye Saint-Paul de Cormery est une ancienne abbaye bénédictine située sur la commune de Cormery dans le département d'Indre-et-Loire, en France.

Wikipédia, l'encyclopédie libre
ut améliorer Version pour appareil mobile Wikipédia en bref Principes fondateurs Portails thématiques Accueil de la communauté Comment contribuer ? Poser une question Article labellisé du jour [imagelink] <span>L'abbaye Saint-Paul de Cormery est une ancienne abbaye bénédictine située sur la commune de Cormery dans le département d'Indre-et-Loire, en France. Simple fondation monastique d'Ithier en 791, elle se voit dotée par Alcuin en 800 du statut d'abbaye et adopte la règle de saint Benoît. Elle est dès lors rattachée à l'abbaye de Sain

### The short answer: It’s better to cover large volumes of easy material

The short answer is that you should probably focus more on extensive studying than you are currently doing. I’m saying this both because it’s generally speaking a better approach, and because I know that most courses don’t do this even remotely as much as they should. Read more in this article:

There are also many requirements that have to be met in order for deep-end immersion to be a good idea, but more about that later.

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### Extensive studying

To make sure we’re on the same page, the idea behind extensive studying is that you cover much more content in a given amount of time, which you can do because the difficulty is much lower.