Homework Answers

3. Using supply and demand curves, show the effect of each of the following events on the market for cigarettes.

a. A cure for lung career cancer is found.

b. The price of cigarette increases.

c. Wage increase substantially in states that grow tobacco.

d. A fertilizer that increase the yield per acre of tobacco is discovered.

e. More state pass laws restricting smoking in public places 

If South Africa’s economy grows, one would expect …

If IBM would like to improve its gross profit margin, which one of the following strategies would be the most appropriate? IBM would have to _______________ .

Select one:

a.

decrease its marketing efforts in order to decrease sales while increasing the cost of products sold

b.

reduce equity by buying back shares and cancelling the shares

c.

improve its marketing efforts in order to increase sales while reducing the cost of products sold

d.

increase sales by relaxing the credit standards while improving productivity by means of performance-management systems

Despite a better statement of financial position and a renaissance in the laboratories, IBM fell further behind every year. In Unix servers, the backbone of the internet, IBM’s sales rose 3% in 1998, but sales of their competitors soared, for example Sun Microsystems grew by 29%. Which one of the following best describes the statement of financial position?

Select one:

a.

Can be described as the accrued power of disposal over the products and services used by the business to generate a monetary return.

b.

Consists of primarily receipts resulting in the sale of the business’s products and/or services.

c.

Reflects all the possessions of the business as well as the nature and extent of the interests in these possessions.

d.

Furnishes details about the way the profit or loss for a particular period was arrived at and how it has been distributed.

1.      As a policy adviser, explain how you would use the OMO to secure 3 -5% economic growth and reduce unemployment in an economy in slight recession? (5mks)

b. Describe possible unintended consequence to your policy actions. (3mks)

Kelly is the owner of a small gourmet burger food truck. She sells her burgers during lunch in the parking lot of the Menlyn Maine shopping centre. Her expenses are recorded as follow:

Sales price per burger: R35 per burger

Variable cost per burger: R12 per burger

Total fixed cost per annum: R42 000

If Kelly were to sell 27 900 burgers what would her profit be?

Select one:

a.

R943 500

b.

R576 600

c.

R599 700

d.

Kelly would not make a profit

Kate owns her own bakery and leases her operating equipment, such as ovens and fridges, from EasyBake. The lease amount, which Kate pays back in regular installments, is determined in such a way that the value of the asset, plus an interest charge, is paid back by the end of the term of the lease, which is usually related to the lifespan of the asset. Which type of financial leasing agreement does Kate have with EasyBake?

Select one:

a.

Operating-lease agreement

b.

Direct financial leasing

c.

Leaseback agreement

d.

Lifespan leasing

Which one of the following options can be used to increase the value of the business?

Select one:

a.

Investing in assets that will add value to the business

b.

Keeping the cost of capital as high as possible

c.

Investing in proper marketing and operational strategies

d.

Investing in liabilities that will add value to the business

Nomvula is the secretary of a labour union at Goliath National Mine in Uganda. He has requested that the financial manager send him the latest financial ratios. Why would Nomvula be interested in the financial ratios of the mine?

Select one:

a.

He requires the information with the view of internal control, planning and decision-making

b.

He needs to evaluate the ability of the mine to pay its debt and interest.

c.

He has need of the information with the view to salary negotiations.

d.

He needs to evaluate the mine as an investment opportunity.