7. Real wages, nominal wages, and unexpected changes in the pricelevel Maria's paycheck each veek is $12 per hour times the number of hours she works. Maria thus currently earns a wage of $12 per hour. Suppose the price of sparkling vater is $4 per gallon. The amount of sparkling vater she can buy vith her paycheck is of sparkling water, which represents her wage. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on vage with those expectations in mind. If the price level turns out to be lovwer than expected, a worker's wage is than both the worker and employer expected when they agreed to the vage. Suppose that Maria and her employer both expected inflation to be 3% betvween 2010 and 2011. They signed a two-year contract stipulating that Maria would earn $12 per hour in 2010 and $12.36 per hour in 2011. However, actual inflation between 2010 and 2011 turned out to be 1% rather than the expected 3%. For example, suppose the price of sparkling vater rose from $4 per gallon to $4.04 per gallon. This means that between 2010 and 2011, Maria's nominal vage ▼ by▼, and her real wage by approximately

7. Real wages, nominal wages, and unexpected changes in the pricelevel Maria's paycheck each veek is $12 per hour times the number of hours she works. Maria thus currently earns a wage of $12 per hour. Suppose the price of sparkling vater is $4 per gallon. The amount of sparkling vater she can buy vith her paycheck is of sparkling water, which represents her wage. When workers and firms negotiate compensation packages, they have expectations about the price level (and changes in the price level) and agree on vage with those expectations in mind. If the price level turns out to be lovwer than expected, a worker's wage is than both the worker and employer expected when they agreed to the vage. Suppose that Maria and her employer both expected inflation to be 3% betvween 2010 and 2011. They signed a two-year contract stipulating that Maria would earn $12 per hour in 2010 and $12.36 per hour in 2011. However, actual inflation between 2010 and 2011 turned out to be 1% rather than the expected 3%. For example, suppose the price of sparkling vater rose from $4 per gallon to $4.04 per gallon. This means that between 2010 and 2011, Maria's nominal vage ▼ by▼, and her real wage by approximately

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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5. A good salesperson can sell $4,000,000 worth of goods, while a poor one can sell only $3,000,000 worth of goods. Job applicants know if they are good or bad, but the fim does not. A fim will offer job applicants a choice between a fixed salary or 25% commission. Assuming risk-neutral salespersons and no opportunistic behavior, what level must the fixed salary be so that the fim can distinguish a prospective good salesperson from a poor one, and thereby avoid hiring a poor one?
6) When Walmart is accused of offering very low wages to their workers they often counter that because of their cost controlling ways, they can offer prices 20% lower than their competitors, which is like increasing the income of all Americans by 25%. Illustrate Walmart's claim more formally using a hypothetical individual who makes $20,000/yr who spends his money on food and clothes and supposing that at stores other than Walmart food costs $5/lb and clothes cost $20/item.
19. Jurgen is an operator and works for a company producing vacuum formed blister packs. The blister packs he produces sell at 0.60€ each and he must produce 800 blister packs every 8 hr shift. He earns a minimum wage of 184€ per week. One fine day he thinks of buying a garage and equip it with all the necessary plant equipment to manufacture the blister packs. He gathers the below quotations. Can you calculate the ROI, payback period and the breakeven quantity? Vacuum forming machine -24000€ Air compressor -8000€ Garage - 85000€ Plastic sheets cost 240€ per roll and 1 roll makes 16000 blister packs.
10. A factory worker who is being paid per piece of finished merchandise desires to have a daily average wage of ₱500. For each piece he makes, he is paid ₱30. For the past 3 days, he has been able to make an average production of 10 pieces a day. By working overtime the next day, how many more pieces of merchandise must he produce in order to achieve his desired average daily wage?
At ABC Co., 10% of each salesperson's yearly bonus is based on whether or not the entire company reaches its annual sales goals. ABC's compensation structure is based on the fundamental idea that ______. A) compensation policies must be legal B) incentives will be more effective if it encourages people to act in ways that benefit both society and the person C) people will work to accomplish a goal if they have a real stake in the reaching the goal D) incentive structures should be as simple as possible E) People are more likely to adhere to a policy if they have had some input into the development of the policy
Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be $5.17 million per year. Your upfront setup costs to be ready to produce the part would be $8.17 million. Your discount rate for this contract is 8.3% a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm?
Calculate the earnings of G. Henry using the straight piece incentive scheme from the information provided below.
Quality Cleaners specializes in cleaning apartment units and off Quality Cleaners specializes in cleaning apartment units and office buildings. Although the work is not too enjoyable, Joe Boyett has been able to realize a considerable profit in the Chicago area. Joe is now thinking about opening another Quality Cleaners in Milwaukee. To break even, Joe would need to get 200 cleaning jobs per year. For every job under 200, Joe will lose $80. Joe estimates that the average sales in Milwaukee are 350 jobs per year, with a standard deviation of 150 jobs. A market research team has approached Joe with a proposition to perform a marketing study on the potential for his cleaning business in Milwaukee. What is the most that Joe would be willing to pay for the market research? Quality Cleaners specializes in cleaning apartment units and off
Your factory has been offered a contract to produce a part for a new printer. The contract would last for 3 years and your cash flows from the contract would be $4.83 million per year. Your upfront setup costs to be ready to produce the part would be $8.02 million. Your discount rate for this contract is 8.1%. a. What does the NPV rule say you should do? b. If you take the contract, what will be the change in the value of your firm? Question content area bottom Part 1 a. What does the NPV rule say you should do? The NPV of the project is $XXX enter your response here million. (Round to two decimal places.) Part 2 What should you do? (Select the best choice below.) A. The NPV rule says that you should accept the contract because the NPV less than 0. B. The NPV rule says that you should not accept the contract because the NPV less than 0. C. The NPV rule says that you should not accept the contract because the NPV greater…
Suppose you have a job that pays a monthly salary of (g) $_3,900____.Unfortunately, recent events have significantly reduced your company’s cash flow.Your employer says that everyone needs to take a 6.5% pay cut or the company mayhave to close.(a) When the 6.5% pay cut is applied to your original monthly salary, by how many dollars will your monthly pay decrease? Round your result to the nearest cent. (4) (b) What will your reduced monthly salary be after the 6.5% decrease is applied to your original monthly salary? Round your result to the nearest cent. (3) Your employer promises that when business returns to normal, everyone will get a6.5% pay raise to bring their pay back to their original levels.(c) When the 6.5% pay raise is applied to your reduced monthly salary, by how many dollars will your monthly pay increase? Round your result to the nearest cent. (4) (d) What will your new increased monthly salary be after the 6.5% increase is applied to your reduced monthly salary? Round…

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