Question

Acme manufacturing is producing $4,000,000 worth of goods this year and expects to sell its entire production. it also is planning to purchase $1,500,000 in new equipment during the year. at the beginning of the year, the company has $500,000 in inventory in its warehouse. find actual investment and planned investment if: instructions: enter your responses as whole numbers.

actual investment planned investment
a. acme actually sells $3,850,000 worth of goods. $ $
b. acme actually sells $4,000,000 worth of goods. $ $
c. acme actually sells $4,200,000 worth of goods. $ $

assuming that acme’s situation is similar to that of other firms, in which of these three cases is output equal to short-run equilibrium output?

A. Case a
B. Case c
C. None
D. Case b

Answer 1

To find the actual investment and planned investment, we need to calculate the investment in inventory and equipment separately. Actual Investment = Investment in Inventory + Investment in Equipment. Planned Investment = $4,000,000 (Production Value) + $1,500,000 (Equipment Purchase).

Step-by-step explanation:

To find the actual investment and planned investment, we need to calculate the investment in inventory and equipment separately.

Actual Investment = Investment in Inventory + Investment in Equipment

Planned Investment = $4,000,000 (Production Value) + $1,500,000 (Equipment Purchase)

a) Actual Investment: Acme sells $3,850,000 worth of goods. Investment in Inventory remains the same, so the actual investment is $3,850,000 + $1,500,000 = $5,350,000

b) Actual Investment: Acme sells $4,000,000 worth of goods. Investment in Inventory remains the same, so the actual investment is $4,000,000 + $1,500,000 = $5,500,000

c) Actual Investment: Acme sells $4,200,000 worth of goods. Investment in Inventory remains the same, so the actual investment is $4,200,000 + $1,500,000 = $5,700,000

Based on the information provided, we cannot determine which case represents short-run equilibrium output.