Find the Ratio of Net Income After Taxes to Average

question 47

Multiple Choice

Find the ratio of net income after taxes to average owner's equity. Round to the nearest tenth of a percent.
-Owner's equity at beginning of year: $602,000. Owner's equity at end of year: $806,000. Net income after taxes: $93,500.

• A)15.5%
• B)11.6%
• C)15.6%
• D)13.3%

Analyze how information asymmetry can lead to market failure, especially in used goods and insurance markets.

Understand how adverse selection affects the pricing and availability of goods in the market.

Explore the role of market signals in reducing information asymmetry.

Grasp the concept of economic incentives in shaping consumer and business behavior in the presence of asymmetric information.

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Definitions:

Cognitive Consistency

A model of social cognition in which people try to reduce inconsistency among their cognitions, because they find inconsistency unpleasant.

Balance Theory

A psychological theory that suggests individuals strive for a harmonious balance in their relationships and beliefs, avoiding inconsistency among their thoughts.

Triad

In sociology, a group of three people, which provides the simplest unit for studying complex group dynamics.

Cognitive Consistency Theories

A group of attitude theories stressing that people try to maintain internal consistency, order and agreement among their various cognitions.