Smithfield's Has a Line of Credit with a Local Bank

question 72

Multiple Choice

Smithfield's has a line of credit with a local bank of $50,000.The loan agreement calls for interest of 9 percent with a 5 percent compensating balance requirement that is based on the total amount borrowed.What is the effective interest rate if the firm needs $45,000 for one year to finance a fixed asset purchase?

• A)8.55%
• B)9.00%
• C)9.13%
• D)9.38%
• E)9.47%

Differentiate between innovation and invention in the context of commercialization and scientific research.

Discuss the economic viewpoint on technological advances as a response to market mechanisms.

Evaluate the decision-making process involved in R&D spending by firms.

Understand the concept of marginal utility (MU) in the adoption of new products by consumers.

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Definitions:

Household Appliance Industry

The sector of the economy focused on manufacturing and selling electrical or mechanical machines used in homes, such as refrigerators, washers, or ovens.

Differentiated Oligopoly

A market structure where a few companies dominate the market, but they offer products that are distinct from each other in some way, allowing for competition.

Pure Competition

A market structure characterized by a large number of buyers and sellers, similar products, and free entry and exit, leading to price determination by supply and demand forces.

Monopolistic Competition

A market structure where many businesses sell products that are similar but not identical, allowing for competition based on price, quality, and marketing.