3-28. CVP Analysis
Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a boy- or girlfriend, spouse, or other loved one. Top management will not approve this product in view of its high break-even point.
Mark knows that if he can reduce the fixed costs in his proposal, then the break-even point will be reduced to a level that top management finds acceptable. Working with a friend in the company’s finance department, Mark finds ways to credibly misstate the estimated fixed costs of producing DNA-diamonds below those that any objective person would estimate.
Mark knows that if the product is successful (and he is certain that it will be), then top management will not find out about the understatement of fixed costs. Mark believes that this product, once it is successful, will benefit the shareholders and employees of the company.
Are Mark’s actions ethical? Explain.
Unit 3 DB: Supply & Demand (ECO201 Macroeconomics)
Please review the following article found in Investopedia, Kramer, L. (April 29th, 2021). How does the law of supply and demand affect prices? Investopedia.
Most goods respond to the relationship between price, supply, and demand. What happens when price controls are put in place such as for gasoline in the 1970s? Why?
When does the Fed reduce interest rates and why? When does the Fed increase interest rates and why?