project part 1_ Yeliz Makuloglu

project part 1_ Yeliz Makuloglu - Yeliz Makuloglu Business...

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Yeliz Makuloglu Business Economics GM545
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Question 1 The issue is that the companies seek to over report or under report their net income. The company management likes to show that their net income has grown every quarter. Therefore they show that they adopt unethical means or illegal means in the operation and financial reporting. A similar method is the indiscriminate use of stock options for employees is that enable companies to take employment costs off balance sheet and inflate earnings.This method will reduce the equilibrium price and increase equilibrium quantity for this company's products and services. The reason for this is that the wage bill is shown lower than what it actually is. This causes the supply curve to shift to the right. With an increase in supply, if the firm is a monopoly/oligopoly/monopolistic competition, there will be a decline in the price of the product of the firm. In case the firm is operating in perfect competition, there will only be an increase in the quantity the company sells in the market.
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project part 1_ Yeliz Makuloglu - Yeliz Makuloglu Business...

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