Answer: Her income elasticity of demand for cottage cheese is <em><u>0.3333</u></em> making it a <em><u>normal and necessary</u></em> good.
The income elasticity of demand is given by :
The percentage change in income is given as 60%. We calculate the percentage change in quantity demanded as follows:
Substituting the value above in the income elasticity demand formula we get,
<u>YED = 0.33333</u>
Since the income elasticity is positive, and since Shawna buys more cottage cheese after an increase in income, we can classify this good as a normal good.
Since the income elasticity is between 0 and 1 we can also conclude that cottage cheese is also a essential good or a necessity.
Answer:
(a) 5
(b) $150 million
(c) 45 million
Explanation:
(a) Multiplier = 1 ÷ (1 - MPC
)
= 1 ÷ (1 - 0.8
)
= 1 ÷ 0.2
= 5 ⇒ the value of the simple multiplier is 5.
b) If the autonomous expenditure is increased by $30 million then the total output will increase by:
= $30 million × 5
= $150 million
c) If the Marginal propensity to import is 0.3 then the import will increase by:
= 150 × 0.3
= 45 million
Answer:
Stock is valued at lower of : cost or market price [prudence principle]
Explanation :
Prudence or Conservatism is an accounting principle : anticipating for all possible losses & expenditures, not anticipating for possible profits & gains. This makes business better prepared to face all contingent expenditures/ losses.
This concept's implication is that : Stock or Inventory is valued at the value whichever is lesser between 'cost of inventory' & sale price. This makes inventory valuation as per the above explained Prudence/ Conservatism principle.
Answer:
Year 1, Year 2 purchasing power = 8 , 9 (respectively). As price level fall, value of money<u> Increases </u>
Explanation:
Year one purchasing power = Money ($) / Price per basket = 72 / 9 = 8
Year two purchasing power = Money ($) / Price per basket = 72 / 8 = 9
This implies that, as price level falls (from 9 to 8 here) ,the value of money ie purchasing power increases (from 8 to 9)
Given:
<span>$500,000 beg. balance in retained earnings.
</span>$200,000 <span>net income for the year
</span>$1,000,000 <span>sales revenue
</span>$100,000 <span>dividends declared and paid by year-end
Retained earning is the amount left from net income after dividends have been paid. In the given data, sales revenue is not included in the Retained earnings report. It is reflected in the Income statement which generates the Net income.
Retained Earnings, beg. balance 500,000
Add: Net Income for the year <u> 200,000</u>
Total 700,000
Less: Dividends declared and paid this year <u> (100,000)</u>
Retained Earnings, end balance 600,000
</span>
