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sweet-ann [11.9K]
3 years ago
10

A newspaper story on the effect of higher milk prices on the market for ice cream contained the following: "As a result [of the

increase in milk prices], retail prices for ice cream are up 4 percent from last year. . . . And ice cream consumption is down 3 percent." Source: John Curran, "Ice Cream, They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press, July 23, 2001. Based on the information given, what is the price elasticity of demand for ice cream? Group of answer choices
Business
1 answer:
antoniya [11.8K]3 years ago
4 0

Answer:

The price elasticity of demand for icecream is -0.75, that means that is inelastic.

Explanation:

Price elasticity of demand measures the porcentage of the change in the demand when there is a change in the price. If the change in porcentage of the demand is less than the pocentage of change in the price we talk about inelastic demand. An increase in the price of inelastic goods will result in bigger revenues, as the porcentage in the drop of sales is less than the porcentage   of increase in the price.

The formula is: % in change demand/% in change of price

-3%/4= -0.75

The minus symbol indicates that when the price rises the demand decrease.

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3 years ago
During a company's first year, the asset account, Office Supplies, was debited for $3,900 for the purchases of supplies. At year
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Answer:

The adjusting entry will be shown below:

Explanation:

The adjusting journal which is to be recorded in the following case will be:

Office Supplies expense A/c..............................Dr  $2,275

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As the amount $3,900 is already debited and at the year end, the remaining amount of office will be posted to the account of the office supplies expense against the office supplies account.

Working Note:

Amount = Debited amount of office supplies - Offices supplies on hand

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_ are loans to a conpany or government for a set amount of time they Earn interest and are considered a low- risk invest
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bonds

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3 years ago
The Reynolds Corporation buys from its suppliers on terms of 2/12, net 45. Reynolds has not been utilizing the discounts offered
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Answer:

A. 22.56%

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Explanation:

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Cost of not taking cash discount = ( 2% / 98% )* ( 365 / (45 - 12) )

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Annual rate of interest = 17.97%

Therefore the rate of interest if the company borrow from the bank will be 17.97%

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3 years ago
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