Answer:
A. Elasticity measure the change in quantity demanded that comes with a change in price. The elasticity formula is;
Elasticity = %change in quantity demanded / % change in price
0.4 = 20% / %change in price
%Change in price = 20%/0.4
= 0.5
= Increase price by 50%
= 50% * 5 = $2.50
<em>Government should increase the price by $2.50 to make it $7.50. </em>
B. Effect is larger 5 years from now
Effect will be larger 5 years from now than 1 year from now. This is because in 5 years the high prices would have forced smokers to look for more alternatives to smoking than in a year.
C. Teenagers have less income.
Teenagers likely have a higher price elasticity because they do not have the income to support an increase in the price of cigarettes so when the prices increase, they buy less than adults who are more likely to have an income stream.
Answer – Contests
The sales promotion tool which is the best match for the
growth in consumer (or user)-generated content is CONTEST. This is basically
because contests, if well designed gives a straightway answer to the basic question:
“What’s in it for me?” through awards of money, goods, free service and even
recognition.
Answer:
a. - $3,100
b. $17,300
Explanation:
Changes in working capital = (ending balance of current assets - ending balance of current liabilities) - (beginning balance of current assets - beginning balance of current liabilities)
where,
Beginning current assets = Account receivable + inventory
= $25,200 + $12,600
= $37,800
Ending current assets = Account receivable + inventory
= $23,600 + $13,700
= $37,300
And, the current liabilities is given
= ($37,300 - $17,700) - ($37,800 - $15,100)
= $19,600 - $22,700
= - $3,100
b. The computation of the cash flow is shown below:
= Sales - costs + decrease in accounts receivable - increase in inventory + increase in accounts payable
= $36,600 - $24,600 + $1,600 - $1,100 + $2,600
= $17,300
The decrease and increase in current assets and liabilities shows a difference between the beginning and ending year amounts
Answer:
B. The cash flow at year 3 is a negative $500.
Explanation:
In case of Investment the cash outflow results.
In years 1, there is a negative cash flow of $300, because $300 is invested which decreased the cash balance.
In case of withdrawal in year 2, there is a positive cash flow of $50.
In years 3, there is a negative cash flow of $500, because $500 is invested which decreased the cash balance.
Answer:
a) actual dollar = $60
b) Constant dollar of the 15th payment = $38.710
Explanation:
Facts from the question:
The Face value of the bond = $1,000
Nominal Interest rate = 12% and it compounded annually
General inflation rate = 6%
The question: Determine the 15th interest payment on the bond.
Step 1: The coupon for the amount of semi annual payment is as follows:
Coupon= (Interest rate/ Number of compounding times in a year) x face value of the bond
= (0.12/2) x 1000
= $60 -= Actual dollar amount
Step 2: Determine the 15th payment and this will represent the middle of the 8th year or (7 1/2) year.
To calculate this=
Constant dollar amount of the 15th interest payment
= Actual dollar amount (above) / (1 + inflation rate)∧n
where n= the number of years = 7.5 years
= $60 / (1 + 0.06) ∧7.5
= $60/1.55
= $38.710
This means the constant dollar amount on that 15th payment = $38.710
