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QveST [7]
3 years ago
5

Jessica Simpson sets up shop to sell “Buffalo Wings.” She observes that if the price drops from $3.50 per order to $2.50 per ord

er, her daily sales rise from 300 to 500 orders. A. What is the price elasticity of demand for Jessica’s “Buffalo wings?” B. Which price yields the greater total revenue? C. Jessica is considering adding a new product, widgets, to the menu. She has experimented and discovered that a 10% increase in the price of wings causes a 20% increase in the quantity of widgets sold. What is the cross elasticity of demand between widgets and wings? Are they complements or substitutes?? D. What is the difference between the price elasticity of demand and the slope of the demand curve? Are they the same concept? Are they even related concepts?
Business
2 answers:
Sidana [21]3 years ago
7 0

Answer:

(I) Price elasticity = 1/6

(II) the $2.5 price gives the higher revenue: 1,250

Explanation:

(I) price elasticity

E_s =\frac{\frac{Q2 - Q1}{(Q2+Q1)/2}}{\frac{P2 - P1}{(P2+P1)/2}}

↑Q (500 - 300)/((500+ 300) / 2)

↑Q 200 / (800/2) =  200/400 = 1/2

↑P (3.5 - 2.5)/((3.5+2.5)/2)

↑P 1/(6/2) = 1/3

Es = \frac{1/2}{1/3}  = 1/6

(II) total revenue

3.5 x 300 = 1,050

2.5 x 500 = 1,250

ehidna [41]3 years ago
7 0

Answer:

A) the price elasticity of demand (PED) of Jessica's buffalo wings is:

PED = % change in quantity / % change in price

{Q2 - Q1 / [(Q2 + Q1) / 2]} / {P2 - P1 / [(P2 + P1) / 2]} = {500 - 300 / [(500 + 300) / 2]} / {3.50 - 2.50 / [(3.50 + 2.50) / 2]} = (200 / 400) / (1 / 3) = 0.5 / 0.33 = 1.52

B) $3.50 x 300 = $1,050

$2.50 x 500 = $1,250

A price of $2.50 per buffalo wing order will result in a total revenue of $1,250

C) Cross PED = % change in quantity demanded for Product A / % change in price of product B.

% change in quantity demanded of widgets / % change in price of wings = 20% / 10% = 2

Since the cross PED of widgets and wings is positive, then they are substitute products.

D) PED measures the proportional change in quantity demanded when the price of the product changes by 1%, while the slope of the demand curve measures the change in price due to a change in the quantity demanded.

Both concepts seem to be similar, their definitions include too many price changes and changes in the quantity demanded, but they measure different things. One measures a change in units and the other a change in price.

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4 0
3 years ago
The Southern Corporation manufactures a single product and has the following cost structure: Variable costs per unit: Production
Blizzard [7]

Answer:

$3,500

Explanation:

Under variable costing method, product costs are calculated on variable manufacturing  costs only.

Step 1 : Determine unit Product Cost

Product Cost = Variable Manufacturing Costs

                      =  $ 35

Step 2 : Determine the units in Inventory

Units in Inventory = Opening Stock + Production - Sales

                              = 0 +  7,210 - 7,110

                              = 100 units

Step 3 : Determine Inventory value

Inventory value = Units x Cost per unit

                           = 100 units x $ 35

                           = $3,500

Conclusion :

the ending inventory of finished goods under variable costing would be: $3,500

3 0
2 years ago
A contract with a mistake that results from failure to understand the contract’s meaning or significance or from failure to read
Olegator [25]
A.............................
4 0
2 years ago
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lys-0071 [83]

Answer:

W-2, 1099, 1040, I-9, W-4

Explanation:

5 0
3 years ago
During the 1990s positive technological change in the production of chicken caused the price of chicken to fall. Holding everyth
Marta_Voda [28]

Answer:

The demand for pork would decrease and the equilibrium price of pork would decrease.

Explanation:

Substitute goods are goods that can be consumed in place of each other.

If the price of chicken falls, consumers would increase the quantity demanded of chicken and reduce their demand for pork. The fall in the demand for pork would lead to a leftward shift in the demand curve for pork. A leftward shift in the demand curve while the supply curve remains unchanged would lead to a fall in equilibrium price of pork.

I hope my answer helps you

5 0
3 years ago
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