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Dmitrij [34]
3 years ago
12

If a firm's sales estimate used in its base case analysis is 1,000 units per year and they anticipate the upper and lower bounds

to be +/- 15%, What is the "best case" for units sold per year?
Business
1 answer:
pishuonlain [190]3 years ago
7 0

Answer:

1,150 units

Explanation:

Data given in the question

Estimated firm sales used in its base case analysis = 1,000 units

upper and the lower bonds = +/-15%

So, the best case for units sold per year is

= Estimated firm sales used in its base case analysis +  Estimated firm sales used in its base case analysis  × upper and the lower bonds

= 1,000 units + 1,000 units × 15%

= $1,000 units + 150 units

= 1,150 units

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Which statement is true? Portfolio A dominates portfolio B if: Portfolio A has a higher return that portfolio B Portfolio A has
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The answer is "The last choice"

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What other inspiring realizations helped Andrew Feld come up with the idea for his startup? List and rank them in order accordin
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A firm has estimated the following demand function for its product:
Rom4ik [11]

Answer:

(i) Q=300

(ii) Elasticity of Demand=-3.33 (elastic)

(iii) Income Elasticity= 2.5 (normal good)

(iv) Advertising Elasticity: 1.5

Explanation:

The Demand function is given by

Q=100-5P+5I+15A

(1) To solve (i) we need to replace P = 200, I = 150, and A = 30 in the demand equation:

Q=100-5(200)+5(150)+15(30)=300

(2) To find the price elasticity (how much quantity demanded changes with price) we use the point price elasticity formula

\eta_{Price}=\frac{\Delta Q}{\Delta P}\frac{P}{Q}

From the above equation we get: \frac{\Delta Q}{\Delta P}=-5

Replacing in the elasticity formula

\eta_{Price}=-5\frac{200}{300}=|-3.33|>1

in absolute terms the elasticity is bigger than one so it is an elastic demand.

(3) For income elasticity (how much quantity demanded changes with income), we proceed similarly as above. But the derivative is respect to income

\eta_{Income}=\frac{\Delta Q}{\Delta I}\frac{I}{Q}=5\frac{150}{300}=2.5>1[/tex]

Which is bigger than one, denoting this is a normal good because it's bigger than one.

(4) Advertising elasticity (how much quantity demanded changes with expenditures in advertising), we proceed as before

\eta_{advertising}=\frac{\Delta Q}{\Delta A}\frac{A}{Q}=15\frac{30}{300}=1.5

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