Answer:
The equilibrium price is expected to decrease
Explanation:
Here, we want to state what will happen to the equilibrium price when the supply go a product increases but the demand stays the same
What will happen is that the equilibrium price is expected to fall since in this particular case the supply of the product will actually exceed the demand for it
So all things being equal, the demand for the product at increased supply will drive a decrease in equilibrium price
Answer:
a) attached below
b) X < 2.7767.8
Explanation:
Working with the information available
a) Diagram of the cash flow of both alternatives ( Buying and leasing alternatives )
attached below
b) Determine the value of X if the company leases the truck
Given that : MARR = 7%
assuming end-of-year lease payments
Note : The company will only lease the truck if the cost of buying the truck is higher than the cost of leasing in the long term
<u>∴ we will calculate for The cost of buying ( equivalent annual cost ) </u>
= -8000( A/P, 7%, 5 ) - 9000 - 1000 (A/G, 7%, 5 ) + 15000 (A/F, 7%, 5 )
= - 27767.8
Hence the value of X that the company should lease instead of buying will be : X < 2.7767.8
Answer:
$0.45
Explanation:
Given the following :
At a unit price of $0.5 :
Quantity sold = 1000 and price elasticity of demand = 2. If quantity sold is to increase to 1200, new price of pencils equals ;
Price elasticity of demand :
(% change in quantity demanded / percentage change in price)
% change in quantity demanded equals :
[(1200 - 1000) / 1000] * 100
(200/1000) * 100
0.2 * 100 = 20%
Therefore ;
Price elasticity of demand :
(% change in quantity demanded / percentage change in price)
(2 = 20% / % change in price)
% Change in price * 2 = 20%
% change in price = 20% / 2
% change in price = 10%
Old price = $0.5
Since quantity demanded increases, then the price of pencil has decreased
10% decrease in old price
10% of $0.5
(10/100) * $0.5
0.1 * 0.5 = $0.05
New price = $0.5 - $0.05
New price = $0.45
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Answer:
An increase in Price and decrease in Quantity.
Explanation:
Please see the attached Decrease in Supply when Demand is Constant Diagram for further explanation:
<em>Supply Curve </em>is always upward because Supply and Price are directly proportional as shown in attached diagram as S
.
<em>Demand Curve</em> is always downward because Demand and Price are inversely proportional as shown in attached diagram as D
.
The point where Demand Curve and Supply curves meet each other or intersect each other is called <em>Equilibrium </em>as shown in the attached diagram as E. At this the point Quantity Demanded and Quantity Supplied are equal.
The point at which Equilibrium touches the price is called Equilibrium Price as shown in the attached Diagram as P. At this point the Quantity Demanded and Quantity Supplied are equal.
The Point at which Equilibrium touches the quantity is called <em>Equilibrium Quantity</em> as shown in the attached Diagram as Q. At this point the Quantity Demanded and Quantity Supplied are equal.
Since the Demand is constant D and Supply is decreasing, So when the Supply decreases it shifts towards its left side as shown in the attached diagram as S'.
After decrease in Supply the changes it brings a new Equilibrium point as E' at which Equilibrium Price rises to P' and Equilibrium Quantity falls to Q' as shown in the attached diagram. At this point the Quantity Demanded and Quantity Supplied are equal.