1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Pavlova-9 [17]
3 years ago
9

It is common for supermarkets to carry both generic (store-label) and brand-name (producer-label) varieties of sugar and other p

roducts. Many consumers view these products as perfect substitutes, meaning that consumers are always willing to substitute a constant proportion of the store brand for the producer brand. Consider a consumer who is always willing to substitute four pounds of a generic store-brand sugar for two pounds of a brand-name sugar. Do these preferences exhibit a diminishing marginal rate of substitution between store-brand and producer-brand sugar.
Required:
a. Do these preferences exhibit a diminishing marginal rate of substitution? Assume that this consumer has $24 of income to spend on sugar, and the price of store-brand sugar is $1 per pound and the price of producer-brand sugar is $3 per pound.
b. How much of each type of sugar will be purchased?
c. How would your answer change if the price of store-brand sugar was $2 per pound and the price of producer-brand sugar was $3 per pound?
Business
1 answer:
dsp733 years ago
8 0

Answer:

a. Do these preferences exhibit a diminishing marginal rate of substitution?

  • no, because the consumer is actually purchasing a higher amount of goods, the only difference is that they are paying a lower price.

Assume that this consumer has $24 of income to spend on sugar, and the price of store-brand sugar is $1 per pound and the price of producer-brand sugar is $3 per pound.

  • The consumer will purchase 24 pounds of price of store sugar simply because the price is much lower, not because he/she wants to consume less. Actually a lower price might result in an increase of consumption.

b. How much of each type of sugar will be purchased?

  • If the consumer is willing to spend the whole $24 on sugar, he/she will purchase 24 pounds of store brand sugar. The alternative is to buy 8 pounds of producer brand sugar, and that is not a good deal.

c. How would your answer change if the price of store-brand sugar was $2 per pound and the price of producer-brand sugar was $3 per pound?

  • The consumer would purchase 12 pounds of store brand sugar instead of 24, but he/she will still not purchase producer brand sugar since the difference in price is still too high. Remember that consumers view both types of sugar as perfect substitutes, so they will purchase the brand with the lower price.
You might be interested in
If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ______ .
boyakko [2]

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to rise, domestic consumption to fall, and domestic production to rise.

A levy on imported goods is known as a tariff. The use of an example is the simplest way to explain how it operates. The US lumber industry is the example we've used throughout this section, and it's continuing below. The domestic equilibrium price and quantity in the domestic market are $1,000 per board foot and 40 million board feet, respectively. PD = $1,000 and QD = 40,000,000 are used to represent this. The world price, or PW, in this instance is significantly less than the local price. While this is not always the case, if PW is higher than PD, there is no reason to import (This model assumes that imports are identical to domestic products in every respect except for price).

American customers will buy a lot more lumber if they can obtain imports for as little as $400. The number of units they will be demanded will rise to 70 million (40 million more than the domestic equilibrium). With the improved accessibility to inexpensive lumber, these consumers are vastly better off.

The imports, on the other hand, cause domestic producers to lose a significant amount of surplus. Previously, they could have provided 40 million board feet of lumber for $1,000, but now they can only provide 10 million. This is due to the fact that many domestic companies will either exit the market or reduce production since they can no longer compete with the foreign production.

60 million board feet of lumber are imported from Canada out of a total production of 70 million board feet, 10 million of which are produced domestically.

To lean more about Tariffs from the given link.

brainly.com/question/26923792

#SPJ4

3 0
1 year ago
Blue Co. had the following first-year amounts related to its $12,000,000 construction contract: Actual costs incurred and paid $
IrinaVladis [17]

Answer:

$900,000

Explanation:

The computation of the total amount excluding cash is shown below:

But before that following calculations need to be done

% completion during the year is

= $3,000,000 ÷ ($3,000,000 + $6,000,000)

= 33.3333%

Now Total revenue to be recognized for the year is

= $12,000,000 × 33.33333%

= $4,000,000

Profit for the year is

= $4,000,000 - $3,000,000

= $1,000,000

Now Accounts receivables at the end of year is

= Billings - Collection

= $3,500,000 - $3,100,000 = $400,000

Now Cost and profits in excess of billings

= ($3,000,000 + $1,000,000) - $3,500,000

= $500,000

And, finally Total amount of current assets to be recognize at year end is

= $400,000 + $500,000

= $900,000

3 0
3 years ago
Bedekar, Inc., has an issue of preferred stock outstanding that pays a $3.40 dividend every year in perpetuity. If this issue cu
Ainat [17]

Answer:

i=4.84%

Explanation:

the key to answer this question, is to remember the model of return for a perpeuity dividend calculation:

Value=\frac{1}{i-k}

where value is the current stock price, i is the dividend yield and k is the growth rate, so applying to this particular case we have

k=3.4/91

k=3.74%

and solving i for the previous formula:

91=\frac{1}{i-0.0374}

0.01098={i-0.0374}

i=4.84\%

8 0
3 years ago
Legal forces are important external forces that international managers need to understand. They are developed at the national le
Fantom [35]

Answer:

1. Per se application  - US Competition law

Justification: It is a provision of US competition law

2. Misuse of activity - EU Competition law

Justification: It is a provision of EU competition law

3. Extraterritoriality - US and EU

Justification: It is a provision of US and EU antitrust and competition law

4. Trade obstacle, non-tariff - France

Justification: These are considered to be part of the France trade system

5. Strict liability - U.S. Tort Law

Justification: It is part of the U.S. Tort Law and depends on intent to harm liability

6. Punitive damages - U.S. Product Liability Law

Justification: It is a provision of U.S. Product Liability Law

5 0
2 years ago
if the required reserve ratio is 10 percent the banking system currently has excess reserves equal to
prisoha [69]

Answer:

Experts are tested by Chegg as specialists in their subject area. We review their content and use your feedback to keep the quality high. Transcribed image text: If the required reserve ratio is 10 percent, the banking system currently has excess reserves equal to: $10 billion.

Explanation:

5 0
3 years ago
Other questions:
  • Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a
    7·1 answer
  • What is the general tone of Defoe's piece describing labor in the textile-manufacturing village?
    8·1 answer
  • How is a line of credit similar to a credit card
    15·1 answer
  • A company acquired mineral rights for $7,500,000. The mineral deposit is estimated at 600,000 tons and during the year 100,000 t
    5·1 answer
  • Will and Lyndsey are married with no dependents and file a joint tax return. In 2019, they paid $3,000 in qualified student loan
    14·1 answer
  • Greening refers to: a. Answer the need for more carbon dioxide in our air. b. firms acquiring more green backs (U.S. dollars) fr
    15·1 answer
  • Why does the government provide public goods and services, redistribute income, protect property rights, and resolve market fail
    14·1 answer
  • Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts p
    14·1 answer
  • If a company has $10,000 in Cash, $2,000 in Accounts Receivable, $100,000 in Building and Land, $30,000 in Accounts Payable, and
    10·1 answer
  • A foreign branch bank operates like a local bank, but legally Group of answer choices a branch bank is subject to only the banki
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!