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pychu [463]
3 years ago
12

Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips dema

nded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is 0.33 0.45 2.20 3.00
Business
1 answer:
Tresset [83]3 years ago
4 0

Answer:

2.20

Explanation:

The Price elasticity will be:

Δdemand/ΔPrice

<u>The mid point is used to calculate the increases.</u>

Δdemand = ΔQ/midpointQ

(Q2+Q1)/2 = mid point quantity = (300+ 200)/2 = 250

ΔQ = 300-200 = 100

Δdemand = 100/250 = 0.4

<u>Same procedure is applied with the Price numbers:</u>

Δprice = ΔP/midpointP

(P2+P1)/2 = mid point price = (3+ 2.5)/2 = 2.75

ΔP = 2.5-3 = 0.5

Δprice = 0.5 / 2.75 = 0.181818

FInally we calculate the price elasticity:

Δdemand/ΔPrice

0.4/0.1818181818 = 2.2

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Answer:

Great data entry skills. ...

Good communication. ...

Knowledge of bookkeeping principles. ...

Organising records. ...

Attention to detail. ...

Have an understanding of the bigger picture. ...

Be disciplined. ...

Have an interest in furthering your education.

4 0
3 years ago
Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, an
kvv77 [185]

Answer:

Raw Material (Dr.) $4,900

Accounts Payable (Cr.) $4,900

Factory Labor wages (Dr.) $1,400

Cash (Cr.) $1,400

Additional Overheads (Dr.) $1,300

Accumulated Depreciation (Cr.) $800

Accounts Payable (Cr.) $500

Explanation:

Work in process inventory (Dr.) $5,750

Manufacturing Overhead (Cr.) $5,750

Finished Goods Inventory (Dr.) $20,600

Work in process inventory (Cr.) $20,600

6 0
2 years ago
Andrew, a college student, loves drinking coffee late at night to study for exams. Having a small income, he is used to buying c
Ivanshal [37]

He is buying a better quality coffee because he can afford it now, which means it is because of change of income.

8 0
3 years ago
The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for upkeep of the property and $1,0
Alborosie

Answer:

a. The amount you could afford to pay now for this property is $134,765.04.

b. Effective annual rate (EAR) = 5.12%

Explanation:

a. If i 8.6% per year (the MARR) is an acceptable interest rate, how much could you afford to pay now for this property if it is estimated to have a resale value of $150,000 9 years from now?

Step 1: Calculation of the present value of the annual net cash inflow

This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PVAC = AC * ((1 - (1 / (1 + i))^n) / i) …………………………………. (1)

Where;

PVAC = Present value of the annual cash inflow = ?

AC = Annual net cash inflow = (Annual rent * Number of months in a year) – Annual property upkeep expense – Annual property tax = ($1,200 * 12) - $3,000 - $1,000 = $10,400

i = annual interest rate = 8.6%, or 0.086

n = number of years = 9

Substitute the values into equation (1), we have:

PVAC = $10,400 * ((1 - (1 / (1 + 0.086))^9) / 0.086) = $63,377.43

Step 2: Calculation of the present value of the resale value

This can be calculated using the formula for calculating the present value as follows:

PVRV = RV / (1 + i)^n ........................... (2)

Where;

PVRV = present value of the resale value = ?

RV = resale value = $150,000

i = annual interest rate = 8.6%, or 0.086

n = number of years = 9

Substitute the values into equation (2), we have:

PVRV = $150,000 / (1 + 0.086)^9 = $71,387.61

Step 2: Calculation of the amount you could afford to pay now for this property

PVAC = Present value of the annual cash inflow = $63,377.43

PVRV = present value of the resale value = $71,387.61

Amount you could afford to pay now = PVAC + PVRV = $63,377.43 + $71,387.61 = $134,765.04

b. Let's assume that the interest rate is 5%. If the 5% interest had been a nominal interest rate, what would the corresponding effective annual interest rate have been with bi-weekly (every two weeks) compounding?

The effective annual rate (EAR) can be calculated using the following formula:

EAR = ((1 + (i / n))^n) - 1 .............................(3)

Where;

i = Annual nominal interest rate = 5%, or 0.05

n = Number of compounding periods in a year = Number of bi-week in a year = Number of weeks in a year / 2 = 52 / 2 = 26

Substitute the values into equation (3), we have:

EAR = ((1 + (0.05 / 26))^26) - 1 = 0.0512206204121786, or 5.12206204121786%

Rounding to 2 decimal places, we have:

EAR = 5.12%

8 0
3 years ago
Which of the following statements is correct regarding the components of the master​ budget?
Dmitry [639]

Answer:

(C) Operating budgets are used to create cash budgets.

Explanation:

The operating budget fprecast the various budget costs estimates for various expenses as direct materials, direct labor and other manufacturing overhead expenses and these expenses are feed in to the cash budget as the cash disbursements required in the future.

Therefore, The operating budgets are used in creating cash budgets.

3 0
3 years ago
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