Answer:
a.
P = $3.50 per gallon
b.
Equilibrium Quantity = 165 million gallons
Explanation:
a.
The equilibrium price is the price at which Quantity demanded equals quantity supplied. To calculate the equilibrium price using the given equations for demand and supply, we need to equate both equations.
<u>Equilibrium Price (P) calculation</u>
QD = QS
200 - 10P = -10 + 50P
200 + 10 = 50P + 10P
210 = 60P
P = 210 / 60
P = $3.50 per gallon
b.
The equilibrium quantity can be calculated by inserting the value of Price (P) in any of the equation for demand or supply.
Equilibrium Quantity = 200 - 10(3.50)
Equilibrium Quantity = 200 - 35
Equilibrium Quantity = 165 million gallons
Answer:
Silven Industries
If Silven buys its tubes from the outside supplier, it will be able to avoid $1.10 of its own Chap-Off manufacturing costs per box
Explanation:
a) Data and Calculations:
Estimated Production and Sales Units of Chap-Off = 140,000 boxes
Manufacturing cost per box: Avoidable costs
Direct material $ 3.70 $0.74 ($3.70 * 20%)
Direct labor 2.00 0.20 ($2.00 * 10%)
Manufacturing overhead 1.60 0.16 ($1.60 * 10%)
Total cost $ 7.30 $1.10
Outside supplier's price for tubes = $1.20 per box
b) Unless there an alternative use for the machine used in making the tubes internally exists, it may not be cost-effective for Silven to buy from the outside supplier. Alternatively, it should renegotiate a price per box that is less than $1.10 in order to stop making the tubes internally.
Answer:
D
Explanation:
A change in quantity supplied is as a result of a change in the price of the good. This change in the price leads to a movement along the supply curve. If price increases, there is an upward movement up along the supply curve and if there is a decrease in price, there is a movement down the demand curve.
A change in supply is caused by other factors other than price. Some of these factors include :
- A change in the number of suppliers
- The cost in the price of raw materials needed in the production of the good.
A change in supply leads to a movement outward or inward
Answer: A. Aggregate demand does not affect the quantity of output.
Explanation: Aggregate supply curve is perfectly vertical in a long run, Economist believed that the changes in aggregate demand only caused a temporal change in an economy output
Aggregate supply in a short run, the quantity supplies increase as price rise.
Aggregate demand does not affect the quantity of output If the aggregate supply is vertical.
Answer:
company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity
Explanation:
cost of equity = risk free rate + (beta x market premium)
risk free rate = 4.25%
market premium = market return - risk free rate = 11% - 4.25% = 6.75%
Company A's cost of equity = 4.25% + (0.7 x 6.75%) = 8.975%
Company B's cost of equity = 4.25% x (1.45 x 6.75%) = 14.0375%
this means that company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity.
