Answer:
50% discount
Explanation:
We have the formula
price = marginal cost*(E/(E + 1)
)
We are given the following:
price per unit item = $10
elasticity of demand, E = -3 for coupon users
marginal cost MC = ?
Hence
10 = MC * (-3/(-3 + 1))
10 = MC * 1.5
MC = 10 / 1.5 = 6.67
So, the appropriate discount that can be given is
price - marginal cost = 10 - 6.67 = $3.33 per box
OR 3.33 / 6.67 = 50% discount over cost.
Answer:
$300 i.e irrecoverable cost of old printer
Explanation:
Sunk costs refer to those costs incurred in the past which can no longer be recovered. Such costs are considered as irrelevant in decision making process since they have no current or future implications.
For example, research and development costs incurred by an enterprise in the past represent sunk costs since those costs can no longer be recovered and secondly have no current or future implications w.r.t investment decisions.
In the given case, the cost incurred in purchase of old printer is a sunk cost, incurred in the past. The irrecoverable part of the said cost i.e $350 less $50 i.e $300 represents sunk cost. Also, the expenditure on old printer's cartridges which costed $80 apiece would be regarded as a sunk cost.
This cost of $300 cannot be recovered and would be considered irrelevant w.r.t the decision of purchasing a new advanced printer.
Answer:
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Explanation: