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ycow [4]
3 years ago
5

Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his fir

st cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct? a. Chad’s consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté. b. Chad places a higher value on his second cup of latté than on his first cup of latté. c. Chad’s willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté. d. Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté.
Business
1 answer:
SCORPION-xisa [38]3 years ago
4 0

Answer:

C. Chad's willingness to pay for his second cup of latte was smaller than his willingness to pay for his first cup of latte.

Explanation:

Consumer surplus refers to the excess of price a consumer is willing to pay for a good over the price he actually ends up paying.

In the given case, Chad was willing to pay $5 for his first cup of latte. He bought the first cup for $3.75.

Thus, his consumer surplus for the first cup he purchased = $5 - $3.75

                                                                                          = $1.25

Similarly, his consumer surplus for the second cup of latte he purchased being,                                                                                 = $4.5 - $3.90

                                                                                          = $0.6

As can be seen, his consumer surplus has fallen in case of the second cup and also by the concept of diminishing marginal utility by which utility derived after each successive unit of consumption falls, Chad was willing to pay lesser i.e $4.5 instead of $5 for the second cup of latte.

Hence, Chad's willingness to pay for his second cup of latte was smaller than his willingness to pay for his first cup.

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<u>Solution and Explanation:</u>

 Breakeven point = Fixed cost divide by Contribution margin

Contribution margin = Sales minus Variable cost.

Fixed cost

Particular           Amount

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Utilities                   $1100

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Maintenance   $780

Total Fixed cost = $8,080.

Variable cost =Maid services plus Other cost = $7 plus $13 = $20

Contribution = $40 minus $20 = $20.

Breakeven point in number = $8080 divide 20 = 404 rented rooms per month.

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Incremental contribution margin:

$25,000 increased sales x 60% CM ratio           $15,000

                                                                             

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yes, the position should be converted.

In economics, the margin is profit after deducting expenses, expressed as a percentage. In investing, the margin is the deposit an investor leaves with a broker when borrowing money to buy a security.

The portion of a page or sheet outside the body of a printed product or document. 2: The outer boundary and adjoining surface of something: a ridge at the edge of the continental margin of a forest. 3: Any amount or measure or degree of substitution permitted or granted due to unforeseen circumstances or special circumstances was not subject to error.

Learn more about margin at

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2 years ago
Corporate social responsibility (csr) means that a corporation should:
postnew [5]
<span>Corporate Social Responsibility (CSR) can be described as an approach of business that contributes to continuous development of business by providing/delivering economic, environmental and social benefits to all the stakeholders of the company. CSR means that a corporation should take accountability of its actions on people, community and the environment in which it exists.</span>
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3 years ago
A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $23,649 repres
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Answer:

a. $(3,881)

Explanation:

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Answer:

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On the other hand, the <em>"indirect costs"</em> are the ones that have the characteristics of being the oppositive of the direct costs. Therefore that these type of costs are the ones that would not be easily referable to a cost object.

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