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serg [7]
3 years ago
9

A car dealer wants to get rid of the stock of last year's model. Assume that the dealer knows from past experience that the pric

e elasticity of demand for cars is unitary (= 1). If the price of the cars is currently $20,000 and the dealer wants to increase the quantity demanded from 30 units to 50 units, what must the new price be if the dealer is to sell the 20 additional cars?
Business
2 answers:
Pie3 years ago
7 0

Answer: $6,600

Explanation: According to the question, The price elasticity of demand for cars is unitary meaning that any percentage increase or decrease in price of a product will give an equal increase or decrease in the demand for the product.

If cars are sold at $20,000 and current sales is 30 units. To increase the quantity sold to 50 units, there must be a price reduction.

what percentage of increase in quantity to be sold do we have? 50 - 30 = 20

20/30 = 66.67 appx 67%

Meaning that a 67% decrease in price of the car will give an equal 67% increase in sales quantity.

The new price of the car will be $20,000 * 67% = $13,400

new price = $20,000 - $13,400 = $6,600

horrorfan [7]3 years ago
4 0

Answer: The answer is $6,600

Explanation:

The unitary elasticity of demand means that the quantity and price must change in the same proportion .

Using the formula

Old quantity - New quantity / Old quantity × 100%

Old quantity = 30 units, New quantity = 50units

30 - 50 / 30 × 100%

-20/30 × 100%

= -0.666 × 100 ignore the minus sign)

= 67% approximately

The percentage change in cars is 67%

0.67 × 20,000 = 13,400

Therefore the new price is

20,000 - 13,400

= 6,600

Therefore the new price is $6,600

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Option D would be the appropriate alternative.

Explanation:

  • A broker dealer would be a company or organization engaged throughout the purchase as well as the sale of securities within its multiple occasions or even on behalf of the participants.
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Other choices available aren't connected to that same scenario in the statement. So the answer here is just the perfect one.

3 0
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When the US government becomes aware of economic changes, the discovery is most likely to influence 1. how the nation allocates
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1. How the nation allocates resources

Explanation:

Government is the chief decision maker in any economic model because their power enables to allocate nation`s resources among economic unit. As such they keep watch on the economic changes and trends in order to make the best economic decision for the nation. When government becomes aware of economic changes, it will try to allocate resources efficiently and effectively based on signal given by the changes.

For example, if US government is aware that the economy is nearing recession, it will be put in preventive measures to escape the intending recession and make sure it allocates its scarce in efficient way among the economic units by spending more on capital projects, raising social empowerment spending and doing other necessary things.

So the discovery of economic changes will most likely influence how the nation allocates resources.

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3 years ago
Which of the following is a challenge faced by developing nations? A. Growing population B. Declining population C. Lack of effo
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If a 20 percent increase in the price of red bull energy drinks results in a decrease in the quantity demanded of 25 percent, th
yanalaym [24]

The correct answer is that the price elasticity of demand is elastic.

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4 0
3 years ago
Oslo Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. Aprofit margin of
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Answer:

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The computation of the ending inventory using the lower of cost or market value which is shown below

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For Product 2

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7 0
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