1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zubka84 [21]
3 years ago
5

A firm has estimated the following demand function for its product:

Business
1 answer:
Rom4ik [11]3 years ago
3 0

Answer:

(i) Q=300

(ii) Elasticity of Demand=-3.33 (elastic)

(iii) Income Elasticity= 2.5 (normal good)

(iv) Advertising Elasticity: 1.5

Explanation:

The Demand function is given by

Q=100-5P+5I+15A

(1) To solve (i) we need to replace P = 200, I = 150, and A = 30 in the demand equation:

Q=100-5(200)+5(150)+15(30)=300

(2) To find the price elasticity (how much quantity demanded changes with price) we use the point price elasticity formula

\eta_{Price}=\frac{\Delta Q}{\Delta P}\frac{P}{Q}

From the above equation we get: \frac{\Delta Q}{\Delta P}=-5

Replacing in the elasticity formula

\eta_{Price}=-5\frac{200}{300}=|-3.33|>1

in absolute terms the elasticity is bigger than one so it is an elastic demand.

(3) For income elasticity (how much quantity demanded changes with income), we proceed similarly as above. But the derivative is respect to income

\eta_{Income}=\frac{\Delta Q}{\Delta I}\frac{I}{Q}=5\frac{150}{300}=2.5>1[/tex]

Which is bigger than one, denoting this is a normal good because it's bigger than one.

(4) Advertising elasticity (how much quantity demanded changes with expenditures in advertising), we proceed as before

\eta_{advertising}=\frac{\Delta Q}{\Delta A}\frac{A}{Q}=15\frac{30}{300}=1.5

You might be interested in
The local classic car auction raised $12,000 for local charities, the mayor is designating the funds to the children’s hospital.
Nataly [62]
<span>The error is called a comma split. That is because the two clauses are connected with a comma without a conjunction and this is ungrammatical. You should either turn them into two sentences, or add a conjunction, or turn the comma into a semi-colon. This way you would correct the error.</span>
4 0
3 years ago
Read 2 more answers
Giselle has $10,000. She could put it in a CD earning 2% interest, a tech stock earning an 18% return this year, a mutual fund l
Arturiano [62]
The investment with the lowest volatility is the CD.

CD stands for Certificate of Deposit. It is a savings certificate that states that the bearer of the certificate is entitled to receive interest. A Certificate of Deposit reflects the amount invested, specified interest rate, and its maturity date.

In Giselle's case, her CD will reflect a $10,000 with an interest rate of 2% compounded annually and a maturity date that is either one month up to five years from the day of opening the CD account and depositing the cash.

Regardless of what happens in the stock market, Giselle is assured of earning 2% from her $10,000 investment. For example: her term is 1 year.
$10,000 * 2% * 360/360 = 200 is the interest she will earn for the year.

4 0
3 years ago
Prepare a pro forma balance sheet, assuming a sales increase of 15 percent, no new external debt or equity financing, and a cons
xeze [42]

Answer:

pro forma Balance sheet

                             old increased

   

assets    

non current assets   37800 43470

net PPE                   37800 43470

Current assets   15400 17710

Inventory          9000 10350

Accounts receivable  3900 4485

cash                      2500  2875

   

total assets           53200 61180

   

Equity & Liabilities    

common stock    15000 15000

retained earnings   6800 13930

total                           21800 28930

Liabilities    

long term debt   24000 24000

   

Current liabilities   7400 7760

Accounts payable   2400 2760

notes payable   5000 5000

   

total                             53200 60690

EFN = 61180 - 60690 = 490

PAYOUT RATIO = dividends / net income

additions to retained earnings = net income less dividends

Explanation

Retained earnings = old retained earnings plus additions to retained earnings = 6800 + 7130 =13930

Missing parts of the Question

Consider the following income statement for the Heir Jordan Corporation:

 

HEIR JORDAN CORPORATION

Income Statement

 Sales     $ 48,500  

 Costs      34,500  

 Taxable income     $ 14,000  

 Taxes (35%)      4,900  

 Net income     $ 9,100  

     Dividends $ 2,900      

     Addition to retained earnings  6,200      

 

The balance sheet for the Heir Jordan Corporation follows.

 

HEIR JORDAN CORPORATION

Balance Sheet

Assets  Liabilities and Owners’ Equity  

 Current assets      Current liabilities    

   Cash $ 2,500      Accounts payable $ 2,400  

   Accounts receivable  3,900      Notes payable  5,000  

   Inventory  9,000        Total $ 7,400  

     Total $ 15,400    Long-term debt $ 24,000  

 Owners’ equity    

 Fixed assets        Common stock and paid-in surplus $ 15,000  

   Net plant and equipment $ 37,800      Retained earnings  6,800  

     Total $ 21,800  

 Total assets $ 53,200    Total liabilities and owners’ equity $ 53,200  

   

1.Prepare a pro forma balance sheet, assuming a 10 percent increase in sales, no new external debt or equity financing, and a constant payout ratio. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

2.Calculate the EFN. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

8 0
3 years ago
A producer of mobile aerial work platforms rewards employees for the number of basic skills they can perform rather than for the
evablogger [386]
The company uses skill-based pay. The skill-based pay is the most widely-implemented salary system, in which the salary is defined based the knowledge, experience, education or specialized training of the employee. <span>The greater the number or depth of skills an employee acquires and applies the bigger the pay. </span>
5 0
3 years ago
1.Democratic leaders balance leadership and respect for employees.
Firdavs [7]
The relationship-oriented leadership style is centered on people. Relations-oriented leaders are attuned to the expectations and interactions of subordinates. They are devoted to person-oriented leadership.

In return for advocating on behalf of staff, people-oriented leaders expect loyalty.

The relationship-oriented leadership style is often contrasted with task-oriented leadership, which is more tightly focused on getting work done and less focused on motivating people by tending to their emotional needs.

7 0
3 years ago
Other questions:
  • Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 25 years to maturity that is
    6·1 answer
  • Henry and claudia can claim alyssa for which tax benefits
    8·1 answer
  • The article discusses income inequality, and for some people this means a more equitable distribution of income is needed in the
    5·1 answer
  • A company reported the following in its recent balance sheet:
    7·1 answer
  • Graphical information can be useful in
    7·2 answers
  • The production of small consumer goods is referred to as?
    11·1 answer
  • Consider the following production and cost data for two products, L and C: Product L Product C Contribution margin per unit $ 12
    10·1 answer
  • Possible reasons for additional students accommodation on a project proposal ​
    5·1 answer
  • In the context of the strategies for reaching global markets, a(n) _____ is a firm that is offered the right to produce and mark
    8·1 answer
  • In many cases, it is reasonable to refer to the ________________ as the price.
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!