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Vikentia [17]
2 years ago
12

The Acmeville Metropolitan Bus Service currently charges $0.88 for an all-day ticket and is used by an average of 513 riders a d

ay. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must, therefore, find a way to increase revenues. The bus company is considering increasing the ticket price to $0.99 . The marketing department's studies indicate this price increase would reduce usage to 363 riders per day. Calculate the price elasticity of demand using the midpoint method for bus tickets to determine if the bus company should increase price or decrease price to increase revenues. Enter your answer as an absolute value and round it to two places after the decimal. price elasticity of demand: Determine if demand is elastic or inelastic and what this implies regarding how ticket prices affect revenue. Demand is inelastic, so increasing ticket prices will increase revenue. Demand is inelastic, so decreasing ticket prices will increase revenue. Demand is elastic, so increasing ticket prices will increase revenue. Demand is elastic, so decreasing ticket prices will increase revenue.
Business
1 answer:
ki77a [65]2 years ago
6 0

Answer:

Price elasticity of demand = Change in Quantity/ Change in Price

Using midpoint formula;

Change in Quantity ;

= \frac{Q2 - Q1}{\frac{Q1 + Q2}{2} } \\\\= \frac{363 - 513}{\frac{513 + 363}{2} }\\\\= -0.342

Change in Price;

= \frac{P2 - P1}{\frac{P1 + P2}{2} } \\\\= \frac{0.99 - 0.88}{\frac{0.99 + 0.88}{2} }\\\\= 0.118

Price elasticity of demand = -0.342/0.118

= -2.90

Demand is elastic, so decreasing ticket prices will increase revenue.

When the elasticity is larger than 1 it means that a 1% change in price will change demand by more than 1%. In this case, a a decrease of price by 1% will bring 2.9% increase in customers.

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On August 1, 2019, the accountant for Western Imports downloaded the company's July 31, 2019. Bank statement from the bank?s Web
Radda [10]

Answer:

Required 1.

<u>Bank Reconciliation Statement as at 31 July</u>

Balance at bank as per updated Cash Book           $28,192

Add Unpresented Cheques

Check 1429                                                 $1,248

Check 1430                                                    $140      $1,388

Less Lodgements not yet credited                             ($790)

Balance as per Bank Statement                              $28,790

Required 2.

Journal Entries :

J1

Cash $14,300 (debit)

Accounts Receivable : Foncier Ricard $14,300 (credit)

J2

Accounts Payable : Central Common $261 (debit)

Cash $261 (credit)

J3

Check 1425 $30 (debit)

Cash $30 (credit)

Explanation:

The first step is to update the Cash Book Bank Balance as follows :

<u>Debit :</u>

Balance as at July 31                                                    $14,183

Credit Transfer : Foncier Ricard                                 $14,300

Totals                                                                           $28,483

<u>Credit:</u>

Check 1425 understated ($99 - $69)                               $30

Direct Debit : Central Common                                       $261

Cash Book Updated Balance (Balancing figure)       $28,192

Totals                                                                           $28,483

Then prepare a Bank Reconciliation Statement as at 31 July :

<u>Bank Reconciliation Statement as at 31 July</u>

Balance at bank as per updated Cash Book           $28,192

Add Unpresented Cheques

Check 1429                                                 $1,248

Check 1430                                                    $140      $1,388

Less Lodgements not yet credited                             ($790)

Balance as per Bank Statement                              $28,790

Journal Entries :

J1

Cash $14,300 (debit)

Accounts Receivable : Foncier Ricard $14,300 (credit)

J2

Accounts Payable : Central Common $261 (debit)

Cash $261 (credit)

J3

Check 1425 $30 (debit)

Cash $30 (credit)

3 0
3 years ago
Decreases in the money supply affect the economy indirectly because A. interest rates decrease causing planned investment to inc
Nimfa-mama [501]

Answer:

The correct answer is option C.

Explanation:

A decrease in the money supply would reduce the availability of credit in the market. The money supply curve will shift to the left. This would further cause the interest rate to increase.

This increase in the interest rate would increase the cost of borrowing. As a result, the cost of borrowing will increase. This will cause the planned investment to decline.

Since investment expenditure is a component of aggregate demand, a decline in the investment will cause the aggregate demand to decrease as well.

8 0
3 years ago
During the year, Cheng Company paid salaries of $24,000. In addition, $8,000 in salaries has accrued by the end of the year but
Burka [1]

Answer:

Correct answer is D. Credit to Salaries Payable for $8,000

Explanation:

Based on the basic underlying guideliness in accounting, specifically matching principle. All income and expenses should be reported during the period it incurred. Thus, all expenses incurred during the period even though it wasn't paid yet shoud be recorded to the book and that's the moment that the year-end adjusting entry is necessary.

On the above given problem, the salaries paid of $24,000 is presumed to have been recorded in the book already. Because it incurred and paid within the calendar period. In addition, the salaries accrued by the year end needs year-end adjustment<em> to recognize the salaries expense applicable for the period</em>. Journal entry of it is to debit salaries expense and credit salaries payable in the amount of $8,000.

6 0
3 years ago
What is a lease? AA loan from a bank used to buy a house. BA loan from a bank used to rent a home. CA contract outlining the ter
julia-pushkina [17]
Contract outlining the terms under which a landlord agrees to rent property to a tenant :)
8 0
3 years ago
Read 2 more answers
Goshford Company produces a single product and has capacity to produce 105,000 units per month. Costs to produce its current sal
Salsk061 [2.6K]

Answer:

Net income= $4,836,200

Explanation:

Giving the following information:

Offer:

21,000 units for $77.4

An increase in variable cost= $7.6 per unit

Direct materials $ 12.50 $ 1,050,000

Direct labor 15.00 1,260,000

Variable manufacturing overhead 14.00 1,176,000

Fixed manufacturing overhead 17.50 1,470,000

Variable selling and administrative expenses 14.00 1,176,000

Fixed selling and administrative expenses 13.00 1,092,000

Totals $ 86.00 $ 7,224,000

First, we need to calculate the effect on the income of accepting the offer:

Effect on income= 21,000*77.4 - 21,000*(12.5 + 15 + 14 + 14 + 7.6)

Effect on income= 1,625,400 - 1,325,100

Effect on income= 300,300

Net income= 84,000*140 + 300,300 - 7,224,000

Net income= $4,836,200

6 0
2 years ago
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