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alukav5142 [94]
3 years ago
10

The price index in the first year is 110, in the second year is 100, and in the third year is 96. The economy experienced

Business
1 answer:
Digiron [165]3 years ago
8 0

Answer:

a. 9.1 percent deflation between the first and second years, and 4 percent deflation between the second and third years.

Explanation:

To calculate the rate of inflation/deflation, we have to divide by the oldest price index.

The second year, the variation of the price index was:

\Delta PI/PI=\frac{PI_2-PI_1}{PI_1}=\frac{100-110}{110}=\frac{-10}{110}=-0.909=-9.1\%

This means a 9.1% deflation.

The third year, the variation of the price index was:

\Delta PI/PI=\frac{PI_3-PI_2}{PI_2}=\frac{96-100}{100}=\frac{-4}{100}=-0.04=-4\%

This means a 4% deflation.

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The mark up percentage on total cost is 13%.

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Mark up percentage on total cost refers to the profit as a percentage of the total cost.

Therefore, the mark up percentage on total cost can be calculated using the following formula:

Mark up percentage on total cost = (Desired profit / Total cost) * 100 ......... (1)

Where;

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Substituting the values into equation (1), we have:

Mark up percentage on total cost = ($143 / $1,100) * 100 = 0.13 * 100 = 13%

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Equity Theory.

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Which of the following is a disadvantage to choosing a sole proprietorship business structure?
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Which of the following is a disadvantage to choosing a sole proprietorship business structure? The owner has personal responsibility for the company's liabilities.

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