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chubhunter [2.5K]
3 years ago
13

An end-of-aisle price promotion changes the price elasticity of a good from −2 to −3. Suppose the normal price is $34, which equ

ates marginal revenue with marginal cost at the initial elasticity of –2. What should the promotional price be when the elasticity changes to –3? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
Business
1 answer:
Vika [28.1K]3 years ago
8 0

Answer:

MC = $17

P = $25.5

Explanation:

We proceed as follows;

Firstly calculate MC when e = -2, where MR = MC

(P-MC) / P = 1 / IeI

Here P = $34 and e = -2

(34 - MC) / 34= 1/ I-2I

(34 - MC) / 34= 1 / 2

78-2MC = 34

2MC = 34

MC = 34/2

MC = 17

Now, as we have MC, we will calculate the new price when e = -3

(P-MC) / P = 1 / IeI

(P - 17) / P = 1 / I-3I

(P - 17) / P = 1 / 3

3P -51 = P

2P = 51

P = 51/2

P = 25.5

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Answer:

Wyman company should recognize a foreign exchange loss in the amount of $12,600

Explanation:

On the date of sale: £1 = $1.35

So £60,000 = 60,000 × $1.35 = $81000

On the date of payment: £1 = $1.14

So £60,000 = 60,000 × $1.14 = $68, 400

The amount Wyman company received on the date of payment is $12,600 less than the amount it ought to have received on the date of sale.

So Wyman company should recognize a foreign exchange loss in the amount of $12,600

5 0
3 years ago
Assume that microbrewery beer is a normal good. Prices of microbrewery beer have risen steadily in recent years. Over this same​
Shkiper50 [21]

Answer:

The correct answer is option D.

Explanation:

Microbrewery beer is a normal good. Its prices have increased recently in recent years. The prices for fermenting vats used in beer have also risen and the consumer income has fallen.  

Since beer is a normal good an increase in its price and decrease in the consumer income will decrease its demand. As a result, the demand curve will move to the left, decreasing the price of the product.  

At the same time, the increase in the price of fermenting vats will increase the cost of producing beer. This will cause the supply of beer to decrease.  

This will cause the supply curve to shift to the left. If the leftward shift in the supply curve is more than the leftward shift in demand, the price of beer will increase.

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3 years ago
DeKay Dental Supplies issued $10,000 of bonds on January 1, 2018. The bonds pay interest semiannually. This is a partial bond am
svp [43]

Answer: d. 8.0%

Explanation:

The Stated Annual Rate of Interest on a bond refers to the coupon rate which is the amount that the company promises to pay on the bond pay period.

Looking at the question, the company is paying $400 every 6 months on the $10,000 bonds . The interest therefore is;

= 400/10,000

= 4%

Company pays 4% on the bonds every 6 months.

This 4% should be stated in annual terms so;

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3 years ago
ROI: Fill in the Unknowns Provide the missing data in the following situations: North American Division Asian Division European
nordsb [41]

Answer and Explanation:

The computation of the missing data  is shown below:

<u>Particulars     North American    Asian            European</u>

<u>                      division                 Division            Division </u>

Sales            $2,000,000        $5,000,000     $1,050,000

Net Operating

Income        $80,000             $200,000            $168,000

Operating

assets         $500,000          $2,000,000         $700,000

Return on

Investment   16%                      10%                      24%

Return on sales 0.04              0.04                      0.16

Investment

turnover           4                    2.5                         1.5

Working notes :  

1. For North American division

Sales is

= Net operating income ÷ return on sales

= $80,000  ÷ 0.04

= $2,000,000

Operating assets is

= Net Operating income ÷ return on investment

= $80,000 ÷ 16%

= $500,000

Investment turnover is

= Sales ÷ operating assets

= $2,000,000 ÷ $500,000

= 4

For Asian Division

Operating assets is

= Net operating income  ÷  return on investment

= $200,000  ÷ 10%

= $2,000,000

Return on sales is

= Net Operating income ÷ sales

= $200,000 ÷ $5,000,000

= 0.04

Investment turnover is

= Sales ÷ operating assets

= $5,000,000  ÷ $2,000,000

= 2.5

For European division:

Sales is

= Operating assets × investment turnover

= $700,000 × 1.5

= $1,050,000

Return on investment is

= Net operating income ÷  operating assets × 100

= $168,000 ÷ $700,000

= 24%

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3 years ago
You have just received notification that you have won the $1.25 million first prize in the Centennial Lottery. However, the priz
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Answer:

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Explanation:

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P = Present value

R = interest rate = 6.4 percent.

N = number of years = 79

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I hope my answer helps you

5 0
3 years ago
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