Answer:
100 shirts
Explanation:
Borrowing from the contribution margin concept, the level where the marginal benefit is greater than total costs is the break-even point.
Break-even point = fixed cost / contribution margin per unit.
For this retailer,
Fixed costs are $500,
The contribution margin per unit = selling price- variable cost
=$10-$5
=$5
Break-even point
= $500/$5
= 100units
Financial loss. Say you don’t have insurance and your house burns down. You have no insurance to fix the damage.
Answer: a. When inventory purchase costs are rising.
Explanation:
Last In First Out is an inventory stock valuation method where newer inventory is sold first and older inventory are sold last.
When a LIFO liquidation occurs, it means that the company has sold off its new stock and are now selling the older one.
This will lead them to have a lower cost of goods sold as the older stock is usually cheaper. If Inventory purchase costs are increasing in the market, then sales prices will have to increase as well. The company will sell at this new price but will still have that lower cost of goods sold.
This means that they would have more profits as a result which will lead to more taxes being charged on them.
Answer:
C) over time inflation will fall back down to the inflation target.
Explanation:
In the scenario, there is a positive aggregate demand shock which will lead to inflation because prices of goods will rise as aggregate demand increases with supply being unchanged
<u>A demand shock is a sudden event that increases or decreases demand for goods or services temporarily. A positive demand shock increases aggregate demand and a negative demand shock decreases aggregate demand. </u>
<u>Therefore there will be an initial inflation with the shock but since demand shocks are temporary and the central bank commits to an inflation rate target, then over time inflation will fall back down to the inflation target.</u>
