the fully allocated cost of a product is $10. If the price elasticity of demand for the product is -2, then the firms optimal markup is 10% 100% 200% or 300.
Demand is said to be relatively elastic if a relatively small change in price is accompanied by a disproportionately large change in quantity demanded. Mathematically, demand is said to be relatively elastic if its elasticity coefficient (that is, the result of the PED formula) is greater than 1.
Elastic demand or supply is when the elasticity is greater than 1, indicating high responsiveness to price changes. Inelastic demand or supply is one with elasticity less than 1, indicating a poor response to price changes.
A product with 0 elasticity is considered completely inelastic because changes in price have no effect on demand.
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Answer:
a. 50, which is high by historical standards.
Explanation:
a. 50, which is high by historical standards.
It is high because current price is high than earnings.
Earning yield is the reciprocal of price earning ratio that is = 1/ (P/E ratio) expressed as a percentage.
So
PRice Earning ratio = Market price per share/ Earning per share
Price Earning ration= $20/ 0.4 = 50
Earning per share= Earnings/ No of shares outstanding
EPS= $ 1 million/$ 2.5 million = 0.4
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Answer:
Option (d) $5,549.96
Explanation:
Data provided in the question:
Annual payments = $800
Time, n = 12 years
Discount rate, r = 7% = 0.07
Now,
PV2 = Annual payments × ((1 - (1 + r)⁻ⁿ)) ÷ r ) × (1 + r)
= $800 × ( (1 - ( 1 + 0.07)¹²)) ÷ 0.07) × (1 + 0.07)
PV2 = $6,354.15
Therefore,
Present value today = PV2 ÷ (1 + r )²
= $6,354.15 ÷ (1 + .07)²
or
= $5,549.96
Hence,
Option (d) $5,549.96