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fiasKO [112]
3 years ago
11

Income rises from $3,500 to $4,000 a month and the quantity demanded of good X falls from 7 to 5 units a month. Income elasticit

y of demand (for good X) is __________ and good X is a(n) __________ good.
a. 0.40; normal
b. 2.50; normal
c. -2.28, inferior
d. 0.40; normal
e. -2.50;inferior
Business
1 answer:
finlep [7]3 years ago
7 0

Answer:

E) -2.50 ; inferior

Explanation:

Before you earned $3,500 per month, you consumed 7 units per month. That means that you consumed 1 unit every $500 earned.

When your income increased to $4,000, you only consumed 5 units per month. That means that your consumption decreased to 1 unit for every $800.

The income elasticity of demand using the midpoint method is calculated by using the following formula:

income elasticity = {change in quantity demanded / [(old quantity + new quantity) / 2]} /  {change in income / [(old income + new income) / 2]}  

= {-2 / [(7 + 5) / 2]} /  {500 / [(3,500 + 4,000) / 2]} = (-2 / 6) / (500 / 3,750) = -0.333 / 0.133 = -2.5

Since the income elasticity of demand is negative, the good X is an inferior good.

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Better Buy, Inc. has 7 units in inventory on December 31. The units were purchased in November for $160 each. The price lists fr
ki77a [65]

Answer:

$1,120

Explanation:

Ending Merchandise Inventory is value of closing inventory in hand, to be valued at lower of cost or net realizable value or replacement value

Here, cost of closing inventory = 7 units X $160 each = $1,120

Since current realizable/ replacement value = $1,155

Cost is less than realizable value, therefore cost will be considered.

Thus ending merchandise inventory will be valued at total of $1,120.

3 0
3 years ago
Your annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Opt
kotegsom [21]

Answer:

Option 1 is more convenient.

Explanation:

Giving the following information:

The annual salary is $100,000. You are offered two options for a severance package. Option 1 pays you 6 months' salary now. Option 2 pays you and your heirs $6,000 per year forever

The present value of option 1 is:

PV= 6*100,000= $600,000

To calculate the present value of option 2 we need to use the present value formula of a perpetual annuity:

PV= Cash flow/i

PV= 6,000/0.11= $54,545

There is no doubt that option 1 is better.

7 0
3 years ago
Suppose a competitive market is comprised of first that face identical cost curves. The firms experience an increase in demand t
umka2103 [35]

Answer:

i. New firms will enter the market

iii. In the long run, all firms will be producing at their efficient scale

Explanation:

In the competitive market barriers to entry will be low as there is no monopoly. The firms in the market are experiencing increased profitability as a result of increased demand so the market will be attractive for new firms. This will result in new firms entering into the market. In the short run.

In the long run as more firms enter the market, the firm's will need to produce at efficient scales because of high competition, with the aim of minimising cost.

6 0
3 years ago
Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been
leonid [27]

Answer:

the way team members treat each other

Explanation:

The main difference between such teams is the way team members treat each other. This is because the most outstanding teams treat each other as friends, this allows each member to want to motivate one another towards their best self. Overall this provides increased work efficiency and innovative results from these teams as opposed to groups that treat each other only as professional colleagues and want to overshadow one another in order to further their own careers.

4 0
3 years ago
Why does the average cost per garment​ change? The average cost per garment changes as volume​ changes, due to the fixed compone
Vesna [10]

Answer:

In unitary terms, the average cost varies because the fixed costs are divided by higher or fewer units.

Explanation:

The average cost per unit varies according to production levels. First, <u>we need to clarify that fixed costs remain constant in the relevant range. </u>Between levels of production, the total fixed cost don't change.

In unitary terms, the average cost varies because the fixed costs are divided by higher or fewer units. Therefore, a fixed cost of $100 in 100 units is $1 per unit; but, in 50 units is $2 per unit. In unitary terms, variable cost remains the same.

<u>Finally, in total terms, fixed costs (in the relevant range) remains constant and total variable cost varies with production. </u>In unitary terms, variable cost remains constant and fixed cost varies.

5 0
3 years ago
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