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Tamiku [17]
3 years ago
8

Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumpti

on changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by how much (in %)?
Business
2 answers:
Ksivusya [100]3 years ago
7 0

Answer:

60%

Explanation:

The question requires us to calculate the percentage change in the quantity of beer consumption as a result of the government's price increment using the midpoint method.

Using the midpoint method,

Price elasticity of demand is equivalent to;

(%change in quantity demanded)/(percentage change in price)

% change in price=[(P2 - P1)/(P2+P1)] × 200%

For this question , % change in price = [(20-10)/(20+10)] × 200℅ = 66.7%

Given that price elasticity of demand is 0.9, we have that

0.9 = ℅ change in demand/66.7%

% change in demand = 66.7% × 0.9 = 60%.

This means that a change in the price of beer from $10 to $20 will reduce the demand by 60%

Aleonysh [2.5K]3 years ago
4 0

Answer:

The government policy should have reduced beer consumption by 0.6 or 60%

Explanation:

Mid point formula calculates the ratio of mid point of change in demand and change in price to their average value. Then these changes are used in the calculations of elasticity of demand.

According to given data:

Elasticity of demand = 0.9

Midpoint of price  = (20-10) / [(20+10)/2] = 10 / 15 = 0.6667

Elasticity of Demand = Midpoint of demand / Midpoint of price

0.9 = Midpoint of demand / 0.6667

Midpoint of price = 0.9 x 0.6667 = 0.6

Change in demand is should reduce the consumption by 0.6 or 60%.

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Explanation:

With operating leases, the entity leasing the asset or the lessee, does not get the rights to ownership of the asset being leased but instead simply pay a fee or sort of rent for leasing the asset.

With a finance lease however, ownership is passed to the lessee for the lease period and the lessee would have to depreciate the asset and record it in its books.

Airline O will therefore not record any assets but Airline F will. This means that Airline F will have more assets than O because it had to record its assets but O did not.

5 0
3 years ago
Suppose that the market price for a bottle of vitamins is $2.54 and that at that price the total market quantity demanded is 105
Mars2501 [29]

Answer:please refer to the explanation section

Explanation:

The question is incomplete, The amount that each firm must produce is not given or the Quantity/demand equation that each firm faces is not given. We use a firm's quantity/demand equation to calculate how much each firm should produce and then work out the number of firms that should exist in the industry.

let us assume quantity produced by each firm is given by this equation;

Q = 1900 + 15000Price

We need to plug the Price of $2.54 per unit Vitamin Bottle to the quantity equation. Q = 1900 + 15000(2.54) = 40 000

each firm must produce 40 000 units

Number of firms that should exist = Total Market Quantity/Firms Quantity Number of firms that should exist = 1055 560 000/40 000

Number of firms that should exist = 26389

When the price is $2.54, with each firm Producing 40000 units, 26389 firms should exist in the market to cover the total Market Quantity of 1055 560 000.

The question may provide you with the Quantity that each firm must produce, in that case you simple divide total market quantity by the firm's quantity to find number of firm that should exist.

When you are given quantity equations you use the price to work out quantity produced by each firm and then Divide the Market Quantity by Firm's quantity to find number of firms that should exist

6 0
3 years ago
The production department should generally be responsible for materials price variances that resulted from:
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Answer:

c. rush orders arising from poor scheduling.

Explanation:

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When a manager develops a cost of capital for a specific project based on the cost of capital for another firm that has a simila
Aneli [31]

Answer: Pure play

Explanation:

A pure play method in finance is an approach that is used to estimate and determine the cost of equity capital of a private company which involves looking at the beta coefficient of other single focused and public companies.

Pure-play companies are the companies that are involved in a single line of business.

5 0
3 years ago
Valerie has difficulty finding parking in her neighborhood and, thus, is considering the gamble of illegally parking on the side
aivan3 [116]

Answer: -$85

Explanation:

If Valerie does not get a ticket then she would have a positive payoff of $15 because she avoids the cost of finding parking.

Should she get a ticket however, she will have a payoff of;

= Cost of finding a legal parking - ticket charge

= $15 - $100

= -$85.

8 0
3 years ago
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