Answer:
The optimal stocking level is 45 muffins.
Explanation:
First we have to calculate the Overage cost Co = Purchase price - Salvage value = $0.2 - 0 = $0.2
Then the Underage cost Cu = Selling price - Purchase price =$0.80 - $0.2 = $0.60
Service level = Cu / (Cu + Co) = $0.60/($0.60+$0.2) = $0.75
Hence, optimal stocking level = Minimum demand + Service level *(Maximum demand - Minimum demand)
optimal stocking level = 30 + 0.75*(50-30) = 45
The optimal stocking level is 45 muffins.
Optimal stocking level = 68.75 Muffins
Answer:
A. That's the point where total revenue is maximized
Explanation:
Demand Curve is a downward sloping curve representing inverse relationship between price & quantity demanded.
Elasticity of Demand is the responsiveness of quantity demanded to price change. It can be measured geometrically on a demand curve point by :
Demand curve segment below the point / Demand curve segment above the point.
This way the elasticity keeps on decreasing as we move downwards on the demand curve [Ed=∞ to Ed >1 to Ed = 1 to Ed < 1 to Ed = 0] i.e [from perfectly elastic to elastic to unitary elastic to inelastic to perfectly inelastic demand].
If Demand is Elastic [Ed >1] : There is negative relationship between price and Total Revenue. This point is on the upper segment of demand curve as per geometric method, P- TR negative relationship implies that TR can be increased by decreasing Price.
If Demand is Inelastic [Ed <1] : There is positive relationship between price &total revenue. This point is on the lower segment of demand curve as per geometric method, P-TR positive relationship implies that TR can be increased by increasing price.
So: The best Total Revenue Maximising point is on the middle of demand curve where demand is unitary elastic [Ed=1] - as any other deviation from this point would create an incentive to change price to generate higher revenue.
Answer: Four pies.
Explanation:
Marginal cost is the additional cost of producing one extra unit of a good or service.
From this graph we see the marginal cost rise when the first pie is produced and then it subsequently decreases as the second and third pie is produced which is where it reaches its lowest point.
From the fourth pie, the marginal cost begins to rise again which means the marginal cost begins to increase when the producer makes four pies.
The correct answer is (a.) True. Overdraft protection means the bank will protect your funds from excessive taxation. This protection is most likely to be offered by small business since it helps them to gain additional income fees.
