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3 years ago

Why net profit will be higher if increases average prices to customers?

Business

1 answer:

vampirchik [111]3 years ago

6 0

Answer:

Higher prices with same sales quantity will mean greater profit.

Explanation:

Let's hold some variables constant. If a business sells books, and they take the prices up, if they sell the same quantity (at higher prices) this would increase revenues. Higher revenues, less the same cost structure (variable and fixed costs) will lead to a greater profit generation. Of course in the real world, price elasticity of demand comes in play when prices are changed. If prices go up, typically sales quantity will decrease and there may be a net effect in revenue and hence profit. In the simple case where prices go up and sales quantity is unaffected, net profit will rise.

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Consider the following information of Kenton Inc.: Fixed costs $42,000 Target net income $14,000 Contribution margin per unit $7

stepan [7]

Answer:

Quantity of units required to be sold by Kenton is 8,000 units.

TRUE

Breakeven number of units of Kenton is 4,000 units.

FALSE

Target operating income of Kenton is $18,200.

False

Breakeven number of units of Kenton is 2,000 units.

False

Explanation:

1). Target operating income = $14,000 ÷ (1 − 0.3) = $20,000

Quantity of units required to be sold = (Fixed costs + Target operating income) ÷ Contribution margin per unit = ($42,000+$14,000) / $7 = 8,000

2). Fixed costs $42,000 / Contribution margin per unit $7

= 6000 units

3). Target operating income = 42,000 - 14,000 = 28,000

28,000 * 0.3 = 8,400

4). Fixed costs $42,000 / Contribution margin per unit $7

= 6000 units

4 0

3 years ago

A decrease in taxes will shift aggregate demand to the _____, cause consumption to _____, and cause output to _____. Due to the

Korvikt [17]

Answer:

right, increase, increase, decrease

Explanation:

In simple words, a decrease in taxes will result in more disposable income to the individuals which will further lead to increase in demand. Increase in demand will shift the overall economy curve to grow leading to increase in output and consumption.

As per the crowding out effect, the decrease in taxes will increase demand and spending leading to inflation which causes money to value less. Hence individuals will mostly consume their income and will invest less.

4 0

3 years ago

8. In the next year, Bill again, earned $55,000 gross income. He purchased a house Jan 1st 2015, for $187,500. He put down 20% d

shusha [124]

Answer:

The monthly payment due will be $18750.

Explanation:

6 0

3 years ago

Tell the substitution effect of a price change:

Over [174]

Answer:

The correct option is C,will result in the consumer buying less of a good at a higher price

Explanation:

When there are close substitutes for a product,a rational consumer will switch to an alternative good or service when the price of the good rises.

This ultimately is line with the law of the demand that the higher price the lower the quantity demanded and vice versa.

Hence, the substitution effect works in such a way that the product that has a lower price compared to its rival commodities catches the attention of the consumers much more due to its lower price nature.

5 0

4 years ago

Read 2 more answers

The cost of inflation to society includes

dsp73

C. unpredictable changes in the value of money

3 0

4 years ago

Why net profit will be higher if increases average prices to customers?​

Why net profit will be higher if increases average prices to customers?