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Stella [2.4K]
3 years ago
14

The – effect means Tommy’s – will shift because he has less purchasing power. As a result, he may choose the regular-size steak

instead of the larger "hunter’s portion" he prefers. The – effect means Tommy may spend some of the money he saved by ordering the smaller steak to order a bigger salad.
Business
1 answer:
dimulka [17.4K]3 years ago
6 0

Answer:

The correct answer is: income effect; budget line; substitution effect.

Explanation:

The change in the price of a product has two effects on the consumption pattern of an individual. The increase in price reduces the purchasing power of the consumer as the consumer will now be able to afford a lesser quantity of that product.

This is known as income effect as the real income of the consumer is changing. This change in real income causes the budget constraint to shift.  

Here in the given example, Tommy's real income will change causing his budget line to shift. Tommy will be able to afford regular size steak.  

By saving money on a steak if he orders a bigger salad this shows the substitution effect. In case of price change when a consumer prefers a cheaper alternative it is called the substitution effect.

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7 0
3 years ago
A salesperson earns $350.25 per week plus 12% of her weekly sales. Which of the following describes the sales necessary for the
Natali5045456 [20]
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350.25+12/100*x=800.5
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3 years ago
If you are starting a new business, you can assume with some certainty that your customers will have the same level of technolog
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8 0
3 years ago
Read 2 more answers
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statem
Levart [38]

Answer:

a) Break-even point in dollar for 2017

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = (Sales - Variable Cost)/Sales

C.M Ratio = $(2,500,000-1,750,000)/2,500,000

C.M Ratio = 0.30 or 30%

Break-even point in dollars = Fixed expense/C.M Ratio

B-E point ($) = $850,000/0.30

= $2,833,333.33

<u>Alternative 1</u>

<em>Sales Price per unit after increasing 20%,</em>

Sales Price = ($5*0.2) + $5 = $6

Total Sales ($) = (Sales Price x Sales Units)

Total Sales ($) = ($6*500,000) =$3,000,000

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = ($3,000,000- $1,750,000)/$3,000,000

C.M Ratio = 0.42 or 42%

Break-even point in dollars = Fixed expense/C.M Ratio

B-E point ($) = $850,000/0.42

= $2,023,809.52

<u>Alternative 2</u>

<em>Commission</em> = $2,500,000*5% = $125,000

Change in fixed annual salaries = $150,000-$60,000 = $90,000

Total fixed costs after deducting the changes in fixed salaries = $850,000-$90,000 = $760,000

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = (Sales - Variable Cost - Commission on sales)/Sales

C.M Ratio = ($2,500,000-$1,750,000-$125,000)/$2,500,000

C.M Ratio = 0.25 or 25%

Explanation:

Sales = $2,500,000

Sales Unit = $2,500,000/500,000 = $5

Variable Cost = 1,750,000

Fixed costs = $850,000

7 0
3 years ago
Jason is shopping for a new car. He completes new credit applications at four different dealerships. Will this affect his credit
trasher [3.6K]

Applying for a loan in each of the dealerships he visited will have negative consequences on his credit score.

The credit score is a term to refer to the score that people have toward the financial system. The credit score is a kind of business card for each person regarding their financial life.

One of the most common mistakes people make is when they make multiple credit applications when they intend to buy something because this is a bad practice for their credit score.

For example, if Jason completed credit applications in four different dealers, his score may drop because the entities that are going to lend him the money consider this activity as something negative.

In addition, people who apply for loans in different entities are generally forced to do so because they are denied the possibility of credit, that is, they have an unfavorable history to access a loan.

Learn more in: brainly.com/question/16663880

8 0
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