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Andrei [34K]
3 years ago
8

The demand for good X is estimated to be Qxd = 10,000 − 4PX + 5PY + 2M +
AX where PX is the price of X, PY is the price of good

Y, M is income, and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units.
a) Calculate the quantity demanded of good X.
b) Calculate the own price elasticity of demand for good X. Is demand for good X elastic or inelastic?
c) If the firm selling good X wants to increase total revenue, would you recommend lowering or increasing price? Explain your answer.
d) Calculate the cross-price elasticity between goods X and Y. Are the goods X and Y substitutes or complements?
e) Calculate the income elasticity of good X. Is good X normal or an inferior good?
Business
1 answer:
Olenka [21]3 years ago
5 0

Answer:

Explanation:

  • Given the equation ; Qxd = 10,000 − 4PX + 5PY + 2M + AX
  • where PX is the price of X = $50
  • PY is the price of good Y = $100
  • M is income = $25,000
  • and AX is the amount of advertising on X = 1,000 units

a) Calculate the quantity demanded of good X ; Plugging all the values into the equation ;

= 10,000 − 4(50) + 5(100) + 2(25,000) + 1000

Qxd = 61,300units

b) Calculate the own price elasticity of demand for good ;

= d(Qxd)/dpx X px/Qxd = -4 x 50/61,300

= 0.0033. hence he demand for goods is inelastic

c) l will surely recommend lowering the price as this is evident from the value of the price elasticity of demand which is negative as such an increase in the price of their goods will give rise to total loss

d ) cross-price elasticity between goods X and Y = %change in quantity/ %change in price

e) Calculate the income elasticity of good X. Is good X normal or an inferior good? = dQ/dM X M/Q = 2(25000) /61300

= 0.82.

Yes! Good X is a normal goods since the value of the income elasticity is positive.

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Explanation:

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A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is: an exemption. The Form 1040 is most helpful to a person who: itemizes deductions

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option 1 and option 2

Explanation:

option 1 and option 2

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4) Decelerating to stop :: force is -ve because it is moving to finally stop, thus negative work

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What does the European Central Bank (ECB) and the Eurogroup<br> manage in economic/monetary terms?
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Financial and economic stability is controlled and enforced by the European Central Bank (ECB).

<u>Explanation: </u>

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Specifies the inflation it loans to the Euro-zone financial institutions, thus regulating money supply and prices.

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a paragraph of two or three sentences that describes jobs performed outside and the environmental conditions employees might exp
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Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its
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Answer:

1. Salary expense = $2,300,000

Withholdings = $494,500

Salary payable = $1,805,500

2. Total fringe benefits = $185,150

3. Payroll tax = $494,500

Explanation:

1. Employee salary expense is given as $2,300,00

Withholdings is given as $494,500. This is the sum total of federal and state FICA taxes and unemployment tax.

Salaries payable is employee salary expense less withholdings.

Salaries payable = 2,300,000 - 494,500

= $1,805,500

2. Employer-provided fringe benefits includes medical insurance, dental insurance, life insurance and voluntary retirement plan contribution. The corporation matches employee contributions to a voluntary retirement plan up to 6% of their salaries and employee contribution to voluntary retirement plan is $115,000. Since this amount is 5% of salaries, the corporation will contribute an equal amount.

Medical insurance premiums paid by employer = $46,000

Dental insurance premiums paid by employer = $16,100

Life insurance premiums paid by employer = $8,050

Employer contribution to voluntary retirement plan = $115,000

Total fringe benefits = $185,150

3. Employer payroll taxes includes Federal and state FICA taxes and unemployment tax.

Federal FICA tax (rate of 7.65%) = (7.65/100) * 2300000 = $175,950

State FICA tax (rate of 7.65%) = (7.65/100) * 2300000 = $175,950

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Total pay roll tax = 175950 + 175950 +142600

= $494,500

8 0
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