Answer:
False
Explanation:
If Jake decides to increase total sales volume by decreasing the price of its engines, the decrease in price is too large compared to the increase in quantity demanded. The number of engines sold will increase from 5 to 6 (1 more unit) while the price of each engine will decrease from $75,000 to $50,000.
In this scenario, engines are price inelastic:
PED = % change in quantity demanded / % change in price = [(6 - 5) / 5] / [($50,000 - $75,000) / $75,000] = (1 / 5) / ($25,000 / $75,000) = 0.2 / 0.33 = 0.6
when PED is less than 1, the demand is inelastic. This means that a decrease in price will result in a smaller proportional increase in quantity demanded.
The businesses commercialize cinco de mayo in way that they focused on the number 5 i.e. giving 5% discount, get 4 with 5th free, 5% off and also provided mexican food.
<h3>What is cinco de mayo?</h3>
Cinco de mayo is event that took place in mexico that was the war between america and mexico on 5th of may. Now people celebrate it as there holiday.
Business commercialize Cinco de mayo in the way that they stated extensive maketing campaign and selling mexican foods, drinks, services etc.
Learn more about marketing here:
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Let us calculate net profit on each unit; after the changes, we have that the company sells 1300 units and eah unit has a profit margin of 175-100=75$.We also have that the fixed costs are in total 96000-20000=76000$. Consider the profit function P(x) that depends on the number x of units sold. P(x)=75*x-76000. Substituting x=1300, we have that P(x)= 97500-76000=21.500$. This is the Net operating Income after the changes.
Answer:
overstate.
Explanation:
An unchanging basket of goods assumes that consumers are restricted from purchasing exactly the corresponding goods, without caring for changes of the price which are not a very likely hypothesis. <u><em>The result of substitution bias is that the increase in the price of a fixed basket of goods over time tends to</em></u> overstate the rise in the true cost of living of the consumer because it does not take into consideration that the person can substitute away from goods whose corresponding prices have increased.
