Mark, a newspaper editor, walks into the newsroom and announces to a group of five reporters: "I'll pay a $2,000 bonus to the fi
rst reporter who finds definitive evidence that Senator Blue smoked marijuana at the celebrity party last Friday." Anna, the first reporter to produce the evidence, claims her bonus based on: (a) Unilateral contract
(b) Promissory estoppel
(c) Quasi-contract
(d) Implied contract
(e) Express contract
Explanation: A Unilateral contract is a form of contract where a promise is made by one party to another, this contract is normally on a condition that the receiver of the promise in the contract would complete some task(s), in order to receive the promise.
Mark made a promise to his staffs in the newspaper newsroom to be fulfilled, if the task was accomplished by anyone. Of which Anna completed the task and claimed the promise by the editor.
A. The hotels charge very high prices for wine and soft drinks because they are not price takers. They do not consider the price prevailing in the market for the products they are offering to the customers. They are price makers and select to charge the price they want to maintain their current hospitality. It their perception that wine and soft drinks are part of luxury. The food is an essential and people are not allowed to bring outside food in the hotel so they will buy it but when they will consume food they will also require the drinks as a part of their meal.
B. The people in today's world are so much brand conscious. They will pay for a name tag so they will be regarded for their high status in the society despite of low quality products. The ease of shopping at the branded stores is another reason for their high sales.
If the market price is equal to average cost at the profit-maximizing level of output, then the firm is making zero profits. If the market price that a perfectly competitive firm faces is below average variable cost at the profit-maximizing quantity of output, then the firm should shut down operations immediately.
The degree of operating leverage is measured by dividing the contribution margin by operating income.
The degree of operating leverage (DOL) is the ratio of contribution margin to operating income. It measures how much the operating income of a company will change in response to a change in sales. A Companies that have higher proportion of fixed costs to variable cost will have greater levels of operating leverage.
The total surplus is defined as the sum total of producer surplus and consumers surplus. Total surplus with a tax is defined as the combined total of producers and consumers surplus and tax revenue that is earned by the government of a particular nation.
Consumers surplus = Willingness to pay for the product - Actual amount paid for the product
Producers surplus = Actual amount received for the product - Willingness to accept for the product
