Answer:
1 (a)
Since p = 10 - Q,
Revenue = p × Q=10Q - Q2
Hence, MR = 10 - 2Q.
MC is given fixed at 4.
Demand function is Q = 10 - p.
Plotting all these values in graph attached picture, we get
1 (b)
The monopolist will yield where MR = MC. So,
10 - 2Q = 4
Q = 3.
At this quantity, P = 7.
1 (c)
Consumer Surplus = Area of Triangle ABC = 0.5 × 3 × 3 = 4.5
Producer Surplus = Area of Rectangle ABEF = 3 × 3 = 9
2 (a)
Since the price is now P = MC = 4, this means
Q = 10 – 4 = 6.
2 (b)
The consumer surplus in this case would be = 0.5 × 6 × 6 = 18
The producer surplus will be zero.
2 (c)
Deadweight Loss = Total Surplus in Case B - Total Surplus in Case A
18 - 13.5 = 4.5
Answer:
Missing word <em>"2. What is the total sunk cost regarding the decision to buy the model 200 machine rather than the model 300 machine? 3. What is the total opportunity cost regarding the decision to invest in the model 200 machine?"</em>
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1. Differential cost of buying model 200 machine = Cost of model 200 machine - Cost of model 300 machine
= $342,000 - $373,650
= -$31,650
We'll have a savings of $31,650 if model 200 is purchased rather than model 300
2. $383,000 (The Cost of existing machine). Note: $383,000 is a sunk cost since it has already been incurred.
3. Opportunity cost is the total return of the project if the money was invested elsewhere. The Opportunity cost of investing in model 200 machine is $445,600 (Returns from the alternate project)
Answer:
a. $288,000
b. $190,000
Explanation:
The Accounting equation: Assets = Liabilities + Equity
a. Assets = Liabilities + Equity
382,000 = 94,000 + Equity
Equity = 382,000 - 94,000
= $288,000
b. Equity as of December 20Y9.
Account for the changes in assets and equity:
Assets = Liabilities + Equity
(382,000 - 63,000) = (94,000 + 35,000) + Equity
319,000 = 129,000 + Equity
Equity = 319,000 - 129,000
= $190,000
Answer:
Debit to Rent Expense for $700
Explanation:
When the company paid $1,200 in advance for 12 months of rent, the monthly amount is $100 [$1,200 ÷ 12 months]. After seven months have passed, the prepaid rent that has expired is $700 [$100 × 7 months].
When the rent was prepaid, the resulting journal entry was:
(DR) Prepaid Rent, $1,200
(CR) Cash, $1,200
To expire seven months of prepaid rent, the resulting journal entry is:
(DR) Rent Expense, $700
(CR) Prepaid Rent, $700
Answer:
a promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.
Explanation:
Direct marketing involves communication of a product to a target customer without using advertising agents as middle men. Customers are identified and contact is made directly to generate a buying decision from them.
This method gives quick feedback and action from the customer.
Channels such as mail, text, and email can be used to contact the customer directly
