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3 years ago

A movie theater company obtains the following estimated elasticity of demand.

Business

1 answer:

Anarel [89]3 years ago

4 0

Answer:

Explanation:

Given:

Short-run price elasticity = - 0.85

Long-run price elasticity = - 3.2

Cross-price elasticity = - 0.26

Income elasticity = 0.75

a. If the theater raises movie ticket prices by 10 percent it means that percentage of price change is 10%.

$Elasticity = \frac{Percentage change in Quantity demanded}{Percentage change in price} \\\\-0.85 = \frac{Percent change in Quantity demanded\\}{10} \\\\Percent change in Quantity demanded = -0.85*10\\ \\ = -8.5$

Thus, quantity demanded falls by 8.5 percent.

b. Short-run price elasticity is different from long-run elasticity due to the time horizon. When individuals have more time they can switch to cheaper alternatives. While, it takes time to adjust in the short-run as the time horizon is not much. So short-run elasticity is less elastic than in the long-run.

In the long-run demand for movie tickets is very elastic. So as price rises in the long-run, quantity demanded falls by a greater proportion. This will cause total revenue to fall in the long-run.

d. Normal goods are goods which have a positive income elasticity. This means for normal goods demand increases as income increases. But in case of inferior goods, demand is inversely related to income. As income rises demand for inferior goods decreases.

Since in this case, income elasticity is 0.75 (positive) it can be concluded that movie tickets are normal goods.

e. Good X is the related good to movie tickets. As cross price elasticity is -0.26 it means that as price of movie tickets rises by 1 percent demand for good X will fall by 0.26 percent.

Thus, as demand for good X and price of movie tickets are inversely related to each other it can be said that they are complementary goods.

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Answer:

The correct answer is that the valuation would decrease total assets and stockholders’ equity by $101.00

Explanation:

Item Cost Market price Impact

Quantity

1 220 $ 4.40 $ 4.60 no impact as cost is lower

2 130 $ 6.20 $ 6.00 ($6.20-$6.00)* 130=$26

3 100 $ 10.00 $ 9.25 ($10-$9.25)*100 =$75

4 25 $ 20.50 $ 25.00 No impact as cost is lower

The total reduction in the value of inventory as a result of adopting the lower of cost or market price valuation is $101 ($75+$26),hence decreases total assets by $101 and the stockholders' equity(retained earnings which is a component of stockholders' equity ) by the same amount

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Your company sells consulting services in legal forecasting to multinationals studying foreign market entries. In some countries

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Chances are that when your company, which sells consulting services to multinationals, is forecasting legal decisions in <u>domestic markets</u>, the predictions will be MUCH MORE accurate than when forecasting legal decisions in <u>foreign markets</u>.

<h3>What is the difference between domestic and foreign markets?</h3>

The difference between domestic and foreign markets is that a company offering forecasting legal decisions will be very more familiar with the domestic market than the decisions that can be taken in foreign markets.

Chances are that when your company, which sells consulting services to multinationals, is forecasting legal decisions in <u>domestic markets</u>, the predictions will be MUCH MORE accurate than when forecasting legal decisions in <u>foreign markets</u>.

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3 years ago

William pays his $500 premium every 6 months for automobile insurance with collision coverage. His deductible is $750. William c

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William will pay a total of $750 out of pocket for both cars to be fixed.

The other car is covered by the property damage portion of his insurance, so it is covered 100% by the insurance company and there is no deductible or amount that William needs to pay. William’s car will be covered by the collision portion of his insurance. He is responsible for paying the $750 deductible and the insurance company will pay the remaining $50.

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3 years ago

According to the principle of comparative advantage, Group of answer choices countries should specialize in the production of go

Vanyuwa [196]

Answer:

should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners

Explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries.

For example, country A produces 10kg of beans and 5kg of rice. Country B produces 5kg of beans and 10kg of rice.

for country A,

opportunity cost of producing beans = 5/10 = 0.5

opportunity cost of producing rice = 10/5 = 2

for country B,

opportunity cost of producing rice = 5/10 = 0.5

opportunity cost of producing beans = 10/5 = 2

Country A has a comparative advantage in the production of beans and country B has a comparative advantage in the production of rice

Country A should specialise in the production of beans and B should specialise in the production of rice

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3 years ago

Suppose you are a supply chain manager for De Beers Diamond co., and your job is to order components for a manufacturing facilit

Fed [463]

Answer:

100 units

Explanation:

Given that,

Annual demand (D) = 500 units

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Holding cost (H) = $0.50 per unit per year

Optimal order quantity(Q):

$=\sqrt{\frac{2\times D\times S}{H}}$

$=\sqrt{\frac{2\times 500\times 5}{0.50}}$

$=\sqrt{\frac{5,000}{0.50}}$

$=\sqrt{10,000}$

= 100 units

So, the optimal number of diamonds to be ordered is 100 units.

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