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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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Classify each of the following financial statement items based upon the major balance sheet classifications. select a major bala

seropon [69]

Answer:

Prepaid Advertising - Current Asset

Equipment - Property, Plant, and Equipment

Trademarks - Intangible Assets

Salaries and Wages payable - Current Liabilities

Income Tax payable - Current Liabilities

Retained Earnings - Stockholder's Equity

Account Receivable - Current Assets

Land (Held for future use) - Long term Investment

Patents - Intangible Asset

Bonds Payable - Long term Liability

Common Stock - Stockholder's Equity

Accumulated Depreciation - Property, Plant, and Equipment

Unearned sales revenue - Current Liability

Explanation:

Balance Sheet of a company has different heads under which items are classified according to their nature. The major account heads for classification are Assets, Liabilities and Equity.

Prepaid Advertising and Account receivable are classified as current asset because this is expected to be used within a year.

Equipment is classified as Long term asset under the head, Property, Plant and Equipment. The equipment has estimated useful life more than a year then it is classified as Long term asset.

Trademarks and patents are classified as intangible assets, because they are not physical in nature.

Salaries and Wages payable, Income Tax payable and Unearned sales revenue are classified as Current liabilities. These expenses are due to pay within a year.

Retained Earnings and Common Stock are classified as Stockholders equity. The amount after subtracting all liabilities from total assets is referred to as Stockholder equity.

Accumulated depreciation is deducted from Property, Plant and Assets. This has negative sign and is a contra asset account.

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3 years ago

Silver Corporation incurred costs of $600,000 for managing the wholesale division during the year. The customer details of the c

elena-s [515]

Answer: $200,000

Explanation:

The cost will be allocated to customer Y, if a cause-effect relationship cannot be established with any cost driver will be calculated thus:

Total sales = $600,000 + $400,000 + $200,000 = $1,200,000

The percentage of Y on total sales will be:

= $400,000/$1,200,000 × 100

= 1/3 × 100

= 33.33%

Therefore, the cost that's allocated to Y will then be:

= $600,000 × 33.33%

= $600,000 × 0.3333

= $200,000

Therefore, the correct answer is $200,000

8 0

2 years ago

Total fixed costs for Taylor Incorporated are $260,000. Total costs, including both fixed and variable, are $500,000 if 156

kobusy [5.1K]

Answer:

The variable cost per unit is $1.54

Explanation:

Variable costs are those cost which vary with the change in production of units means higher the production higher cost and lower production will result in lower cost e.g Material cost, labor cost etc.

On the other hand fixed cost the cost which does not vary with the production of units. It is fixed no matter what is the level of production.

According to given data:

Total Cost = $500,000

Fixed Cost = $260,000

Variable cost = Total cost - fixed cost

Variable cost = $500,000 $260,000

Variable cost = $240,000

Number of units = 156,000

Variable cost per unit = $240,000 / 156,000 = $1.54 per unit

6 0

3 years ago

In a planned economy what predicts the demand of goods and services and coordinates the appropriate level of production of these

CaHeK987 [17]

Answer:

The government

Explanation:

In the command economy, the government makes all economic decisions in the country. The command economy is also known as the command centrally planned economy. A central authority, which is the government decides what products will be manufactured, and they will be distributed.

The government makes economic plans for the country that outlines the level of production. It allocates resources required for production as per the plans. The government though its different agencies, owns the factors of production.

8 0

3 years ago

Choose the correct choice; At the current price level, producers supply $375 billion of final goods and services while consumers

Solnce55 [7]

Answer:

The price level is A) Above equilibrium.

Explanation:

Normally, every economist believe that a lower price attracts a higher demand. This is so when the behaviour of consumers are measured when choosing a product. Many consumers go for a low priced product or cheaper product over a high priced product or expensive product irrespective of quality, taste or satisfaction derived from consuming them.

Price relating to market or in terms of quantity demanded and quantity supplied is referred to as equilibrium price or equilibrium quantity. When the market price is below equilibrium, quantity supplied of a product will be less than the quantity demanded for it because the price of goods are cheaper. But when price is above equilibrium, quantity supplied will be greater than quantity demanded because the price of goods is high.

7 0

3 years ago