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aliina [53]
3 years ago
9

Tommy is about to order a steak dinner with a salad at his favorite restaurant. The restaurant recently raised its prices on ste

aks but kept its prices on salads the same. How might the real-income effect and the substitution effect influence Tommy’s order?
Business
1 answer:
lozanna [386]3 years ago
3 0

Answer:

Explanation:

Each of these effects would most likely influence Tommy's order differently. The real-income effect would most likely cause Tommy to buy the large steak and salad regardless of the increase in price since individuals tend to spend more when they start making more money. The substitution effect on the other hand would most likely cause Tommy to order a smaller steak since it costs more but at the same time order, more salad since the price has not increased as the steak did.

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Written, Inc. has outstanding 600,000 shares of $2 par common stock and 120,000 shares of no-par 8% preferred stock with a state
Vitek1552 [10]

Answer:

$126,000

Explanation:

Given:

Total outstanding stocks = 600,000

Price per share of common stock = $2

Number of preferred stock = 120,000

Interest rate = 8%

Stock Value = $5

Outstanding year = 3

Total Amount of preferred stock = Principle × Rate × Time

or

Total Amount of preferred stock = ( 120,000 × $5 ) × 0.08 × 3 = $144,000

Since,

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Hence,

the total amount distributed i.e $126,000 will be received by the preferred stockholders

6 0
3 years ago
Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and s
gogolik [260]

Answer:

Smart Stream Inc.

a) Total costs:

Variable costs:

Direct materials = $1,500,000 ($150 x 10,000)

Direct labor = $250,000 ($25 x 10,000)

Factory overhead = $400,000 ($40 x 10,000)

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Fixed Costs:

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Total fixed costs = $490,000

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II) Total cost per unit = $289 ($2,890,000/10,000)

Explanation:

The total cost method includes all the costs in arriving at the unit cost before adding the desired profit to arrive at the selling price of a product.

Total costs include the cost of goods sold and the expenses incurred in running the business for the period.

It is unlike the product cost-plus and variable cost-plus approaches to product pricing.  For the product cost-plus approach, only the costs of production is taken into consideration for arriving at the selling price.  In that case, the costs of direct materials and labor, and factory overheads would be considered, while variable and fixed selling and administrative costs are excluded.   The unit cost would have been $250.

The variable cost-plus approach considers only the variable elements of costs to arrive at the selling price.  These include the direct materials and labor costs, and variable element of the factory overhead and selling and administrative expenses.  The unit cost would have been $240 as stated in the question.

These different cost-plus pricing approaches are more suitable for some industries than others.  No matter the choice made, it must be noted that they result in different selling prices and can affect the competitiveness of a company.

4 0
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Alona [7]

Answer:

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