Answer:
option (c) $600
Explanation:
Given:
Tax = $4 per unit
Initial equilibrium quantity = 2,000 units
Final equilibrium quantity = 1,700 units
Decrease in consumer surplus = $3,000
Decrease in consumer surplus = $4,400
Now,
Deadweight Loss is calculated using the formula:
Deadweight loss
= 
× Tax × (Original equilibrium quantity - New equilibrium quantity)
on substituting the respective values, we get
Deadweight loss = × 4 × (2,000 - 1,700)
or
Deadweight loss = 2 × (3) = $600
Hence,
the correct answer is option (c) $600
I would say the shareholders could disapprove of the performance of their company if it was to consistently to lose money over say several quarters with no signs of improvement or no encouragement by management that this was a temporary situation,
Answer:
Service revenue of $ 440
Explanation:
When the customer prepays, the revenue is yet to be earned hence the entries required would be a debit to cash account and a credit to unearned or deferred revenue.
As the service is rendered and revenue is earned, debit the deferred revenue account and credit the revenue account with the amount earned.
Since $660 was collected for 6 training sessions
Revenue from a training session
= 1/6 × $660
= $110
After 4 training sessions, revenue earned and to be recognized in the income statement
= 4 × $110
= $440
Answer:
D : All options are correct
Explanation:
- The marginal buyer is the essence of demand curve while marginal seller is essence of supply curve.
- @ Q = 500 units, Selling Price is set at SP = $35
- @ Q = 500 units, Buying Price is set at BP = $40
- Since, SP ≠ BP our equilibrium price would be $ 37.5 assuming the price elasticity of demand and supply are equal. In any case the equilibrium price would lie in between [ 35 , 40 ] such that to prevent a shortage of units in near future.
- Moreover, if the seller decides to sell at price $35 then he must sell goods greater than 500 units to reach the equilibrium profits. However, it could also lead to excess of units or surplus.
- We see that from selling the goods at SP = $35 while the buyer is willing to pay BP = $40 for 500 goods, the seller would be under-profiting and would be earning $5*500 = $2,500 less than he would at equilibrium price of $40 and selling units greater than 500. Hence, 500 goods is not an efficient quantity of goods.
