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3 years ago

Explain how a Target price for farm crops is an example of a price floor.

1 answer:

8 0

Answer: A target price for farm crops is an example of price floor because it’s fixed ahead of harvests with the interest of farmers in mind.

Explanation: A quick definition of both concepts would be of help. A price floor is usually fixed by government legislation and it ensures that the price of a commodity or service does not fall below a certain minimum. In the case of farm crops, a floor price makes sure that the farmers are guaranteed a level of profit in case there is poor harvest for any reason whatsoever. The price floor must be fixed above the equilibrium price for this to be effective.

A target price is an expectation of the future price of commodities or services, and hence prices are fixed ahead of the harvest in the case of farm crops. This is so because as explained earlier, future conditions might change and become unfavorable, therefore making the current market price unprofitable for farmers. If for example, a sack of potatoes currently sells for $30, the government may fix the price floor ahead of the harvest season at $45 per sack. This implies that after harvesting farmers can still sell at $30. However if the harvest turns out to be bad perhaps due to natural disasters, pests or fungal attacks, etc, then the farmers can go ahead and sell at $45 and possibly higher. No farmer is allowed to sell below $45 (since that is the ‘floor’). That way, farmers would still have some profit guaranteed and would be encouraged to remain in the farming business.

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Free_Kalibri [48]

Answer:

additional revenue = $26,250

relevant costs:

direct materials =350 x $82 = $28,700

direct labor = 525 x $15 = $7,875

setup hours = 1 x $5 = $5

inspection costs = 20 x $5 = $100

machining = 175 x $3 = $525

total relevant costs = $37,205

1) change in income if order is accepted:

total revenue - total relevant costs = $26,250 - $37,205 = -$10,955

the company will incur in $10,955 in losses if order is accepted.

2) if direct materials are reduced by $13 per unit = $13 x 350 = $4,550, and direct labor costs can be reduced by 0.5 x 350 = 175 hours (= 175 x $15 = $2,625) ⇒ total relevant costs will decrease by $7,175.

It is now a <u>$3,780</u> (= $10,955 - $7,175) loss if the special order is accepted.

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3 years ago

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount wou

sweet-ann [11.9K]

Answer:

A.50%.

Explanation:

The price elasticity of demand formula is:

PED = Change in quantity demanded / change in price

plugging the amounts into the formula we obtain:

2 = X / 25%

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2 x 25% = X

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3 years ago

In an arithmetic progression U5=-1/2 and S7=21 find a, d and U9

LenaWriter [7]

Answer:

The value of a, d, and U9 is " $\bold{ \frac{27}{2}, - \frac{7}{2}, \ and , - \frac{29}{2}}$ ".

Explanation:

Given:

$U_5=-\frac{1}{2}\\\\S_7=21$

Find:

a, d, U9=?

formula:

$T_n=a+(n-1)d\\\\S_n=\frac{n}{2}(2a+(n+1)d)$

Solve:

$\to U_5 = a+4d= -\frac{1}{2}\\\ \to 2a+8d= -1\\\ \to 2a= -1-8d....(a)\\\\ \to S_7 =\frac{7}{2}(2a+(7-1)d)\\\\ \to S_7 =\frac{7}{2}(2a+6d)\\\\ \to 21= \frac{7}{2} (2a+6d)\\\\ \ put \ the \ 2a \ value\\\\ \to 21= \frac{7}{2} ((-1-8d)+6d)\\\\ \to 21= \frac{7}{2} (-1-8d+6d)\\\\ \to 21= \frac{7}{2} (-1-2d)\\\\ \to \frac{21 \times 2}{7}= -1 -2d\\\\ \to 6 = -1 -2d\\\\ \to 2d=-7\\\\ \to d= -\frac{7}{2}$

put the value of d in equation a:

$\to 2a= -1-8 \times \frac{-7}{2}\\\\\to 2a= -1+ 28\\\\\to 2a= 27\\\\\to a =\frac{27}{2}\\$

$\to \bold{U_9 = a+8d}\\\\$

put a and b value in above equation:

$\to U_9 = \frac{27}{2}+8\times\frac{-7}{2} \\\\\to U_9 = \frac{27}{2}- 28\\\\\to U_9 = \frac{27-56}{2}\\\\\to U_9 = \frac{-29}{2}\\\\$

8 0

3 years ago

Explain how a Target price for farm crops is an example of a price floor.​

Explain how a Target price for farm crops is an example of a price floor.