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xeze [42]
3 years ago
9

Label the following scenarios as examples of elastic, inelastic, or unit elastic demand. When Ruko, a device used to stream movi

es at home, increases prices by 42% total revenue decreases by 59%. When Cinema Supreme decreases ticket prices by 5%, total revenue does not change. When BlueBox, a DVD rental kiosk, increases its prices by 56%, total revenue increases by 22%. You can tell whether the price elasticity of demand is elastic, unit elastic, or inelastic based on whether the price effect or the quantity effect is larger. The price effect is the change in revenue due to a change in price whereas the quantity effect is the change in revenue due to the change in quantity demanded.
Business
1 answer:
Ymorist [56]3 years ago
7 0

Answer:

The Streaming device - elastic

An elastic good is a good whose demand falls a lot, or proportionally, if the price rises. In this case, the price of the streaming device rose by 42%, and revenue fell proportionally even more, by 59%, thus, the streaming device is a very elastic good.

Cinema ticket prices - Unit elastic

A perfectly inelastic good is a good whose demand does not respond to price changes. In this case, even if the ticke prices were lowered, demand stayed the same because revenue stayed the same.

DVDs - Inelastic

The DVDs are inelastic because even if the prices were raised, demand was not affected, and in fact, it grew. An inelastic good is a good whose demand only responds to price in a limited way.

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Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 4 years ago. The bond currently sells for 104 percent o
Lesechka [4]

Answer:

6.64%

Explanation:

The pretax cost of debt is the Yield to Maturity (YTM). Since the coupons are paid semiannually, adjust the duration and the coupon payment amount to semi-annual terms.

You can solve for the YTM using a financial calculator with the following inputs;

Maturity of the bond; N = 20*2 = 40

Face value ; FV = 1000

Semi-annual coupon payment ; PMT = (7%/2)*1000 = 35

Current price of the bond; PV = -1.04*1000 = -1040

Then compute the semiannual interest rate ; CPT I/Y =  3.318%

Therefore, pretax cost of debt; YTM = 3.318 *2 = 6.64%

3 0
3 years ago
If the market rate of interest is 6 percent, what is the present discounted value of $1,000 that will be paid in
Pachacha [2.7K]

The formula for percent discount value after n years at the rate r is given by 
pdv=fv/(1+r)^n 
where fv is the fixed value  
here only fixed value is given to us so we will calculate the discounted value for coming 10 years 
after  
year 1=943.4
 2=890
 3=839.62
 4=739.09
 5=747.26
 6=704.96
 7=665.06
 8=627.41
 9=591.90 
10=558.39
6 0
3 years ago
The budget director for Kanosh Cleaning Services prepared the following list of expected selling and administrative expenses. Al
Harrizon [31]

Answer:

Kanosh Cleaning Services

a. Schedule of Cash Payments for S&A Expenses

                                                                       October November December

Equipment lease expense                                     $7,500  $7,500    $7,500

Prior month’s salary expense, 100%                               0    8,200       8,700  

Cleaning supplies                                                     2,800    2,730      3,066

Insurance premium                                                  7,200            0              0

Depreciation on computer                                              0            0              0

Rent                                                                           1,700      1,700        1,700

Miscellaneous expenses                                           700         700          700

Total disbursements for operating expenses  $19,900  $20,830  $21,666

b. Salaries payable = $9,000

c. Prepaid insurance = $3,600

Explanation:

a) Data and Calculations:

                                                October   November  December

Budgeted S&A Expenses

Equipment lease expense       $7,500        $7,500      $7,500

Salary expense                           8,200          8,700        9,000

Cleaning supplies                      2,800          2,730        3,066

Insurance expense                     1,200          1,200         1,200

Depreciation on computer         1,800          1,800         1,800

Rent                                             1,700          1,700         1,700

Miscellaneous expenses             700             700           700

Total operating expenses    $23,900    $24,330   $24,966

Schedule of Cash Payments for S&A Expenses

                                                                       October November December

Equipment lease expense                                     $7,500  $7,500    $7,500

Prior month’s salary expense, 100%                               0    8,200       8,700  

Cleaning supplies                                                     2,800    2,730      3,066

Insurance premium                                                  7,200            0              0

Depreciation on computer                                              0            0              0

Rent                                                                           1,700      1,700        1,700

Miscellaneous expenses                                           700         700          700

Total disbursements for operating expenses  $19,900  $20,830  $21,666

b. Salaries payable = $9,000

c. Prepaid insurance = $3,600 ($7,200 - $3,600)

6 0
2 years ago
1. What is the difference between fixed, variable, and periodic costs?
lisov135 [29]

Answer:

The difference is in how they response to the level of production of the firm.

Variable cost are directly associated with the production level, therefore changes with the number of units produced.

Fixed costs do not change with the level of production and remains fixed. Usually, fixed cost changes with the time.

Periodic Costs are the costs that cannot be capitalised and are incurred for a period of time. Such as administrative costs.

Explanation:

4 0
3 years ago
Analysts are forecasting LifeTech Corporation's common stock price to be $120 at the end of one year. Also, LifeTech will pay a
devlian [24]

Answer:

Price to pay now for the stock = $96.278

Explanation:

<em>The price of the stock would be the present value(PV) of the future cash flow expected from it discounted at the required rate of 13%</em>

<em>Hence we would add the present value of he dividend and the resent of he price at the end of the period</em>

PV = CF × (1+r)^(-n)

<em>CF- Cash Flow</em>

<em>R- rate of return- 13%</em>

<em>n- number of years</em>

PV of dividend =  2.60 × (1.13)^(-1) =  2.30

PV of stock price after a year = 120× (1.13)^(-1) = 93.97

Price to pay now for the stock =  2.30 + 93.97 = $96.278

Price to pay now for the stock = $96.278

5 0
3 years ago
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