Answer:
1. 4,350 helmets
Explanation:
1. The computation of the number of helmets is shown below:
= (Total fixed cost + operating income) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable cost per unit
= $76 - $44
= $32
So, it would be
= ($49,600 + $89,600) ÷ ($32)
= ($139,200) ÷ ($32)
= 4,350 helmets
2. The contribution margin income statement is presented below:
Sales (4,350 × $76) $330,600
Less: Variable cost (4,350 × $44) ($191,400)
Contribution margin $139,200
Less: Total Fixed cost ($49,600)
Operating income $89,600
Answer: 20%
Explanation:
The price elasticity of demand shows the increase in quantity demanded as a result of a decrease in price and vice versa.
It is calculated by the formula:
Price elasticity of demand = Change in quantity demanded / Change in price
The formula can therefore be used to find the increase in quantity. Price elasticities are usually denoted in negatives even if not shown so:
-4 = x / -5%
x = -4 * -5%
x = 20%
B the quality is the most important when considering buying an item. Then you think of quantity.
Answer:
Option (b) is correct.
Explanation:
(i) Law of supply states that if there is an increase in the price of the commodity then as a result the quantity supplied for that commodity also increases and if there is a decrease in the price of the commodity then as a result the quantity supplied for that commodity also decreases.
So, there is a relationship between price and quantity supplied not supply.
(ii) If there is an increase in the cost of production of eggs then as a result the producers of egg will reduce the production of eggs. Hence, this will lead to reduce the supply of eggs in the market.
Therefore, the second statement is correct.