Gus buys cupcakes every saturday morning. when he walks into the bakery, he always orders by saying, "give me $10 worth of cupcakes." what does this tell you about gus's elasticity of demand for cupcakes?

Answers

Answer 1

Answer:

Elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good.

a. Perfectly elastic - The good is perfectly elastic when the consumer is ready to buy any quantity at a fixed price.

b. Perfectly inelastic- The good is perfectly inelastic when the change in the price of the good has not effect on its demand, that is when quantity demanded is same at whatever price.

So, because here Gus is ready to buy any units of cupcakes at a fixed price of $10, the demand for cupcakes should be perfectly elastic.

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Parkway Void Co. issued 14-year bonds two years ago at a coupon rate of 10.2 percent. The bonds make semiannual payments. If these bonds currently sell for 96 percent of par value, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Stooge Enterprises manufactures ceiling fans that normally sell for $93 each. There are 340 defective fans in inventory, which cost $59 each to manufacture. These defective units can be sold as is for $23 each, or they can be processed further for a cost of $41 each and then sold for the normal selling price. Stooge Enterprises would be better off by aA. $9,860 net increase in operating income if the ceiling fans are repaired.B. $23,800 net increase in operating income if the ceiling fans are sold as is.C. $23,800 net increase in operating income if the ceiling fans are repaired.D. $9,860 net increase in operating income if the ceiling fans are sold as is.
Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April, when she expects to produce and sell 3,000 meals. Amount Per Unit Sales revenue $ 18,000 $ 6.00 Costs of meals produced 13,500 4.50 Gross profit $ 4,500 $ 1.50 Administrative costs 2,100 0.70 Operating profit $ 2,400 $ 0.80 Fixed costs included in this income statement are $4,500 for meal production and $600 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected. Required: a. What impact would accepting this special order have on operating profit? (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)
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For a competitive market, A. a seller can always increase her profit by raising the price of her product. B. a seller often charges less than the going price to increase sales and profit. C. a single buyer can influence the price of the product but only when purchasing from several sellers in a short period of time. D. if a seller charges more than the going price, buyers will go elsewhere to make their purchases.

Answers

Answer: For a competitive market, if a seller charges more than the going price, buyers will go elsewhere to make their purchases.

Explanation:

A perfectly competitive market has the following characteristics:

(a). In this particular market there are many buyers and sellers.

(b). Also each company makes similar product. i.e. the products are identical in nature.

(c). In this market buyers and sellers will have access to perfect information about price. and product.

(d). In a competitive market there are no barriers to entry into or exit from the market.

Therefore , if a seller charges more than the going price, buyers will go elsewhere to make their purchases.

Baka Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $244,200 and 9,200 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $245,000 and actual direct labor-hours were 6,100. The overhead for the year was: (Round your intermediate calculations to 2 decimal places.)

Answers

Answer:

The overhead for the year will be $245,000

Applied overheads in the year are $161,894 and Underapplied overheads are $83,106 total charged to cost of goods sold will be $245,000

Explanation:

Predetermined overhead rate = total estimated overhead / estimated direct labor-hours

Predetermined overhead rate = 244,200 / 9,200

Predetermined overhead rate = 26.54 per labor hour

Overhead for the year = Predetermined overhead rate X Actual Direct Labor hours

Overhead for the year = 26.54 x 6100

Overhead for the year = 161,894.00

Underapplied overheads = 245,000 - 161,894 = 83,106.00

Final answer:

The overhead for the year is $162,317.

Explanation:

To calculate the overhead for the year, we need to use the predetermined overhead rate based on direct labor-hours. The predetermined overhead rate is calculated by dividing the total estimated overhead by the estimated direct labor-hours. In this case, the predetermined overhead rate is $244,200 / 9,200 labor-hours, which is $26.57 per labor-hour.

To find the overhead for the year, we multiply the actual direct labor-hours by the predetermined overhead rate. In this case, the actual direct labor-hours are 6,100. So the overhead for the year is 6,100 labor-hours * $26.57 per labor-hour, which equals $162,317.

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3. Problems and Applications Q3 This chapter discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy. If sellers who are oligopolists try to increase the price of goods they sell, the goal of buyers who are oligopolists is to try to decrease the prices of goods they buy. Major league baseball team owners have an oligopoly in the market for baseball players. The owners' goal is to keep players' salaries . True or False: This goal is difficult to achieve because teams have different budgets. True False Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose. True or False: The owners felt the need for a salary cap to help prevent any team from cheating. True False

Answers

Answer: 1. Low

2. False

3. False

Explanation:

1. The owners' goal is to keep players' salaries Low.

As the text says, Oligopolist buyers would try to reduce the price of goods that they buy. In the MLB world, the teams are the buyers and the players are the sellers with the salaries being their price. Team owners will therefore try to keep salaries at a low level so that they make more profit.

2. False

This goal is not difficult to achieve due to budget differences but rather because different payers offer varying contributions to the team's game. Some players push the team forward more and hence are able to demand their fair share. This makes it difficult to cap their salaries.

3. False

They only tried to impose the salary cap so that they could reduce the cost of running the basketball teams and not to prevent teams from cheating. The salaries they were paying were high enough that they felt they weren't making enough profit. So they conspired to impose a salary cap so that they could make more profit.

Danita rescues dogs from her local animal shelter. When danita's income rises by 7 percent, her quantity demanded of dog biscuits increases by 12 percent. For danita, the income elasticity of demand for dog biscuits isa. Negative, and dog biscuits are an inferior good.
b. Negative, and dog biscuits are a normal good.
c. Positive, and dog biscuits are an inferior good.
d. Positive, and dog biscuits are a normal good.

Answers

Answer: d. Positive, and dog biscuits are a normal good.

Explanation:

Normal goods are goods that are positively related with income and negatively related with prices. While, inferior goods are those goods which are negatively related with income. When demand for dog biscuits rises as a result of a rise in income, it shows that dog biscuits are a normal good for Danita. Therefore, we can say for Danita, the income elasticity of demand for dog biscuits is positive, and dog biscuits are a normal good.

Final answer:

The income elasticity of demand for canine biscuits is positive in Danita's case, indicating that they are a normal good. This is because as Danita's income increased, so did her demand for dog biscuits.

Explanation:

The income elasticity of demand measures how the quantity demanded of a good changes in response to a change in income. As Danita's income increases by 7 percent and her demand for dog biscuits increases by 12 percent, the income elasticity of demand is positive. This is calculated by taking the percentage change in quantity demanded divided by the percentage change in income.

Based on the information given, for Danita, the income elasticity of demand for dog biscuits is positive, and dog biscuits would be classified as a normal good, since the demand for them increases as income increases. Inferior goods, by contrast, have a negative income elasticity of demand: as income increases, demand for them falls.

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Arness Woodcrafters sells $300,000 of receivables to Commercial Factors, Inc. on a with recourse basis. Commercial assesses a finance charge of 6% and retains an amount equal to 3% of accounts receivable. Arness estimates the fair value of the recourse obligation to be $8,000. Prepare the journal entry for (a) Arness and (b) Commercial Factor

Answers

Answer:

(a) Journal entry for Arness Woodcrafters

Dr Cash 273,000

Dr Receivable from factor 9,000

Dr Loss on sale of receivables 26,000

Cr Accounts receivable 300,000

Cr Recourse factor 8,000

the amount of cash received = $300,000 x (1 - 6% - 3%) = $273,000

receivable from factor = $300,000 x 3% = $9,000

loss on sale = accounts receivable + recourse factor - cash - receivable = $300,000 + $8,000 - $273,000 - $9,000 = $26,000

(b) Journal entry for Commercial Factors

Dr Accounts receivable 300,000

Dr Recourse receivable 18,000

Cr Cash 273,000

Cr Accounts payable 9,000

Cr Recourse revenue 36,000

If a customer values good A at $15, and it costs the firm $10 to produce, current profit per unit is

Answers

Answer:

Explanation:

15 - 10 = 5

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