¶ … change: for question 4e, find the new equilibrium P. And Q, but you do NOT need to answer the questions - What is the effect on supply?
0=3000-10p
p=300
0=-1000+10p
1000=10p
p=1000
3000-10p=-1000+10p
4000=20p
p=200
3500-10p=-1000+10p
4500=20p
p=225
Chapter 3,-Page 71 Number 6.
Q=200-300p+120i+65t-250 Ac+400 Aj
3750 + 4000 = 5100 cups demand curve Q=200-300P+120(10)+65(60)-250(15)+400(10)
The effect is to raise the y-intersect of the demand curve by 5000 units, but not to change the slope of the demand curve.
250(5000)=400(Aj)
Aj= 3125
She would have to expend $3,125 to counteract the competitors advance.
Chapter 4,-Page 106 Number 6.
=%change in quantity / percentage change in price
((x- 4000)/4000)/((70-63)/70)
((x-4000)/4000)*10=2.5
.25=x-4000/4000
1000=x-4000
x=5000
will revenue increase
Yes -- revenue will increase. Why?
The initial condition, with price at 70, yields 70(4000)=280000
The next condition, with price at 63, yields 63(5000)=315000
4) Chapter 4,-Page 107 Number 15.
a. 20
(3.5-3)/(3)
.20/.1666
- 1.25
b. Sales of chocolate syrup increased because chocolate syrup is a complementary good to vanilla ice cream. The more people eat vanilla ice cream, the more they eat chocolate syrup. You would measure the effect by noting the % price difference in ice cream related to the % change in purchases of chocolate syrup.
c. Effect on total revenue = total revenue should increase, because changing the price by 16% created a 20% change in quantity sold.
5) Chapter 4, Answer the following question which is based on Page 107, Number 17 but has some changes:
The demand curve for product X is given as Q = 2000-20P.
a. How many units will be sold at $10?
Q=2000-20(10)=1800
b. At what price would 2,000 units be sold? 0 units? 1,500 units?
2000=2000-20P -- at no price -- to sell 2000 units, price must be $0.
0=2000-20p
P=100
To sell 0 units, price must be 100.
1500=2000-20p
-500=-20p
p=25
c. Write the equation for total revenue (in terms of P, that is, the equation will include the variable P. But will not include the variable Q).
Total revenue formula
Revenue=price x quantity
R = p (2000-20P)
R= 2000P -20P^2
d. What will be the total revenue at a price of $70?
140000-98000=42,000
e. What is the elasticity between $65 and $75?
% change in quantity demanded/% change in price
(500-700)/500
-.4/((75-65)/65)
-.4/0.15= -2 2/3
f. If price were to decrease to $60, what would total revenue be?
(2000)(60)-20(60^2)
1200000-72000= 48,000
g. What would be the elasticity between $55 and $65?
(700-900)/700 = - 0.28
(65-55)/55 = .18
Problem 12-34-1. Gross margin is calculated as gross profit / revenue. Product a Product B Product C Product D Gross Margin 12,000 / 32,000 = 37.5% 17,600 / 88,000 = 20% 56,000 / 280,000 = 20% 63,000 / 144,000 = 43.75% The product that is the most profitable is Product D. 2. The best way to start this question is to figure out the price and COGS per unit for each product. For Product a, the price was $32,000 / 2900
33% 400000 53.33% 480000 53.33% FM 125,000 125,000 125,000 FSA 25,000 25,000 25,000 Net Income 170,000 28.33% 250,000 33.33% 330,000 36.67% 2. The manager's tabulation is incorrect because the manager has set $2 as the fixed cost per unit. This is only true at the 200,000 unit level. At the other levels, the fixed cost per unit will be lower, as fixed costs do not increase with production volume. 6-47. 1. In order to make this assessment, Dana needs to calculate which method is cheaper. The accounting for producing the parts
So for the 70,000 units completed in July: (70,000)(15 + 10.65) = $1,795,500 2. The ending works in progress is 20,000. The total cost should be (20,000)(25.65) = 513,000 Note: These figures represent the total cost of the goods, not the total cost in July of the goods. The question is worded a little bit funny so I wasn't sure which one it was intended to be. Problem 14-21. Problem 14-21 1 2 3 4 DM Inv, 2010 8 8 5 2 Purchased 5 9 10 8 Used 7 11 7 3 DM Inv,
b) 1) ($20-$5) = $15; $1,200,000 / 15 = 80,000 units 2) if the company wants to sell just 70,000 units, then the price needs to be calculated again using the same formula as was used above: 70,000P -- (70,000*5) -- 1,200,000 = 0 70,000P = 1,550,000 P = $22.15 c) 1) This question is a bit silly. The formula would have one variable, x, to represent both the old and new sides: 19x -- 5x
The passenger miles would be (1,500,000 * 1.1) = 1,650,000. The revenue per passenger mile would be $0.20 -- (.08*.2) = $0.184 So the actual revenue was (.184)*(1,650,000) = $303,600. Now we can calculate Flex for Actual Level, the third column. This is based on the flex budget figures, which were $0.20 in revenue per passenger mile. Variable expenses were 195,000 / 1,500, 000 = $0.13 per passenger mile in the
4) Consider a firm that has just built a plant, which cost $20,000. Each worker earns $5.00 per hour. a) Based on this information, fill in the table below. Number of Worker Hours Output Marginal Product Fixed Cost Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost 0 0 20,000 50 8 20000 20,250 5 5 10 20000 20,500 5 5 8 20000 20,750 5 5 6 20000 21,000 5 5 4 20000 21,250 5 5 85 1900 2 20000 21,500 5 5 71.67 1950 1 20000 21,750 5 5 62.14 b) In the example above, what price must the firm receive in order to keep producing in the short run? The price the firm must receive in the short run is the price that covers the variable cost, so the firm
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