WHAT IS PRICE ELASTICITY OF DEMAND? According to McConnell, Brue & Flynn the law of demand states that other things being equal consumers will buy more of a product when its price declines and less when its price increases. The responsiveness of consumers to a price change is measured by a products price elasticity of demand. In economics, the demand for a certain good or service is represented by the demand curve. The demand curve is plotted on a graph with price labeled on the y-axis and quantity labeled on the x-axis.
Surplus value, in its most basic definition, is the amount of money earned by the capitalist after paying for overhead. In order to better understand this concept, we must explain what constitutes overhead. Overhead is the total amount of money that a company needs to pay in order to cover the raw materials used for the production of the commodity and the wages that are paid to cover the workers who have made the commodity. However, when the wage laborer makes more of a certain commodity than needed to cover overhead, surplus value is created. According to Marx, “the specific use-value, which this commodity possesses of being a source not only of value, but of more value than it has itself”.
2. What item costs and revenues are relevant to the decision of how many units of that item to stock? The item costs relevant to the decision of how many units of that item to stock are the liquidation costs if the item has not been demanded. The revenues related to this same decision are the contribution margins of that item if it has been demanded. The two are used in a way that balances these costs and revenues.
Imani Shakir Period 3 Calhoun 09/11/2009 Chapter 4 Notes Demand What is Demand? Demand- the desire, ability, and willingness to buy a product that can compete with others who have similar demands. Microeconomics-the area of economics that deals with behavior and decision making by small units. The knowledge of demand is essential to understand how a market economy works. Demand Schedule-A listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time.
Profit is calculated in a Trading and Profit and Loss Account. This is divided in a Trading Account which calculates the Gross Profit for the period, and a Profit and Loss Account which calculates Net profit for the period. The Trading Account ─ calculates the profit made strictly from trading activities. Trading involves buying and selling. In the trading
IRR represents the discount rate at which the present value of the expected cash inflows from a project equals the present value of the expected cash outflows. Internal rate of return is used to evaluate the attractiveness of a project or investment. If the IRR of a new project exceeds a company’s required rate of return, that project is desirable. If IRR falls below the required rate of return, the project should be rejected. It is to be noted that NPV uses an absolute amount IRR is interpreted in terms of ‘Rate’.
(4 marks) c) Setting MRS=MRT, solve the resulting equation algebraically for l as a function of G. (6 marks) d) What happens to consumption, wages and output as G increases? (6 marks) Question 2: Now consider the same representative agent, but subject to a proportional tax, so that the budget constraint is now C = (1 − t) z (1 − l) where t is the tax on wages. Assume z=1. a) Solve for labour supply as a function of t. (6 marks) b) Now assume that there is a target level of government spending, with a balanced budget: G = tz(1 − l) What is the value of t that maximizes tax revenue G? (6 marks) 1 City University London Intermediate Macroeconomics 1 Joe Pearlman c) Sketch the Laffer curve for values of t from 0 to 1.
Under absorption costing, a portion of fixed manufacturing overhead is allocated to each unit of product. Variance analysis A variance analysis details and evaluates the difference between planned and actual results. A variance analysis is used to provide a comparison of budgeted costs with the actual costs or a comparison of the
Following graph depicts the effect of inflation on cost One of the method firms use for adjusting for inflation is by deflating nominal cost data using an implicit price deflator. Usually the deflator value is obtained from Survey of current business for a period question. Nominal cost is divided by deflator to arrive at the real cost. Using real cost will help up the firm to come up with good a short run cost estimate. Since short run involves a smaller period the effect of inflation on input prices is ignored.
2.In the graph below, assume that the market demand curve for labor is initially D1. Answer the following questions. [pic] a. What are the equilibrium wage rate and employment level? Wage rate is at b (dollars per unit) and the employment level is at f (quantity of labor).