ECON 1312 Homework Assignment # 2 Chapter 4 1. Why do we need a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price? Answer: To measure or to compare the demand of the two unrelated goods or services. 2. Define the price elasticity of demand and show how it is calculated.
A 6% increase in Electricity costs. 1. A 2.5% increase in material cost When the material costs increases, the affect will occur on the master budget. The 2.5 % increase on the material cost means we will be paying more; as a result the profit will be less, unless we increase the selling price, reduction of employees (redundancy), to cover the change. Here below are show the calculation of the change: Material cost is 50355.15 2.5% of 50355.15 = 50355.15x 2.5 = 1258.87 100 The new material cost is = 50355.15 + 1258.87 =
For an article, material, or supply to be considered domestic it must be an unmanufactured end product mined or produced in the United States; or the end product is manufactured in the United States. The purpose of this Act is to discourage businesses to sell to the government foreign products. When the government is only buying American made products it is encouraging the American business to produce a product that meets the government needs with pricing and quality. Some of the problems also with purchasing material from overseas vendors is that the required items might contain chemicals that do not meet American standards such as we have seen in some of China’s material containing lead. Now there are some exceptions to the Buy American Act which include if the items are being used outside the United States; domestic items that are unreasonably priced; information technology that is a commercial item; when compliance to the Act would not be in the best interest of the government; and item purchased only for the commissary resale.
I calculated an “inventory turnover ratio” which measures the number of times a company sells its inventory during a year. A high rate of turnover indicates easiness in selling inventory; a low rate indicates difficulty. In 2011, the inventory turnover was 6.1. By 2012 the ratio decreased to 5.2. The decrease may be due to a slow ability to turn around merchandise in sales and potentially due to paying a higher cost for goods.
Two disadvantages to automation are that it costs more and it is not easily changed. 6. A products margin is determined by subtracting its manufacturing cots (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the customer buying criteria, how would you increase margins for a low end product?
“Another negative factor was a 6.6 percent drop, on an annualized basis, in federal defense spending.” She supports that the decrease in GDP is directly related to the decrease in government spending g which proves how fiscal policy can affect overall economic growth. Monetary policy can be defined as: A central banks changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth. The article discusses how decline in economic growth can in part be due to uncertainty of interest rates which is directly controlled by the Federal Reserve. The author supports this idea by showing that uncertainty of interest rates has affected business investments and the slowing of the housing
an upward shift in the supply curve of books. a downward shift in the supply curve of books. Question 9 Starting from a pure exchange equilibrium, an increase in the demand for a commodity will result in: a fall in the market price. a rise in the market price. a rise in the equilibrium output.
c. Installation of new ventilating equipment produced depreciation (fixed cost) which will decrease contribution margin, thus the breakeven point will increase. 5. A. Cool-Aire will incur a loss simply if its sales are below 33000, i.e. P(X<33000) or P(Z<((33000-40,000)/4000) = P(Z<-1.75) = 1 - P(Z<1.75) or about .04 using the z-score table. B.
an upward shift in the supply curve of books. a downward shift in the supply curve of books. Question 9 Starting from a pure exchange equilibrium, an increase in the demand for a commodity will result in: a fall in the market price. a rise in the market price. a rise in the equilibrium output.
D. convex to the origin because of increasing opportunity costs. 20. Which of the following will shift the production possibilities curve to the right? A. an increase in the unemployment rate from 6 to 8 percent B. a decline in the efficiency with which the present labor force is allocated C. a decrease in the unemployment rate from 8 to 6 percent D. a technological advance that allows farmers to produce more output from given