Define the price elasticity of demand and show how it is calculated. Answer: The units-free measure of the responsiveness of the quantity demanded of a good to a change in it s price when all other influences on buying plans remain the same. 3. What is the total revenue test? Explain how it works.
“Discuss the extent to which a monopoly provider of transport will always increase economic efficiency” (20) Economic efficiency is where both allocative and productive efficiency occur, this is where price is equal to marginal cost and the least possible amount of scarce resources are used to produce the maximum output. A monopoly can refer to a single firm in a market or owning 25% and 40% of the market share. The traditional monopoly theory states that there will be productive and allocative inefficiency in the market since, the firm will hold back supply to gain a higher price. It will not produce where average revenue meets marginal costs. In terms of resource allocation this may mean that demand is not fully met by supply.
only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements. B. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline. D. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale. 15) Designated market value A. may sometimes exceed net realizable value. B. should always be equal to net realizable value less a normal profit margin.
c). The transfer price of an intermediate product that has an imperfectly competitive external market for the for the product exists when the transfer price of the intermediate product is given at the point at which the net marginal revenue of the marketing division of the firm is equal to the marginal cost of the production division at the best total level of output of the intermediate product, and the price charged in the external market is given on the external demand curve. DQ13) The advantages of cost plus pricing is that it leads to approximately the profit-maximizing price because firms usually apply higher markups for products facing less elastic demand than for products with more elastic demand. p This involves calculating the average variable cost of producing the normal or standard level of output , adding an average overhead charge so as to get the fully allocated average cost for the product. The disadvantages for cost-plus pricing is that it may be very difficult to
et powerECO204: Homework Assignment 3 1. True, False, Uncertain a. A firm that enjoys economic rents earns higher economic profits than other firms without the economic rents. b. Relative to the perfectly competitive equilibrium, the equilibrium outcome for a market dominated by a monopsonist will be higher prices and lower levels of good demanded.
Explain your answer. The cross price elasticity with soda is considered to be rather high (3) therefore, if the price of soda drops, I think the demand of beer will stay the same. This elasticity measures the rate of response of quantity demanded of one good, due to a price change of another good. These two goods are not substitutes in my eyes. I think the demand of beer will decrease and the demand of soda will increase.
To begin with, raising the tax will bring in more money to the government from since demand is inelastic for cigarettes and people will keep on buying them. The extra amount of income could be used to help the well being of the country and to provide more public goods. Also, cigarettes are a demerit good, a good which is considered unhealthy or damaging in some and can be physically harmful to the consumer and other surrounding, so when price increases, demand will fall. Even if it is a small fall in demand, it is most likely to be for the young smokers to demand since they have less income than adults. If more young smokers quit, the healthier the next generations will be since smoking is a main reason behind a lot of health issues including lung
AP Microeconomics Unit 2: Supply, Demand and Consumer Choice Practice Questions 1. The demand curve for a normal good slopes down for which of the following reasons? I. An increase in the price of the good induces consumers to purchase substitute products. II.
Week 3 Case Assignment Analyzing Managerial Decisions iTunes Music Pricing Ch.7 Torrez Moore July 22, 2013 St. Leo University: MBA 540 Analysis Apple’s sales revenue from it’s downloads will increase not just because of the pricing adjustments with their flat pricing price but also the flexibility pricing will definitely increase with the old tracks being priced at a low cost. This will supplement for fewer sales on the new or popular tracks but statics show the older tracks will definitely increase. The increase in revenue from old tracks will supplement for the shortfall on the sale of the new tracks then the less popular and old tracks will balance the load because of increased revenue. Apple’s Computer iTunes Music Store
EGT1: Task 309.1.2.08, Performance Task Element A: Elasticity of Demand (Ed) measures how responsive demand is to a change in the price of a good or service resulting in either elastic, inelastic, or unit-elastic (Roberts, 2013). An item is elastic when a percentage change in the price has a substantial effect on the percentage change of the quantity purchased, this relationship will be one that is inverse in nature. Simply, this responsiveness to change shows that if there is an increase in price on a good or service the result will be a reduction in sales of that good or service. If there is a decrease in price of a good or service, the result would be an increase in sales of that good or service. Elasticity is measured using a