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Suppose the demand function for a firm’s product is given by:
lnQx = 3 – 0.5lnPx -2.5lnPy +lnM + 2lnA
where Px = GH¢10, Py = GH¢4, M = GH¢20,000 and A = GH¢250.
i. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic or unitary elastic.
ii. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes of complements.
iii. Determine the income elasticity of demand, and state whether good X is normal or inferior good.
iv. Determine the own price elasticity of demand.
lnQx = 3 – 0.5lnPx -2.5lnPy +lnM + 2lnA
where Px = GH¢10, Py = GH¢4, M = GH¢20,000 and A = GH¢250.
i. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic or unitary elastic.
ii. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes of complements.
iii. Determine the income elasticity of demand, and state whether good X is normal or inferior good.
iv. Determine the own price elasticity of demand.
The demand for good X is given by:
Qx = 200 – 0.5Px + 0.25Py –0.75Pz + 0.1M,
Research shows that the prices of related goods are given by Py = GH¢900, Pz = GH¢100, while the average income of individuals consuming this product is M = GH¢5,000.
The supply function of the company is given by: Qx = 50+ 2Px
Requirements:
a) Indicate whether goods Y and Z are substitutes or complements for good X.
b) Is X an inferior or a normal good?
c) Determine the price and quantity that will clear the market for good X.
d) Suppose an excise tax of GH¢5 per unit is imposed on the good and the company adjusts the supply function to include tax.
i. Determine the new equilibrium price and quantity in the market.
ii. Compute the deadweight loss associated with this excise tax.
e) The company has acquired a new technology which enhances its production. As result, the new supply function is Qx = 250+ 2Px. Determine the new equilibrium price and quantity in the market.
Qx = 200 – 0.5Px + 0.25Py –0.75Pz + 0.1M,
Research shows that the prices of related goods are given by Py = GH¢900, Pz = GH¢100, while the average income of individuals consuming this product is M = GH¢5,000.
The supply function of the company is given by: Qx = 50+ 2Px
Requirements:
a) Indicate whether goods Y and Z are substitutes or complements for good X.
b) Is X an inferior or a normal good?
c) Determine the price and quantity that will clear the market for good X.
d) Suppose an excise tax of GH¢5 per unit is imposed on the good and the company adjusts the supply function to include tax.
i. Determine the new equilibrium price and quantity in the market.
ii. Compute the deadweight loss associated with this excise tax.
e) The company has acquired a new technology which enhances its production. As result, the new supply function is Qx = 250+ 2Px. Determine the new equilibrium price and quantity in the market.
Mr Zoo is planning to set up a mini Zoo in Howick.
The following relates to different pricing plans of visiting the zoo and costs of running the zoo.
Pricing Plan 1 - $30 per person (a special pack will be included)
Pricing Plan 2 - $25 per visitor (the special pack not to be included)
Variable Costs per visitor
Special Pack - $8
Zoo Consumables - $7
Zoo Expenses - $2
Total Fixed Costs - $200,000
REQUIRED: Study the information above then answer the following questions.
Using the CVP formula, calculate the number of units (and its dollar amount) for achieving
Breakeven
A profit of $30,000 for both plans.
Calculate the Contribution Margin ratio for both plans.
Describe the meaning of Contribution Margin ratio.
Explain the relationship between Contribution Margin ratio and Number of Breakeven units.
Explain why it is important to calculate Margin of Safety.
The following relates to different pricing plans of visiting the zoo and costs of running the zoo.
Pricing Plan 1 - $30 per person (a special pack will be included)
Pricing Plan 2 - $25 per visitor (the special pack not to be included)
Variable Costs per visitor
Special Pack - $8
Zoo Consumables - $7
Zoo Expenses - $2
Total Fixed Costs - $200,000
REQUIRED: Study the information above then answer the following questions.
Using the CVP formula, calculate the number of units (and its dollar amount) for achieving
Breakeven
A profit of $30,000 for both plans.
Calculate the Contribution Margin ratio for both plans.
Describe the meaning of Contribution Margin ratio.
Explain the relationship between Contribution Margin ratio and Number of Breakeven units.
Explain why it is important to calculate Margin of Safety.
Describe the process of collating, coding, and classifying data in preparation for processing.
In Juiceland company Ltd, the relationship between output(Q) and number of hours of skilled labour (S) and unskilled labour(U) is :
Q=500S + 100U - 0.2S^2 - 0.3U^2
The hourly wage of skilled labour is $15, and the hourly wage of unskilled labour is $5. The firm can hire as much labour as it wants at these wage rates.
a) Juiceland COO recommends that the firm hire 400 hours of skilled labour and 100 hours of unskilled labour. Evaluate this recommendation.
b) If Juiceland decides to spend a total of $5000 on skilled and unskilled labour , how many hours of each type of labour should it hire?
c) If the price of a unit of output is $5 ( and does not vary with output), how many hours of unskilled labour should the company hire?
Q=500S + 100U - 0.2S^2 - 0.3U^2
The hourly wage of skilled labour is $15, and the hourly wage of unskilled labour is $5. The firm can hire as much labour as it wants at these wage rates.
a) Juiceland COO recommends that the firm hire 400 hours of skilled labour and 100 hours of unskilled labour. Evaluate this recommendation.
b) If Juiceland decides to spend a total of $5000 on skilled and unskilled labour , how many hours of each type of labour should it hire?
c) If the price of a unit of output is $5 ( and does not vary with output), how many hours of unskilled labour should the company hire?
A company hires an econometrician to estimate the demand function for its products (x).
The econometrician concludes that this demand function is
Qx=100Px^-3.1I^2.3Py^1.5A^0.1
Where Qx is the quantity demanded of product x per capita per month, Px is the product price ($) , I is per capita disposal income ($), Py is the price of a related product y, and A is the firm advertising expenditure ($).
i. What is the own price elasticity of demand?
ii. Will increases in price result in increases or decreases in the amount spent on the company product?
iii. What is the income elasticity of demand?
iv. What is the advertising elasticity of demand?
v. What is the cross-price elasticity of demand between good x and good y? What type of goods are x and y?
vi. If the population in the market increases by 10 percent, what is the effect on the quantity demanded if Px, I, Py and A are held constant ?
The econometrician concludes that this demand function is
Qx=100Px^-3.1I^2.3Py^1.5A^0.1
Where Qx is the quantity demanded of product x per capita per month, Px is the product price ($) , I is per capita disposal income ($), Py is the price of a related product y, and A is the firm advertising expenditure ($).
i. What is the own price elasticity of demand?
ii. Will increases in price result in increases or decreases in the amount spent on the company product?
iii. What is the income elasticity of demand?
iv. What is the advertising elasticity of demand?
v. What is the cross-price elasticity of demand between good x and good y? What type of goods are x and y?
vi. If the population in the market increases by 10 percent, what is the effect on the quantity demanded if Px, I, Py and A are held constant ?
A marketer of motorbikes determines that in 2017, the demand function for its products is
P=2000 - 50Q
Where P is the price ($) of motorbike, and Q is the number of motorbikes sold per month.
i. To sell 20 motorbikes per month, what price should be charged?
ii. If the motorbikes sell at a price of $500, how many motorbikes will be sold per month?
iii. What is the price elasticity of demand if the price equals $500?
iv. At what price, if any, will the demand for motorbikes be unitary elastic?
P=2000 - 50Q
Where P is the price ($) of motorbike, and Q is the number of motorbikes sold per month.
i. To sell 20 motorbikes per month, what price should be charged?
ii. If the motorbikes sell at a price of $500, how many motorbikes will be sold per month?
iii. What is the price elasticity of demand if the price equals $500?
iv. At what price, if any, will the demand for motorbikes be unitary elastic?
How including capital goods(machinery) in final product produced by them result in double counting? How this problem is solved. Pls explain the whole process with an example.
What accounting standard is relevant to the presentation of financial statements including budgets?
Dell Corporation makes two types of tablets, A and B in equal quantities. That is, for every unit of tablet A that firm produces, it also produces 1 unit of tablet B. Dell corporation total cost function is
TC = 100 + Q + 2Q
Where Q is the number of units of output(Where each unit contains 1 unit of tablet A and 1 unit of tablet B), and TC is the total cost (in$). The demand curves for the firm two products are:
Pa = 200-Qa
Pb = 150 - 2Qb
Where Pa and Qb are the price and output A, and Pb and Qb are the price and output of product B.
a. How much of each product should the Dell Corporation produce and sell per period of time?
b. What price should it charge for each product ?
TC = 100 + Q + 2Q
Where Q is the number of units of output(Where each unit contains 1 unit of tablet A and 1 unit of tablet B), and TC is the total cost (in$). The demand curves for the firm two products are:
Pa = 200-Qa
Pb = 150 - 2Qb
Where Pa and Qb are the price and output A, and Pb and Qb are the price and output of product B.
a. How much of each product should the Dell Corporation produce and sell per period of time?
b. What price should it charge for each product ?
