# Suppose the demand equation​ is: Upper Q equals 120 minus 1.25 p. What is the price elasticity of demand if the price is ​\$60 per unit and output is 45 ​units? The price elasticity of demand is nothing. ​(Enter a numeric response using a real number rounded to two decimal​ places.)

-1.67

Explanation:

Given that,

Q = 120 - 1.25p

Initial price, p = \$60 per unit

Initial quantity, q = 45 units

Q = 120 - 1.25p

Now, differentiating Q with respect to price,

dQ/dp = -1.25

Therefore,

Price elasticity of demand:

= (dQ/dp) × (p ÷ q)

= -1.25 × (60 ÷ 45)

= -1.25 × 1.33

= -1.67

This means that the demand is elastic.

## Related Questions

Which of these projects is likely to have the higher asset beta, other things equal? Why? a. The sales force for project A is paid a fixed annual salary. Project B’s sales force is paid by commissions only.b. Project C is a first-class-only airline. Project D is a well-established line of breakfast cereals.

Explanation: The above projects is likely to have higher asset beta other things being equal because people or workers are motivated by Money which would aid them to perform and give hundred percent on any project.

Abraham Maslow gives us a good explanation around Motivation-Starting from the premise that each human being is motivated by needs that are inborn, presumably as a result of tens of thousands of years of evolution, the Maslow theory of motivation suggests a hierarchy of needs:

Physiological needs

These are the very basic needs such as air, water, food, sleep, sex, etc. When these are not satisfied we may feel sickness, irritation, pain, discomfort, etc. These feelings motivate us to alleviate them as soon as possible to establish homeostasis. Once they are alleviated, we may think about other things.

Safety needs

These have to do with establishing stability and consistency in a chaotic world. These needs are mostly psychological in nature. We need the security of a home and family. However, if a family is dysfunction, i.e., an abused child - cannot move to the next level as she is continuously fearful for her safety. Love and a sense of belonging are postponed until she feel safe.

Love and needs of belonging

Humans have [in varying degrees of intensity] a strong desire to affiliate by joining groups such as societies, clubs, professional associations, churches and religious groups etc. There is a universal need to feel love and acceptance by others.

Self-Esteem needs

There are essentially two types of esteem needs:self-esteem resulting from competence or mastery of a task; and the esteem and good opinion of other people.

The need for self-actualisation

Maslow theory of motivation proposes that people who have all their "lower order" needs met progress towards the fulfilment their potential. Typically this can include the pursuit of knowledge, peace, esthetic experiences, self-fulfillment, oneness with God, nirvana, enlightenment etc. So ultimately this is all to do with the desire for self transcendence.

Project A and Project C are likely to have higher asset betas due to their specific characteristics.

### Explanation:

The asset beta of a project depends on various factors, including the risk profile of the project. In the given scenarios, the project with a higher asset beta would be:

• Option a: Project A, where the sales force is paid a fixed annual salary, is likely to have a higher asset beta compared to project B. This is because fixed salaries are a fixed cost for the project, which means that any changes in sales revenue would directly impact the project's profitability and risk.
• Option b: Project C, which is a first-class-only airline, is likely to have a higher asset beta compared to project D, which is a well-established line of breakfast cereals. This is because the airline industry is generally more volatile and exposed to economic fluctuations compared to the stable and established breakfast cereal industry.

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Marlow Company purchased a point of sale system on January 1 for \$5,600. This system has a useful life of 4 years and a salvage value of \$500. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?a. \$1,275.b. \$1,336.c. \$2,550.d. \$2,800.e. \$1,400.

Annual depreciation= \$1,275

Explanation:

Giving the following information:

Purchase price= \$5,600

Useful life= 4 years

Salvage value= \$500

To calculate the annual depreciation, we need to use the following formula each year:

Annual depreciation= 2*[(book value)/estimated life (years)]

Year 1:

Annual depreciation= 2*[(5,600 - 500) / 4]

Annual depreciation= \$2,550

Year 2:

Annual depreciation= 2*[(5,100 - 2,550) / 4]

Annual depreciation= \$1,275

The second year's depreciation expense using the double-declining balance method for the point of sale system purchased by Marlow Company would be \$1,400.

### Explanation:

The double declining balance method is a type of accelerated depreciation accounting method. In the first year, Marlow Company will depreciate the asset at a rate of 2/4 (50%) of the purchase price (i.e., \$5,600), which totals \$2,800. However, the asset has a salvage value of \$500, which must be considered.

In the second year, the depreciation expense will be determined using the remaining book value of the asset after the first year of depreciation (i.e., \$5,600 - \$2,800 = \$2,800) and again applying the rate of 50%. The second year's depreciation will therefore be 50% * \$2,800 = \$1,400.

So the correct option is e. \$1,400.

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Crystal Glassware Company issues \$1,042,000 of its 14%, 10-year bonds at 97 on February 28,2019. The bonds pay interest on February 28 and August 31. Assume that Crystal uses thestraight-line method for amortization. What net amount will be reported for the bonds on theAugust 31, 2019 balance sheet?A) \$1,010,740 B) \$1,012,303 C) \$1,009,177 D) \$1,042,000

The correct option is B. \$1,012,303

Explanation:

For computing the net amount, the following calculations are need to be done which is shown below:

1. Calculation the total value of bond which equals to

= Issue amount × price

= \$1,042,000 × (97 ÷ 100)

= \$1,010,740

2. Now compute the discount which shown below:

= Issue amount - total value

= \$1,042,000 - \$1,010,740

= \$31,260

3. Then, compute the semiannual discount amount by applying the straight line method

= Discount value ÷ number of years

where,

number of year would be multiply by 2 = 2 × 10 = 20 years

So, the value would be equal to

= \$31,260 ÷ 20 years

= \$1,563

4. So, the net amount would be

= Total value of bond + semiannual discount

=  \$1,010,740 +  \$1,563

= \$1,012,303

Hence, the net amount will be reported for the bonds on the August 31, 2019 balance sheet is \$1,012,303

Therefore, the correct option is B. \$1,012,303

I am having a diffiucult time figuring out the advertising expense. I have plugged in several solutions and they are all incorrect.Listed below are several transactions that took place during the second and third years of operations for RPG Company.
Year 2 Year 3
Amounts billed to customers for services rendered \$ 320,000 \$ 420,000
Cash collected from credit customers 230,000 370,000
Cash disbursements:
Payment of rent 77,000 0
Salaries paid to employees for services rendered during the year 137,000 157,000
Travel and entertainment 27,000 37,000
In addition, you learn that the company incurred advertising costs of \$24,000 in year 2, owed the advertising agency \$4,900 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.
Required:
1. Calculate accrual net income for both years.
2. Determine the amount due the advertising agency that would be shown as a liability on RPG’s balance sheet at the end of year 2.

RPG Company

1. Accrual Net Income for Year 2 and Year 3:

Year 2             Year 3

Amounts billed to customers for services  \$ 320,000   \$ 420,000

Expenses:

Rent                                                                     38,500         0

Salaries paid to employees for services          137,000       157,000

Travel and entertainment                                  27,000        37,000

Net Income                                                      \$93,500     \$170,900

2. Determination of the liability for Advertising:

Year 1 balance = \$4,900

Year 2 =            \$24,000

Cash paid           (13,500)

Balance             \$15,400

Explanation:

a) Data and Calculations:

RPG Company.

Year 2             Year 3

Amounts billed to customers for services  \$ 320,000   \$ 420,000

Cash collected from credit customers           230,000       370,000

Cash disbursements:

Payment of rent                                                  77,000         0

Salaries paid to employees for services          137,000       157,000

Travel and entertainment                                  27,000        37,000

Year 2             Year 3

Service Revenue:   \$ 320,000   \$ 420,000

Accounts Receivable

Service revenue  \$320,000

Cash collected       230,000

Balance Year 2      \$90,000

Service revenue    420,000

Cash collected      370,000

Balance Year 3     \$50,000

Year 1 balance = \$4,900

Year 2 =            \$24,000

Cash paid           (13,500)

Balance             \$15,400

Year 3 =              16,600

Cash paid           32,000

Balance               0

The accrual net income for RPG Company in Year 2 is \$55,000, and in Year 3 is \$194,000. The amount due to the advertising agency shown as a liability on RPG's balance sheet at the end of Year 2 is \$0, as it was completely paid off in that year.

### Explanation:

In order to calculate the accrual net income and determine the liability of the advertising agency, we first need to correctly account for all the incomes and expenses. Here's how it works:

Accrual net income is calculated as revenues (Amounts billed to customers) minus expenses. For year 2, the expenses include Payments of rent, Salaries paid, Travel and entertainment, and Advertising costs. For year 3, as there was no rent payment and no liabilities at the end of the year, we deduct only the Salaries paid, Travel and entertainment, and Advertising costs from the revenues.

Revenues

Year 2: \$320,000
Year 3: \$420,000

Expenses

Year 2: Rent(\$77,000) + Salary(\$137,000) + Travel & Entertainment(\$27,000) + Advertising(\$24,000) = \$265,000
Year 3: Salary(\$157,000) + Travel & Entertainment(\$37,000) + Advertising(\$32,000) = \$226,000

Accrual Net Income

Year 2: \$320,000 - \$265,000 = \$55,000
Year 3: \$420,000 - \$226,000 = \$194,000

The amount owed to the advertising agency that should be considered as a liability at the end of year 2 can be figured out by taking into account the advertising expenses incurred in year 2 and the previous year's outstanding. But since we learn that there were no liabilities at the end of year 3, the outstanding \$4,900 at the end of year 1 must be paid in year 2 along with the incurred cost of \$24,000. Therefore, the liability at the end of year 2 would be \$0.

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A pollution haven is A. unattractive for multinational investment because of the ambient pollution. B. a location with weak environmental rules that attracts manufacturing companies due to decreased costs. C. a place that has very low worker wages. D. a place where people actually like pollution and view it as a positive externality.

B. a location with weak environmental rules that attracts manufacturing companies due to decreased costs.

Explanation:

A pollution haven is when companies establish factories or offices abroad in countries in which they have lower costs and have access to all the resources they need. Also, these locations tend to be in developing nations in which the environmental standards tend to be lower than the ones in developed nations. According to this, the answer is that a pollution haven is a location with weak environmental rules that attracts manufacturing companies due to decreased costs.

The other options are not right because a pollution haven is attractive for multinational investment because of the lower cost and it is not related to ambient pollution. Also, a pollution haven has low wages but it is not the only thing that defines it and it is not a place where people like pollution.

An analyst wants to estimate the yield to maturity on a non-traded 4-year, annual pay bond rated A. Among actively traded bonds with the same rating, 3-year bonds are yielding 3.2% and 6-year bonds are yielding 5.0%. Using matrix pricing the analyst should estimate a YTM for the non-traded bond that is closest to:

3.8%

Explanation:

3 year bonds yielding 3.2%

6 year bonds yielding 5.0

Annual pay bond 4 years

Yielding bond+[(Annual pay bond- Bonds years)/bond years]×(Yielding bond-Yeilding bonds)

Let plug in the formula

Interpolating: 3.2% + [(4 - 3) / (6 - 3)] × (5.0% - 3.2%)

=3.2%+[1/3×(1.8%)]

= 3.2%+(0.33333×1.8%)

=3.2%+0.006

=0.032+0.006

=0.038×100

=3.8%

Alternatively,

Interpolating: 3.2% + [(4 - 3) / (6 - 3)] × (5.0% - 3.2%) =3.8%

In this case the analyst should estimate a YTM for the non-traded bond that is closest to: 3.8%