Consumers would normally spend on the higher utility and in this instance that product is product A. However, the more customers purchase product A, the extra satisfaction will decrease and the utility of B will increase since you will now hardly have a demand for it. Equilibrium will be restored as one utility goes up, the other one goes down. Let us assume the income of the consumer goes up by 5%, this will mean: Income =$100 + $5 = $105.00 Product A $ 5.00 per unit Product B $11.00 per unit With an income of $ 105.00 a consumer can purchase 21 units of product A and 9 units of product B (yellow line) There was an increase in purchasing power for the consumer, however because the price of A was lower, the consumer substituted, since the price of B increased the extra money will go to this product, thus maintaining the same bundle, and an equilibrium state will continue to remain. 2|Page Question 3 ISOQUANTS In Figure 3.0 although points A, B, and C all involve different combinations of capital and labor, output is equal to Q0 with each of these combinations.
The second series is an uneven cash flow stream, but it contains an annuity of $400 for 8 years. The series could also be thought of as a $100 annuity for 10 years plus an additional payment of $100 in Year 2, plus additional payments of $300 in Years 3 through 10. 8-3 True, because of compounding effects—growth on growth. The following example demonstrates the point. The annual growth rate is I in the following equation: $1(1 + I)10 = $2.
This percentage is obtained by dividing the margin of safety in dollar terms by total sales. Following equation is used for this purpose. [Margin of Safety = Margin of safety in dollars / Total budgeted or actual sales] Example: Sales(400 units @ $250) | $100,000 | Break even sales | $87,500 | Calculate margin of safety | Calculation: | Sales(400units @$250) | $100,000 | Break even sales | $ 87,500 | | --------- | Margin of safety in dollars | $ 12,500 | | ======= | Margin of safety as a percentage of sales:12,500 / 100,000= 12.5% | It means that at the current level of sales and with the company's current prices and cost structure, a reduction in sales of $12,500, or 12.5%, would result in just breaking even. In a single product firm, the margin of safety can also be expressed in terms of the number of units sold by dividing the margin of safety in dollars by the selling price per unit. In this case, the margin of safety is 50 units ($12,500 ÷ $ 250 units = 50 units).
c. What fraction of the economic burden of this tax is borne by consumers and what fraction is borne by sellers? 2 4. Jose has an income of $1,000. The price of good X is $50 and the price of good Y is $20. He initially maximizes his utility by consuming 10 units of good X and 25 units of good Y. a.
The average CPM will drop by 10% when compared to the current 2006 CPM ($2.00) Not targeting a specific market group could mean a loss in market opportunities due to specific aggressive competition from the other networks. **Considering 2007’s Base as a non-changing situation on TFC’s current strategy. Scenario 2 Target Group: Fashionistas Expected Ratings: 0.8 Potential CPM: $3.50 Average Viewers: 880,000 Additional expenses: $ 15 M PROS The profit margin will increase to 37% compared to the Base in year 2007** (19%) if this scenario is implemented. Advertisement may become more efficient; therefore CPM could increase to $3.50. (From $2.00) The targeted segment specifically represents better CPM rates than other groups, compensating for the generalized audience loss.
In the United States, there are different tax brackets for different people depending on one’s annual income. For instance, if one makes $0 to $8,500, he must give up 10% of that to the federal government; if one makes $1000 dollars per year, he must pay $100 to the federal government. Within a bracket, there is a set tax rate however, if one makes $379,150+ he must pay 35% of that total to the federal government; if one makes $1,000,000, he must pay $350,000 to the federal government. These numbers don’t mean much until you explore the concept of the ratio. Let us suppose that the income tax rate for all Americans, regardless of the total income, is 20%.
Superior Metals Corporation (SMC) Business Memorandum The objective of Decision Model One of the most significant part of a company is its Net Income. Developing a decision model to see and analyze how product cost and sales impact the company’s profit can benefit company to maximize its profit and achieve long term sustainable business development. Going over this assignment, I better understand the relationship between product costs and company’s net income, as well as develop my excel spreadsheet skills and improve my ability to analyze numbers from the model. Analysis of SMC’s decision model Cost of goods manufactured indicates product costs for a period of time. This amount is transferred to finished goods inventory and is used to calculate cost of good sold.
Mechanically how is your strategy different than your best strategies in 4a Strategy 6 : Inventory Management in Price Cutoffs = 10 could be improved with a small tweak on the preloaded strategy. The cutoff could be reduced from 10 to say 5-6. Why does the change in 5a work better? With the tweaked strategy 6, the reduced cut-off will ensure that the inventory be cut down quickly when the overnight volatility and order processing costs are relatively high. The bid-ask spread is also a cost to the dealer.
Zara: Fast Fashion Case - Answers 1. The comparison between financial results of Inditex and H&M is very interesting according to their profitability. In order to analyze the profitability, net margin is calculated as net income divided by net operation revenue which is found as 10.5% and 9.6% for Inditex and H&M, respectively. Furthermore, it is found that cost of goods sold of Inditex is lower than H&M’s. Also, Inditex has less operation expenses than H&M’s.
Using the following calculation, we find: z= x- μ σ -1.96 = 10,000 – 20,000 σ σ=5102 Standard deviation σ = 5,102 μ = 20,000 mean 2. Stock outs were calculated by the four management numbers. Equation is: z = (x – μ)/ σ 15,000: Z = (15,000-20,000)/5102 z = -0.98 Then, reference the cumulative probabilities for standard deviation table in the beginning of the book to identify what -0.98 represents, which is .1635. Since stock outs are any quantity greater than what management suggested, they need to be subtracted from 1. 1 - .1635 = .8365 which = 83.65% Same logic/steps for the rest of the values: 18,000 24,000 28,000 Z = (18,000-20,000)/5102 z=(24,000-20,000)/5102 z=(28,000-20,000)/5102 z = -.39 z=.78 z= 1.57 1 - .3483 = .6517 1 - .7823 = .2177 1 –.9418 = .0582 which = 65.17% which = 21.77% which = 5.82% 3.