Answer:
a. For both restaurants to abide by the cartel’s agreement.
Explanation:
These type of agreements unite companies that have common interests or are in a similar industry to form an association.
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Hope this helps you.
Answer:
Qe 2
Pe 2
Demand price elasticity -0.60
Supplu price elasticity 3
i. It will decrease
As the demand as a more than proportionate price elasticity will overreact to the input price and their subsequent price increase with a reduce in consumption.
Explanation:
We equalize both to get the equilibrium quantity (Qe)
4 - 2/3Qe = 1 + 1/3Qe
Qe(2/3 + 1/3) = 4 - 1
Qe = 3
Then we solve for equilibrium price (Pe)
Pe = 4 - 2/3 x 3 = 4 - 2 = 2
Pe = 1 + 1/3 x 3 = 1 + 1 = 2
Price elasticity of demand at equilibrium:
variation in quantity / variation in price
we solve for Q when P = 3 and compare the variation
(1.33-3) / (3 - 2) = -1.66/1 = -1.66
Price elasticity of supply at equilibrium: ( 6 - 3) / (3 - 2) = 3 / 1 = 3
Answer:
Option a should be selected
Explanation:
After considering the PV of both options A and B the option that has been selected is A.
For option A:-
A total of the present value of option A= -25000-925.926-857.339-793.832 = -27577.097
Present value = 27577
For option B,:-
Total = -20,000-3703.704-2572.017-1587.664
= -27863.385
The present value of option B = 27863
From the calculations I have attached, it is evident that option A has lower present value compared to option B. Therefore option A should be selected.
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