Answer:
A) change in the cost of eating index = <u>20% increase</u>
B) Suppose that consumers are completely indifferent between two chickens and one ham. For this example, how large is the substitution bias in the official "cost-of-eating" index?
The <u>INCREASE</u> in the cost-of-eating index is <u>18</u> %.
The <u>OVERESTIMATE</u> of inflation in the cost of eating reflects substitution bias.
Explanation:
2015
product units unit cost total
chickens 30 $4 $120
hams 10 $5 $50
<u>steaks 10 $8 $80</u>
total $250
2016
product units unit cost total
chickens 30 $5 $150
hams 10 $7 $70
<u>steaks 10 $8 $80</u>
total $300
A) ($300 - $250) / $250 = 20%
B)
if consumers are indifferent for 2 chickens per 1 ham, then the new basket should be assuming consumers will purchase the cheapest option:
2016
product units unit cost total
hams 25 $7 $175
<u>steaks 10 $8 $80</u>
total $255
the increase in inflation would have been = ($255 - $250) / $250 = 2%
the substitution bias = reported inflation - real inflation = 20% - 2% = 18%
Explanation:
The journal entry to record the uncollectible is shown below:
On December 31
Bad debt expense $800
To Allowance for doubtful debts $800
(Being the bad debt expense is recorded)
The computation is shown below:
= Sales × estimated percentage - credit balance of doubtful accounts
= $280,000 × 0.5% - $600
= $1,400 - $600
= $800
Answer:
D stands for drive.
Explanation:
In automatic transmission vehicles, the letter D represents all forward-moving gears. When the engine is running, and the automatic transmission is activated with D, accelerating the car will make it move forward.
Some vehicles will have a series of numbers after the D. The may be labeled ad D1, D2, D3 in that order. These are manuals setting for the forward gear operations. They help the vehicle navigate different terrain as follows
- D1: Suitable for difficult terrains like sand and mud.
- D2: Best for up climbing or hilly roads
- D3: May also be marked as OD or overdrive. It makes the car move fast hence suitable for when overtaking.
For vehicles with only D, the single D combines all the above functions.
Answer: a. benefits Boxlandian consumers by $672 and harms Boxlandian producers by $598.50.
Explanation:
Equilibrium price will be at level where quantity demanded equals quantity supplied.
200 − 2P = -60 + 3P
200+60 = 5P
5P = 260
P = $52
Equilibrium Quantity Demanded = 200 − 2P = 200 - 2 * 52 = 96 units
In a no-trade situation the demand in Boxland is 96 units at a price of $52. If they were to buy at the world price of $45, they would benefit;
= (96 * 52) - (96 * 45)
= 4,992 - 4,320
= $672
Producers however would produce the following at a price of $45;
Q S = -60 + 3P
= -60 + 3(45)
= 75 units
They would be supplying less units and be hurt.
Answer:
$119,500
Explanation:
Solution:
Recall that
The budgeted sales for Micro Miller company = $700,000,
Sales commissions of = 4%
The salary of sales manager = $80,000.
Now,
Since Budgeted Sales is $700,000
Then
sales commissions is calculated as follows:
Sales Commission=0.04*700000(A)= 28000
Thus,
Sales Manager's Salary(B) = $80,000
Hence,
The shipping expenses = 0.01*700000 = $7000
Miscellaneous selling expenses becomes
Fixed = 1000
Variable =3500 700000 * 0. 5 = 119500
