The determinants of price elasticity of demand generally include substitutability.
Rate Elasticity of demand = % alternate in quantity Demanded / % alternate in the fee. for example, if the amount demanded for a product will increase by 15% in response to a ten% discount in fee, the price elasticity of the call for would be 15% / 10% = 1. five.
Call for an amazing is stated to be elastic whilst the pliancy is extra than one. a very good with an elasticity of −2 has elastic demand because the amount falls two times as a good deal as the charge growth; an elasticity of −zero.5 has an inelastic call because the amount reaction is half of the fee boom.
Price elasticity measures the responsiveness of the amount demanded or furnished of an awesome to trade in its fee. it is computed as the share exchange in the amount demanded—or provided—divided by the percentage change in rate.
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determine the initial valuation of each asset samtech acquired in these transactions. determine the initial valuation of each asset, assuming that immediately after acquisition, samtech demolished the building. demolition costs were $250,000 and the salvaged materials were sold for $6,000. in addition, samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
The initial valuation of each asset Samtech acquired in these transactions:
Value to be capitalized = $4,000,000 + $16,000 + $5,000 + $4,000
Value to be capitalized = $4,025,000
Assets Fair value Total percentage Proportional value
1.Land $3,300,000 75% $2,475,000
2.Building $1,100,000 25% $275,000
Total $4,400,000 100 % $2,750,000
Working Notes :
For Land = ($3,300,000 ÷ $4,400,000) = 75%
For Building = ($1,100,000 ÷ $4,400,000) = 25%
Land Improvement = $82,000 + $40,000 = $122,000
Answer 2) The initial valuation of each asset, assuming that immediately after acquisition that Samtech demolished the building:
Entries Amounts
Purchase cost $4,000,000
Add: Title insurance $16,000
Add: Legal fees for drawing the contract $5,000
Add: State transfer fee $4,000
Add: Demolition cost $250,000
Add: Cleaning and grading cost $86,000
Less: Salvage material $6,000
Total Cost of land $4,355,000
Land Improvement = $82,000 + $40,000 = $122,000
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braden publicly praises his employees when they have achieved their goals. braden hopes this will increase the likelihood of goal achievement in the future. this is an example of
Bruce praising his employees publicly is an example of positive reinforcement that they have achieved their goals.
Describe the appearance of reinforcement.For illustration, praise is a type of reinforcement when it comes to rewarding a child for putting their toys away (the response). If praise is used to reinforce the desired behavior, the youngster will be more likely to repeat it in the future.
How does behavior modification work?Following a range of reactions, a person's behavior is reinforced. It involves compensating someone for carrying out the necessary conduct three, six, and finally merely two times.
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If a vendor that has been contracted for a project experiences an equipment problem, this is categorized as a _________ risk. a) deliverable; b) resource; c) schedule; d) budget
If a vendor that has been contracted for a project experiences an equipment problem, this is categorized as a resource risk. Correct answer: letter B.
This is because resource risks are often outside the organization's control and have a significant impact on the project, even if they are not directly related to the project itself.
What are resource risks in a project?There are a variety of resource risks that can impact a project, including:
availability of resourcesquality of resourcescost of resourcesIf a project is dependent on a specific resource, such as a particular type of equipment, and that resource is not available when needed, the project can be delayed.
If the resource is available but is not of the expected quality, the project may not meet its objectives. And if the resource is available but is more expensive than anticipated, the project may go over budget.
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a student is deciding whether to take an additional class or work extra hours. which amounts are relevant to this decision? (check all that apply.)
The amounts that are relevant to the decision the student wants to take on taking additional classes or work extra hours are:
Out-of-pocket costs Opportunity costs.What are out of pocket costs and opportunity costs ?Out of pocket costs are those costs that we pay for in actual cash. This means that when we pay out of pocket costs, we actually know the monetary value of what we paid for. This is quite different from opportunity costs which are costs we incur when we don't take one alternative, and instead take another alternative.
Opportunity costs are therefore not monetary event though they can be expressed as such. The out of pocket costs to the student would be the costs to take additional classes so these costs are relevant to the decision. Opportunity costs would be the costs of losing money from the working additional hours if one decides to take an additional class.
Options for this question are:
out-of-pocket costs sunk cost opportunity costsFind out more on out of pocket costs at https://brainly.com/question/27371207
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A clothes manufacturer has 10 yards of cotton material, 10 yards of wool material, and 6 yards of silk material. a pair of slacks requires 1 yard of cotton, 2 yards of wool, and 1 yard of silk. a skirt requires 2 yards of cotton, 1 yard of wool, and 1 yard of silk. the net profit on a pair of slacks is $3 and the net profit on a pair of skirt is $4. how many skirts and how many slacks should be made to maximize profit?
The skirts and slacks that should be made to maximize profit is 2 and 4 slacks respectively.
How to illustrate the information?From the information, the clothes manufacturer has 10 yards of cotton material, 10 yards of wool material, and 6 yards of silk material.
Let x = number of slacks
Let y = number of skirts.
Therefore, based on the information, the equation van be illustrated as:
x + 2y ≤ 10
x + y ≤ 6
This is subject to f = 3x + 4y
Solving this will give x as 4 and y as 2.
The number of skirts is 2 and slack is 4.
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Existing investors own 20% of a company, having purchased their Series A stake for $1 million. New Series B investors purchase 20% of the company for $2 million. The existing investors’ ownership share of the company is now __. a 10% b 16% c 18% d 14%
New investors purchase 18 percent of the company so existing investors' ownership will have the rest. Hence, option B is appropriate.
What is the meaning of investors?An investor is an individual who invests money with the hope of making a profit or gaining an advantage in the future (interest). The majority of the time, the investor buys some kind of property using these assigned funds.
An investor is any individual or some other organization (such as a business or deposit bonus) who invests money with the hope of making a profit.
You are a loan investor, You have invested in ownership if you purchase stock in a corporation. Your proportionate part of the company's profits will be deducted from the return you receive. The initial investment sum will continue to be correlated to the overall worth of the business.
Hence, option B is appropriate.
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Question 2 3 pts A real estate investment trust (REIT) O pays federal income taxes cannot use debt financing retains all of its earnings invests in mortgages or rental properties
possess real estate and derive at least 75% of its gross income by renting it out, paying interest on real estate-related mortgages, or selling it.
What is the REIT interest rate?
Three-year net lease The interest rate beta of 1.5 is significant for REITs. Accordingly, the yield on triple net yield REITs rises by 1.5% for every 1% increase in interest rates (based on the yield on the 10-year Treasury note).
Do REITs benefit from high interest rates?
The share prices of equities REITs have occasionally been impacted by rising interest rates and predictions of upcoming changes in monetary policy. However, increases in interest rates are frequently fueled by economic expansion, which could support future growth in REIT earnings and dividends.
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two months after a major application implementation, management, who assumes that the project went well, requests that an is auditor perform a review of the completed project. the is auditor's primary focus should be to:
Two months after a major application implementation, who assumes that the project went well, the IS auditor's primary focus should be to: review controls built into the system to assure that they are operating as designed.
Information system auditors conduct security audits, provide detailed reports on system effectiveness, and explain security issues. He or she is responsible for conducting general and application-related reviews of complex computer information systems.
What is the role of auditors?The role of the auditor or investigator is to provide a professional and independent opinion on these financial statements. An audit or audit of the association's financial statements can ensure greater accountability to members and ensure that all funds received by the organization are properly accounted for.
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If there is no specialization of resources in the production of milk and cream, the production possibilities curve for an economy that produces these two goods are: _______
straight and downward-sloping
The production possibilities curve for an economy that produces milk and cream is straight and downward-sloping if there is no specialization of resources in their production.
What is a production possibility curve?In economics, a production possibilities curve measures the maximum output of two goods with the same input.Any combination of the four production factors constitutes the input: labor, capital goods, natural resources (including land), and entrepreneurship.What Effect Does the Production Possibilities Curve Have on the Economy?The production possibilities curve depicts the various combinations of fixed-resource production volumes for two goods.It is assumed that when one commodity's production increases, so does that of another.Points on the production curve indicate that an economy does not produce at its comparative advantage, and production outside the curve is impossible.The right proportion of the goods that can be produced is shown on the production possibilities curve.The production possibilities curve for an economy that produces milk and cream is straight and downward-sloping if there is no specialization of resources in their production.
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on january 1 of this year, olive corporation issued bonds. interest is payable once a year on december 31. the bonds mature at the end of four years. olive uses the effective-interest amortization method. the partially completed amortization schedule below pertains to the bonds:
The interest expense of :
1st year = $3,717
2nd year = $3,702.573
3rd year = $3,687.39
How do you calculate an amortization balance?Start by dividing the loan's interest rate by 12 to obtain the monthly interest rate before calculating amortisation. Then, to calculate the interest for the first month, multiply the principle amount by the monthly interest rate. The main payment amount is then determined by deducting the first month's interest from the monthly payment.If you know the loan's monthly payment, creating an amortization schedule is rather simple. Take the total loan amount and multiply it by the interest rate starting in month one. Then, divide the result by 12 to obtain the monthly interest for a loan with monthly instalments.Learn more about amortization balance refer to :
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Which is the first step in setting a financial goal?
a. setting aside leftover income
b. reducing your spending
c. tracking your spending
d. starting a second source of income
Answer:
All four actually.
Explanation:
In order to reach a financial goal you need to:
1. Save Money
2. Set and manage a budget (usually a monthly budget listing all your known expenses works)
3. Track your spending, and keep managing your budget.
4. Reduce your spending. If you are trying to reach a goal, a great line of thinking is “Only buy what you Need, Not what you Want”
5. If you are trying to reach a set financial goal quickly, then yes, it makes sense to find a secondary source of income, such as a part time job, or start a selling site on EBay, for items you don’t use anymore, etc.
Answer: B. reduce your spending.
Explanation: by not spending money this will allow you to save money for your financial goal.
Although the salesperson will be dealing with the contact, it is extremely important for the salesperson to gain some information on the contact's company prior to making the sales call.
True
False
true
The answer is true. The salesperson is in charge of greeting clients, pointing them in the direction of the goods they require, and tally up transactions. You need to be a great communicator if you want to succeed in sales.
A successful salesperson achieves sales goals while being courteous and helpful to consumers. There are three categories into which all salesmen can be placed: The salesperson for goods. The salesperson for prices. The salesperson for solution value. A skilled salesperson can provide communicator with more than just an interesting pitch; they are positive, resilient individuals who take the time to understand their clients' needs, exhibit empathy, and deal in a product with confidence.
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How do employee surveys benefit companies?.
Increased Retention Employers must perform employee engagement surveys to identify those who are most likely to quit the company early in order to reduce high turnover.
Explain about the Increased Retention?The percentage of people who continue to use your product or service over a specified time period is determined by the retention rate, an important indicator. A high retention rate indicates that your present consumers value your product and are a reliable source of ongoing income.
When a company or product has a high customer retention rate, it means that customers maintain using or purchasing the good or service. When a company or product has a low customer retention rate, customers stop using or buying that product or service.
Profits can rise by up to 95% when you enhance retention by only 5%. Customers are motivated to make purchases from brands they believe in.
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Which economic system relies most strongly on profit to motivate economic behavior.
Many people think of capitalism as an economic system in which private individuals own and control property according to their own interests and where supply and demand are allowed to freely set market prices in a way that can best serve the interests of society.
What is capitalism?An economy with a capitalist structure has its means of production owned privately and operated for profit. Capital accumulation, competitive markets, the price system, private property, recognition of property rights, voluntary exchange, and wage labor are key aspects of capitalism. In a market economy, owners of wealth, property, or the capacity to move capital or the ability to produce are the ones who decide on investments and decisions, whereas the competition in the markets for goods and services is largely responsible for setting prices and determining how things are distributed. Numerous viewpoints have been used in the analysis of capitalism by economists, historians, political economists, sociologists, and others. Different manifestations of capitalism have been seen in daily life. Among them are anarcho-capitalism, state capitalism, welfare capitalism, and laissez-faire or free-market capitalism.
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A woman has a total of $ 9 , 000 to invest. she invests part of the money in an account that pays 9 % per year and the rest in an account that pays 11 % per year. if the interest earned in the first year is $ 890 , how much did she invest in each account?
The final answer is 750 dollars. Simple interest could be a fast and simple technique of shrewd the interest charge on a loan. Interest is set by multiplying the daily rate by the principal by the amount of days that glide by between payments.
The rest of 9000-6000 = 3000 dollars is invested at 9%. Check, 0.08*6000 + 0.09*3000 = 480 + 270 = 750 dollars
Generally, interest paid or received over a precise amount may be a mounted proportion of the principal quantity that was borrowed or Lententide. Interest accrues and is side to the accumulated interest of previous periods, thus borrowers should pay interest on interest likewise as principal.
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A monopolist deciding to engage in price discrimination wants to keep the quantity produced the same (or close to the same) because which of the following is true?
A Revenue will automatically go down with price discrimination.
B Marginal revenue will be greater than price at that point.
C Costs will decrease with an increase in quantity.
D Costs will increase with an increase in quantity.
Answer: D
Option D Costs will increase with an increase in quantity.
Charge discrimination is a microeconomic pricing approach in which equal or largely comparable items or services are bought at distinctive charges through an identical company in one-of-a-kind markets.
Price discrimination is a selling method that fees customers one-of-a-kind fees for the same products or services primarily based on what the vendor thinks they could get the purchaser to agree to. In pure rate discrimination, the seller fees every customer the most charge they may pay.
First-diploma rate discrimination includes promoting a product at the exact rate that each customer is inclined to pay. 2nd-degree rate discrimination objectives corporations of clients with lower costs made viable through bulk shopping. There are 3 kinds of price discrimination: first-diploma or perfect price discrimination, 2d-diploma, and third-degree.
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question mode multiple choice question the presence of unions tends to multiple choice question. push wages up even for non-unionized workers. push wages up only for unionized workers. push wages down for unionized workers push wages down for non-unionized workers.
Push wages up even for non-unionized workers.
What means non unionized employees?Each Employee who was working for the Company immediately before the Closing and whose employment conditions were not governed by a collective bargaining agreement is referred to as a non-union employee. An employee who is not a member of a union is referred to as a non-union employee.A non-union workplace is one where employees do not organise organisations or make requests on behalf of the whole workforce. The employer or corporate management has the authority to impose rules at work.A strikebreaker is someone who continues to work during a strike (also known as a scab, blackleg, or knobstick). Strikebreakers are often people who were not working for the company before to the labour dispute but were hired following or during the strike to keep the business operating.Learn more about non unionized employees refer to :
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A reporter collected data on the purchase prices, in thousands of dollars, of 72 cars sold in a region. The following histogram summarizes the reporter's data.
For a presentation on the data collected, the reporter used the median of the distribution to describe the typical purchase price. Which of the following might explain the use of median to describe the typical purchase price?
Between $80,000 and $85,000, there is an outlier. Means are not immune to outliers, but medians are.
How do you define medians?
The middle number in a sorted series of numbers is referred to as the median in mathematics. Ordering the numerals reveals the center one. In descending sequence, the numbers are listed. The middle number, when the numbers are arranged, is referred to as the data set's median.
Why is median significant?
A useful way to determine where a dataset is in the middle is to use the median. You may gain a sense of a dataset's distribution by comparing both median and mean. The dataset is almost uniformly scattered from the mean if both mean and median are equal.
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What do you understand by information?.
Knowledge by study, communication, research, or education is referred to as information.
What is information and examples?Information is defined as data that is understood, organised, organised, or displayed in a manner that is understandable or is meaningful. Information gives data context. For instance, with out information that makes the dates important, a list of dates, or data, is worthless (dates of holiday).
What is information easy answer?Knowledge by study, communication, research, or education is referred to as information. Information is, in essence, the outcome of the analysis and interpretation of data. Information is the interpretation of such pieces of knowledge, while data is the specific figures, numbers, or graphs.
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What are the 3 things a business plan should do?.
A business plan is an important written document that describes and summarizes the future of your company.
What are the three major purposes of business plan?A Business Plan's purpose is to identify, describe, and analyze a business opportunity or an existing business, examining its technical, economic, and financial feasibility.A business plan's three primary goals are to1) Develop an effective growth strategy.
2) Determine your future financial needs.
3) Attract investors (including angel investors and VC funding) and lenders.
The executive summary is the most important section of the business plan, in my opinion. It must be brief, to the point, and well-written. Many of those who read your business plan will decide whether or not to continue reading based solely on the executive summary.To learn more about business plan refer to :
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recall financial outcomes that are commonly measured and used in the balanced scorecard framework. more than one answer may be correct.
Financial, Customer, Internal Process, and Learning and Growth are commonly measured and used in the balanced scorecard framework.
What is balanced scorecard framework ?A plan for successful organizational design. The balanced scorecard records both financial and non-financial metrics to assess an organization's success and identify when corrective action is required. It is a framework for strategic planning and performance monitoring.The structure of four main areas or viewpoints for strategy implementation—financial, customer, internal business, and innovation and learning—makes up the balanced scorecard's core. In order for the business to be financially successful, the financial viewpoint inquires as to how the organisation should seem to shareholders.Companies should define goals for time, quality, performance, and service before translating these goals into precise measurements in order to implement the balanced scorecard .Learn more about balanced scorecard framework refer to :
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DFA techniques can help quantify which of the following?
The best location and method for assembly
Tolerance needed for assembly
Assembly time
Ease of assembly
Manufacturing cost
The skills required for assembly
DFA technique quantifies the Assembly time and Manufacturing cost.
DFA:
DFA refers a set of practices and principles that seek to tailor the conceptual and design phases of product development to the given manufacturing method and in such a way that ensures the ease and cost-effectiveness of production
Given,
Here we need to find the DFA technique that helps to quantifies which of the options.
As per the definition of DFA technique, DFA alias Design for assembly (DFA) is a process by which products are designed with ease of assembly in mind.
So, if a product contains fewer parts it will take less time to assemble, thereby reducing assembly costs.
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a car manufacturing company loses 40% of its market share and has a declining investment in new product development.
Market share represents the proportion of an industry, or a market's total sales, that is earned by means of a precise company over a specified time period.
Market share is calculated via taking the company's income over the period and dividing it by way of the total income of the enterprise over the equal period.
What is an instance of market share?If a business promoting $20 million's worth of a product in one year, and the whole market is well worth $40 million, the brand's market share would be 50%.
How do you determine market share?A company's market share is its income measured as a percentage of an industry's complete revenues. You can decide a company's market share through dividing its total income or revenues by way of the industry's total sales over a fiscal period. Use this measure to get a widespread idea of the dimension of a agency relative to the industry.
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https://brainly.com/question/15530466#SPJ4krugman argues that strategic trade policy should not be embraced because many times governments are influenced by politically important blank to intervene in the economy.
According to Krugman, strategic trade policy should be avoided since governments are usually convinced to interfere in the market by potentially powerful interest groups.
What are interest groups?A special interest group is a community within a larger organization that has a common goal of advancing a particular field of knowledge, learning, or technology. Members work together to influence or produce solutions in their particular field and may communicate, gather in person, and plan conferences.Strategic trade policy, according to Krugman, should be avoided since governments are frequently persuaded to intervene in the economy by potentially significant interest groups.A Common Interest Group is designed to promote organic and flexible group interactions among people who have similar interests in the same fields of study or work.Therefore, according to Krugman, strategic trade policy should be avoided since governments are usually convinced to interfere in the market by potentially powerful interest groups.
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Complete question:
Krugman argues that strategic trade policy should not be embraced because many times governments are influenced by potentially important _____ to intervene in the economy.
which aspects of job satisfaction do the workers seem most dissatisfied with? think of the nine common job satisfaction facets to identify the source(s) of low job satisfaction (table 9.1 on page 217 in your book).
Some of the areas of job satisfaction that employees appear to be least satisfied with include low pay, an unsupportive or unreliable employer, and little room for career advancement.
What is job satisfaction?A worker's level of contentment with their job, including whether they enjoy all aspects of it or just certain parts, such as the nature of the work or the supervision, is measured by their job satisfaction, employee satisfaction, or work satisfaction.
Cognitive (or evaluative), affective (or emotional), and planned behavior can all be used to quantify job satisfaction. The extent to which job satisfaction reflects the job's feelings (affective job satisfaction) or thoughts about the job varies, according to researchers (cognitive job satisfaction).
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which factors may influence a company's choice of inventory cost flow assumption? (select all that apply.)
The following factors may influence a company's choice of inventory cost flow assumption:
tax implications of choicefinancial statement effectactual physical flow of inventoryWhat is inventory cost?Inventory costs include all costs associated with ordering, holding, and managing inventory or inventories for a product-based business.Total inventory costs often fall into three categories: Order costs, storage costs, inventory costs.Warehousing costs include the costs of storing, transporting, and handling inventory, as well as the labor costs associated with these processes. This also includes taxes, insurance, item replacement, depreciation, and opportunity costs.To calculate your inventory holding cost, divide your inventory holding total by your total inventory value and multiply by 100 to get a percentage of your total inventory value. The total inventory value is the inventory cost multiplied by the available inventory.To learn more about inventory cost from the given link :
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Which of the following core property types includes buildings designed for the temporary storage of goods such as inventory, company records, and excess raw materials?
A) apartment
B) industrial
C) office
D) retail
B
(B) Industrial property includes building designed for the temporary storage of goods such as inventory, company records, and excess raw materials.
What is Industrial property?
All land and structures that house industrial activities like production, manufacturing, assembly, warehousing, research, storage, and distribution are collectively referred to as industrial real estate.
In order to prevent the activity on these sites from interfering with companies or residences, each city has particular areas designated for industrial properties that are depicted on a zoning map.
Any commercial building will have a class grade associated with it, such as Class A, Class B, or Class C.
Class A buildings are often the most recent and highest-caliber buildings on the market.
Class B homes are typically older structures, though they can also be brand-new structures without all the frills.
Class C properties are structures that are often 20 years old or older, have numerous unresolved maintenance issues, and occasionally are situated in undesirable neighborhoods.
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asset w has an expected return of 15.7 percent and a beta of 1.75. if the risk-free rate is 3.3 percent, what is the market risk premium?
The market risk premium is 14.12. A market risk premium in finance and economic is used to measure how much the level of risk.
A risk premium means a measure of excess return that is used by an individual to compensate being subjected to an improved degree of risk. A risk premium is the common definition being the expected risky return less the risk-free return.
To find the amount of risk premium, we can calculate it use beta of the stock formula:
Beta of the stock = (expected return - risk-free rate) ÷ risk premium
Because we need the amount of risk premium, then it will be:
Risk premium = Beta of the stock/(expected return - risk-free rate)
Risk premium = 1.75/(15.7% - 3.3 percent)
Risk premium = 1.75/(0.157 - 0.033)
Risk premium = 1.75/0.124
Risk premium = 14.12
Thus, the market risk premium is 14.12.
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The following best describes the depreciation method used in MACRS-GDS. Declining Balance switching to a Straight Line Declining Balance only Straight Line only Straight Line switching to Declining Balance
Depreciation method used in MACRS-GDS is Declining Balance only.
In the United States, the depreciation method utilized for tax reasons is called the modified accelerated cost recovery scheme (MACRS). The capitalized cost of an item may be recouped over a predetermined time via annual deductions under MACRS depreciation. The MACRS system divides fixed assets into classes with predetermined periods of depreciation.
Depreciation, according to the Internal Revenue Service (IRS), is a tax deduction that enables a firm to recoup the cost basis of particular assets. Deprecation is a yearly provision for a piece of property's wear and tear, deterioration, or obsolescence. Depreciable assets are mostly tangible ones. Similar to tangible assets, intangible assets like patents and copyrights are depreciable.
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Phoenix Motors wants to lock in the cost of 10,000 ounces of platinum to be used in next quarter's production of catalytic converters. It buys three-month futures contracts for 10,000 ounces at a price of $1,310 per ounce.
Suppose the spot price of platinum falls to $1,205 in three months' time, answer the following:
a-1. Calculate the profit or loss on the futures contract. (Enter the amount as a positive value.)
a-2. What is the total cost to Phoenix of buying the platinum?
Suppose the spot price of platinum increases to $1,455 after three months, answer the following:
b-1. Calculate the profit or loss on the futures contract. (Enter the amount as a positive value.)
b-2. What is the total cost to Phoenix of buying the platinum?
If Phoenix Motors buys three-month Futures Contract from its suppliers, suppose that the spot price of platinum falls to $1,205 in the three months' time:
Phoenix Motors will record $1,050,000 loss. The total cost to Phoenix of buying the platinum is $13,100,000Suppose that the spot price of platinum increases to $1,455 after three months' time:
Phoenix Motors will save $1,450,000 profitsThe total cost of Phoenix of buying the platinum is $13,100,000Future Contract is a legal agreement between 2 companies to buy or sell a particular commodity asset at a predetermined price at the specific time in the future. Future contract is a standardized contract and regulated under law.
Based on the future contract made between Phoenix Motors and its supplier, Phoenix Motors will purchase 10,000 ounces of platinum at a price of $1,310 per ounce. Phoenix Motors will have to purchase the platinum at the predetermined price regardless of the platinum price fluctuation in the future.
The total cost for Platinum Motors to purchase the platinum is:
TC = Q x P
TC = 10,000 x $1,310
TC = $13,100,000
Scenario 1If there is a fluctuation in the platinum's price and the price falls to $1,205 per ounce then Phoenix Motors will have to purchase the platinum at the predetermined price $1,310 per ounce and record loss.
The price that Phoenix Motors has to pay without Future Contract is:
TC' = Q x P
TC' = 10,000 x $1,205
TC' = $12,050,000
The loss recorded by Phoenix Motors because of the future contract is:
ΔTC = TC' - TC
ΔTC = $12,050,000 - $13,100,000
ΔTC = $1,050,000 (loss)
Scenario 2If there is a fluctuation in the platinum's price and the price rises to $1,455 per ounce then Phoenix Motors will have to purchase the platinum at the predetermined price $1,310 per ounce and save profits.
The price that Phoenix Motors has to pay without Future Contract is:
TC' = Q x P
TC' = 10,000 x $1,455
TC' = $14,550,000
The profits recorded by Phoenix Motors because of the future contract is:
ΔTC = TC' - TC
ΔTC = $14,550,000 - $13,100,000
ΔTC = $1,450,000 (profit)
Learn more about Future Contract here: https://brainly.com/question/29240253
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