Answer:
What would induce the investor to purchase the corporate stock is a rate of return that is significantly higher than 3.5% of a risk-free government bond.
Explanation:
A high-risk investment can be described as an investment in which the level of risk is high and the probability of losing a significant portion or all of the money invested is high. As a result, underperformance is more likely in high-risk Investments than in other types of investments.
According to one of the principles of finance, the only incentive for inventors to invest in high-risk investment is the rate of return that is significantly higher than the rate of return of risk-free investments.
Therefore, what would induce the investor to purchase the corporate stock is a rate of return that is significantly higher than 3.5% of a risk-free government bond.
Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000, of which $24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:
Answer:
Debit Work in Process Inventory $140,000
Debit Factory Overhead $24,000
Credit Raw Materials Inventory $164,000.
Explanation:
Preparation of The journal entry to record the issuance of materials to production
Based on the information given The journal entry to record the issuance of materials to production is:
Debit Work in Process Inventory $140,000
($164,000-$24,000)
Debit Factory Overhead $24,000
Credit Raw Materials Inventory $164,000
(To record the issuance of materials to production)
Carmel Corporation is considering the purchase of a machine costing $47,000 with a 7-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment
Answer:
$23,500
Explanation:
The average accounting rate of return is the rate of return on the investment in the project considering the average annual net income and the average amount of investment made in the project.
In other words, it is the average annual net income expressed as a percentage of the average investment as shown below
average accounting rate of return =average annual net income / average investment.
average investment=(initial capital outlay+book value of the project at end of useful life)/2
initial capital outlay=$47,000
book value of the project at end of useful life=$0
average investment=($47,000+$0)/2
average investment=$23,500
California laws requires that renters be paid interest on their security deposits. You are considering renting a one bedroom uni at The Sterling Heights Apartments, where a $1,500 security deposit is required. You plan to live there about three years. If you expect 2 percent a year how much interest should you expect to receive when you move out in three years
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations:Selling price 156 Units in beginning inventory 0Units produced 9,500Units sold 9,100Units in ending inventory 400 Variable costs per unit: Direct materials 29Direct labor 71Variable manufacturing overhead 17Variable selling and administrative expense 21Fixed costs: Fixed manufacturing overhead 142,500Fixed selling and administrative expense 9,900What is the net operating income for the month under absorption costing?a. $35,400
b. $11,400
c. $17,400
d. $6,000
Answer:
c. $17,400
Explanation:
The computation of the net operating income under absorption costing is given below:
unit product cost under Absorption costing
direct materials $29
direct labor $71
variable manufacturing overhead $17
fixed manufacturing overhead ($142,500 ÷ 9,500) $15
unit product cost $132
Now
Sales (9,100 × 156) $1,419,600
less:Variable cost of good sold (9,100 × 132) $1,201,200
Gross profit $218,400
Selling and administrative expense
variable selling expens (9,100 × 21) $191,100
Fixed selling & adm expense $9,900
Net operating income $17,400
Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,200. The division sales for the year were $963,800 and the variable costs were $477,000. The fixed costs of the division were $529,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:__________.
a. $275,200 increase
b. $486,800 decrease
c. $211,600 increase
d. $275,200 decrease
e. $486,800 increase
Answer:
d. $275,200 decrease
Explanation:
Calculation to determine what The impact on Granfield's operating income for eliminating this business segment would be:
Using this formula
Impact on operating income =Saving in relevant fixed cost -loss of Contribution margin of backpack Division
Let plug in the formula
Impact on operating income=($529,000*40%)-($963,800-$477,000)
Impact on operating income=$211,600-$486800
Impact on operating income=$275,200 decrease
Therefore The impact on Granfield's operating income for eliminating this business segment would be:$275,200 decrease
Using the following accounts and an overhead rate of 70% of direct labor cost, determine the amount of applied overhead.
Work in Process Inventory
Beginning WIP 23,900
Direct Materials 71,700
Direct Labor ?
Applied Overhead ?
To Finished Goods
Ending WIP 39,190
Finished Goods Inventory
Beginning FG 5500
150610
Ending FG
Answer:
the applied overhead is $38,788.24
Explanation:
The computation of the amount of overhead applied is given below:
0.70 ÷ 1.70 × applied overhead + $23,900 + $71,700 = $39,190 + $150,610
0.70 ÷ 1.70 × applied overhead = $94,200
applied overhead is
= $38,788.24
Hence, the applied overhead is $38,788.24
A company uses the weighted average method for inventory costing. During a period, Department B finished and transferred 62,000 units to Department C. Also in Department B during the period, 16,000 units were started but brought only to a stage of being 60% completed. The number of equivalent units produced by Department B during the period was:_____.a. 60,000 units.
b. 55,000 units.
c. 62,500 units.
d. 67,500 units.
e. 47,500 units.
Answer:
Total Equivalent units of production= 71,600 units
Explanation:
The weighted average method blends the costs and units of the previous period with the costs and units of the current period.
Units completed in the period + Equivalent units in ending inventory WIP (units*%completion) = Equivalent units of production
Equivalent units of production:
Units completed in the period= 62,000
Equivalent units in ending inventory WIP= (16,000*0.6)= 9,600
Total Equivalent units of production= 71,600 units
All of the following are symptoms of organizations struggling with strategy disconnect and unclear priorities EXCEPT Multiple Choice inadequate resources. people are working on multiple projects and feel inefficient. frequent conflicts between managers. confused employees regarding which projects are more important. not enough projects within the portfolio to make a profit.
Answer:
All of the following are symptoms of organizations struggling with strategy disconnect and unclear priorities EXCEPT
not enough projects within the portfolio to make a profit.
Explanation:
Strategy disconnect does not support an organization to be consistent in its actions at every level. However, where the strategy is shared across board, there is an integrated and coordinated attempt at long-term planning with the organization positioned to exceed the needs of its customers and to achieve success. With strategy connect, the organization responds well to changes in its external environment and is able to allocate scarce resources for the improvement of its competitive position.
To balance the trade-off between speed and distance in ADSL, most ADSL service providers have chosen a T1 level of ADSL, and offer it under the trademarked name of _________ ADSL
Incomplete question. The missing option read;
a. CA*net 3
b. DOCSIS
c. G.Lite
d. OE
e. UCAID
Answer:
c. G.Lite
Explanation:
Remember, the term ADSL stands for, Asymmetric Digital Subscriber Line (ADSL), a telco-enabled service for digital communication.
Indeed, because of the shortcomings of a normal ADSL connection, ADSL service providers often chose to use G.Lite since it does not require a voice-data splitter to split the voice and data signals coming from a communication line, by so doing they are able to balance the trade-off between speed and distance in ADSL.
The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 15,000 utensils at $0.90 each. Arthur sells its utensils wholesale for $1.00 each; the average cost per unit is $0.96, of which $0.14 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits
Answer:
$1,200
Explanation:
Since Arthur Company is producing below its capacity, it means it does not have to increase in plant capacity, I mean fixed costs in order to fulfil the special order, hence, in determining the increase in operating profits, we would only consider variable costs.
average cost per unit=variable cost per unit+fixed cost per unit
$0.96=variable cost per unit+$0.14
variable cost per unit=$0.96-$0.14
variable cost per unit=$0.82
Increase in operating profits=(special order price-variable cost per unit)*quantity of special order
special order price=$0.90
variable cost per unit=$0.82
quantity of special order=15000 utensils
Increase in operating profits=($0.90-$0.82)*15000
Increase in operating profits=$1,200
Human Resource Management (HRM) takes a strategic approach in developing and maintaining a qualified workforce to gain a competitive advantage. The role of a Human Resource Manager in the strategic process is to focus on the specific areas that will contribute to the overall effectiveness of the organization. If you were an HR Manager, on which would you focus
Answer:
Explanation:
If I were a HR manager, I would like to focus on work-life balance for all employees.
Work-life balance is the lack of opposition between work and other life roles.
It is the state of equilibrium in which demands of personal life, professional life, and family life are equal. It can benefit organization in long run by-
1. Increase productivity
2. Lower absenteeism
3. A happier, less stressed workforce
4. Improvements in employee health and well being
5. A more positive perception of an employer
6. Greater employee loyalty, commitment and motivation
7. Creates healthy-work environment
8. Employers or managers can save money by reducing costs
When employees are satisfied with the organization and organization wants them to work ethically and they can easily accept that; and work ethically and socially responsible to the needs of society. Proper and regular training can develop skill-set of employees. These are also important for HR manager to focus but he or she should first start with satisfy employees and build trust among them for the organization.
Fresh Veggies, Inc. (FVI), purchases land and a warehouse for $450,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker's commission, $25,000; title insurance, $1,500; and miscellaneous closing costs, $5,200. The warehouse is immediately demolished at a cost of $25,000 in anticipation of building a new warehouse. Determine the amount FVI should record as the cost of the land
Answer:
$506,700
Explanation:
Calculation to determine the amount FVI should record as the cost of the land
Purchases land and a warehouse for $450,000
Add Commission $25,000
Add Title insurance $1,500
Add Miscellaneous closing costs $5,200
Add Demolished cost $25,000
Cost of the land $506,700
Therefore the amount FVI should record as the cost of the land is $506,700
Nathan and Diana are married and have three married children and seven minor grandchildren. For tax year 2020, what is the maximum amount they can give to the family (including the sons- and daughters-in-law) without using any of their unified transfer tax credit
Answer:
Maximum amount that can be given to family (including the sons- and daughters-in-law) without using unified transfer tax credit is $390,000.
Explanation:
Given the data in the question;
Nathan and Diana are married and they have 3 married children, meaning Nathan and Diana also have 3 daughters/sons in law married to their children. In addition, they have 7 minor grand children.
Number of donees will be ⇒ 3 + 3 + 7 = 13
Now, we know that; The annual gift tax exclusion for 2019-2020 is $15,000 per donee or individual for every tax payer while that of married couple is $30,000.
Meaning Nathan and Diana can give $30,000as a gift to each of their family members without using any of their unified transfer tax credit.
Hence,
Maximum amount that can be given to family (including the sons- and daughters-in-law) without using unified transfer tax credit will be;
⇒ 13 × $30,000
= $390,000.
Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $23.80 per pound and costs $15.00 per pound to produce. Product D would sell for $44.55 per pound and would require an additional cost of $11.75 per pound to produce. The differential cost of producing Product D is
Answer:
$20.75
Explanation:
Calculation to determine what The differential cost of producing Product D is
Using this formula
Differential cost =Revenue from sale of product D−Revenue from sale of product J
Let plug in the formula
Differential cost =$44.55−$23.80
Differential cost =$20.75
Therefore The differential cost of producing Product D is $20.75
A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is
Answer:
The amount allocated to cost of goods sold for July is $2,070.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Olympus Climbers Company has the following inventory data:
July 1 Beginning inventory 30 units at $19 $570
7 Purchases 105 units at $20 2100
22 Purchases 15 units at $22 330
$3000
A physical count of merchandise inventory on July 30 reveals that there are 48 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is
The explanation of the answers is now provided as follows:
Last in, first out (LIFO) inventory method refers to a method under which the costs of the costs of the most recent goods purchased or manufactured are expensed first.
Thereforee, the amount allocated to cost of goods sold for July can be calculated as follows:
Total units available for sales = 30 + 105 + 15 = 150 units
Units sold = Total units available for sales - Units on hand on July 30 = 150 - 48 = 102 units
Cost of goods sold for July = Value of 15 units July 22 purchases + (87 units * Cost per units of purchases on July 7) = $330 + (87 * $20) = $330 + $1,740 = $2,070
Therefore, the amount allocated to cost of goods sold for July is $2,070.
A stock will pay no dividends for the next 5 years. Then it will pay a dividend of $5 growing at 2%. The discount rate is 10%. What should be the current stock price?
Answer:
$38.81
Explanation:
The value of the stock is the present value of its future divided payments, bearing in mind that the first dividend is payable six years from,hence, the present value of dividend in year 5( a year before its payment) is then computed thus:
PV of dividend at the end of year 5=expected dividend/discount rate-growth rate
expected dividend in year 6=$5
discount rate=10%
growth rate=2%
PV of dividend at the end of year 5=$5/(10%-2%)
PV of dividend at the end of year 5=$62.50
We need to discount the PV backward by 5 years to show the stock value today
the current stock price=$62.50/(1+10%)^5
the current stock price= $38.81
Consider a Cournot duopoly with the following inverse demand function: P = 96 - 2Q1 - 2Q2, where Q1 and Q2 are quantities produced by firms 1 and 2, respectively. The firms' marginal cost are identical and given by MCi(Qi) = 2Qi, where i is either firm 1 or firm 2. Based on this information firm 1 and 2's reaction functions are:_____.
a. MR1(Q1, Q2) = 100-2Q1-Q2 and MR2(Q1, Q2) 100-Q1-2Q2.
b. MR1(Q1, Q2) = 100-4Q1-2Q2 and MR2(Q1, Q2) = 100 - 2Q1 - 402.
c. MR1(Q1, Q2) = 100 - 2Q1 - 4Q2 and MR2(Q1, Q2) = 100 - 4Q1 - 2Q2.
d. MR1(Q1, Q2) = 24.5 - 0.5Q2 and MR2(Q1, Q2) = 24.5 - 0.5Q1.
Two identical firms compete as a Cournot duopoly. The demand they face is P = 90-Q. The cost function for each firm is C(Q_i) = 6Qi. Each firm earns equilibrium profits of:_____.
Answer: See explanation
Explanation:
The revenue - firm 1 will be:
= P x Q1
= 100Q1 - 2Q1² -2Q1Q2
Then, marginal revenue MR1 will be:
= dR1/dQ1
= 100 - 4Q1 -2Q2
Similarly, the revenue for firm 2 will be:
= P x Q2
= 100Q2 - 2Q2² -2Q1Q2
Then, MR2 will be:
= 100 - 4Q2 - 2Q1
Therefore, MR1(Q1, Q2) = 100-4Q1-2Q2 and MR2(Q1, Q2) = 100 - 2Q1 - 402.
Option B is the correct answer.
P = 90 - Q
Q = Q1 + Q2
The revenue for firm 1 (R1) will be:
= PQ1
= 90Q1 - Q1² - Q2Q1
The marginal revenue MR1 will be:
= 90 - 2Q1 - Q2
The marginal cost MC is:
= dC/dQ
= 6
Since profit is maximized when MR = MC, this will be:
90 - 2Q1 - Q2 = 6
- 2Q1 - Q2 = 6 - 90
- 2Q1 - Q2 = - 84
2Q1 + Q2 = 84
3Q = 84
Q1 = Q2 = 28
Therefore,
P = 90-Q.
P = 90 - (Q1 + Q2)
P = 90 - (28 + 28)
P = 90 - 56
P = 34
Then, the equilibrium profit will be:
= Total revenue - Total cost
= (34 × 28) - (6 × 28)
= 952 - 168
= 784
What is the purpose of an inspection report
Hayward Industries manufactures dining chairs and tables. The following information is available: Dining Chairs Tables Total Cost Machine setups 200 600 $48,000 Inspections 250 470 $72,000 Labor hours 2,600 2,400 Hayward is considering switching from one overhead rate based on labor hours to activity-based costing. Perform the following analyses for these two components of overhead: Compute total machine setups and inspection costs assigned to each product, using a single overhead rate.
Answer and Explanation:
The computation is shown below:
Single overhead rate is
= total cost ÷ total labor hours
= ($48000 + $72000 ) ÷ (2600+2400)
= 24 per labour hour
Now
Dining chairs
= 2600 × 24
= $62400
And,
tables
= 2400 × 24
= $57600
total = $120000
One reason IT is important is because video conferencing has become cheaper, quicker, more collaborative, and more efficient. Of what IT benefit is this an example
Answer:
Communication
Explanation:
Communication
This is simply defined as information exchange or simply say the sharing of thoughts, messages, or information, by speech, signals, writing, or behavior etc.
Communication Technology
This is simply an act or form of communication that involves the use of technical equipment.
Input devices
This are used to enter information into a communication technology system; it includes the keyboard, microphone, a television camera etc.
Output
This are used in getting information or messages out using communication systems devices such as TV, speakers, computer monitor, etc.
Information
This are said to be data that has been sorted and arranged with a particular mindset.
In communication, due to the internet and mobile technologies, we can communicate with anyone in the world and form relationships with people who are some distance away, rather than being limited to people within our physical vicinity. This has some great benefits for both work and home life.
The index weighting that results in portfolio weights shifting away from securities that have increased in relative value toward securities that have fallen in relative value whenever the portfolio is rebalanced is most accurately described as:_________
a) float-adjusted market-capitalization weighting.
b) fundamental weighting.
c) equal weighting.
Answer: B. Fundamental weighting.
Explanation:
A fundamentally weighted index refers to a type of equity index whereby the components that are chosen based on the fundamental criteria like the dividend rates, book value, revenue, dividend rates, etc.
Fundamental weighting is the index weighting which results in portfolio weights shifting away from securities that have increased in relative value toward securities that have fallen in relative value whenever the portfolio is rebalanced.
Amount of
Invoice
Terms of
Sale
Partial
Payment
Credit for
Partial Payment
Net
Amount Due
$5,998.20
4/15, n/60
$3,100
$
$
Answer:
Credit partial payment is "$3229.17" and Net amount due is "$2769.03".
Explanation:
Given:
Invoice,
= $5998.20
Sales terms,
= 4/15, n/60
Partial payment,
= $3100
The credit partial payment will be:
= [tex]\frac{Partial \ payment}{1-Discount}[/tex]
= [tex]\frac{3100}{1-0.04}[/tex]
= [tex]\frac{3100}{0.96}[/tex]
= [tex]3229.17[/tex] ($)
The due net amount will be:
= [tex]5998.20-3229.17[/tex]
= [tex]2769.03[/tex] ($)
XYZ Co. uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. It based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $440,000, variable manufacturing overhead of $2.20 per machine-hour, and 50,000 machine-hours. The estimated total manufacturing overhead is closest to:
Answer:
the estimated total manufacturing overhead is $550,000
Explanation:
The computation of the estimated total manufacturing overhead is given below:
= Fixed manufacturing overhead + variable manufacturing overhead
= $440,000 + $2.20 × 50,000 machine hours
= $440,000 + $110,000
= $550,000
hence, the estimated total manufacturing overhead is $550,000
Suppose a stock had an initial price of $56 per share, paid a dividend of $1.60 per share during the year, and had an ending share price of $66. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Answer: 20.71%
Explanation:
The percentage total return will be calculated as follows:
= (Ending price + Dividend - Initial price) / Initial price
= ($66 + $1.60 - $56) / $56
= $11.60 / $56
= 0.2071
= 20.71%
Therefore, the percentage total return is 20.71%
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.
March 1 Issues 50,000 additional shares of $1 par value common stock for $47 per share.
May 10 Purchases 4,500 shares of treasury stock for $50 per share. June 1 Declares a cash dividend of $1.25 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Resells 2,250 shares of treasury stock purchased on May 10 for $55 per share.
Required:
Record each of these transactions
Answer:
See the journal entries below.
Explanation:
Each of these transactions can be recorded in the journal as follows:
Date Particulars Debit ($) Credit ($)
Mar 1 Cash (50,000 * $47) 2,350,000
Common stock 50,000
Additional Paid-in Capital 2,300,000
(To record Issue of 50,000 additional shares for $47 per share.)
May 10 Treasury stock (4,500 * $50) 225,000
Cash 225,000
(To record Purchase of 4,500 shares of treasury stock)
Jun 1 Dividend (w.1) 181,875
Dividend payable 181,875
(Record dividend declared.)
Jul 1 Dividend payable 181,875
Cash 181,875
(Record dividend paid.)
Oct 21 Cash (2,250 * $55) 123,750
Treasury stock (2,250 * $50) 112,500
Additional Paid-in Capital 11,250
(To record resale of shares of treasury stock.)
Working:
w.1. Dividend = Dividend per share * (Shares of common stock outstanding as of the beginning of 2018 + Additional shares issued on March 1 - Shares of treasury stock purchased on May 10) = $1.25 * (100,000 + 50,000 - 4,500) = $181,875
Melinda Stoffers owns and operates ABC Print Co. During February, ABC incurred the following costs in acquiring two printing presses. One printing press was new, and the other was purchased from a business that recently filed for bankruptcy. Indicate which costs incurred in acquiring the new printing press that should be debited to the asset account.
a. Fee paid to factory representative for installation
b. Freight
c. Insurance while in transit
d. New parts to replace those damaged in unloading
Answer:
The answer is below
Explanation:
a. Fee paid to factory representative for installation - DEBITED to Asset account
b. Freight - DEBITED to Asset account
c. Insurance while in transit - DEBITED to Asset account
d. New parts to replace those damaged in unloading - NOT DEBITED to Asset account
To understand which costs incurred in acquiring the new printing press should be debited to the asset account, it should be noted that "new parts to replace those damaged in unloading" does not lead to improvement in assets, hence, it should be considered as Expense instead of being devoted into the asset account.
What is the APR on a loan with an effective annual rate of 15.26% and weekly compounding of interest?
Answer:
14.22%
Explanation:
Assuming 52 weeks in a year
[tex](1+.1526)=(1+i)^{52}\\i=.002734892\\.002734892*52=.142214377[/tex]
Which rounds to about
14.22%
A money market security that has a par value of $10,000 sells for $8,924.70. Given that the security has a maturity of two years, what is the investor's required rate of return?
Answer:
The answer is "5%".
Explanation:
[tex]\to \$8,924.70 = \frac{10,000}{(1 + r )^2}\\\\\to \$8,924.70 (1+r)^2= 10,000\\\\\to (1+r)^2= \frac{10,000}{\$8,924.70}\\\\\to (1+r)^2= \frac{10,000}{\$8,924.70}\\\\\to (1+r)^2= 1.1204\\\\\to (1+r)= 1.05\\\\\to r= 1.05-1\\\\\to r=0.05\\\\\to r=5\%\\\\[/tex]
which of the following would be included in the set of electrical plans for individual residence?
A. Individual romex cables
B. Power panels to be installed
C. routes of cables
D. Wire sizes
Answer:
A. Individual romex cables
Explanation:
Individual romex cables would be included in the set of electrical plans for individual residence.
This is because they are a non-metallic sheathed cables, and they are flexible electrical cables which are popularly used in residential setups.
This cable comes with two insulated wires that include a ground copper wire that ensures safe passage of electrical current in case of any unfortunate event.
Along any downward sloping straight-line demand curve: Group of answer choices both the price elasticity and slope are constant. both the price elasticity and slope vary. the price elasticity varies, but the slope is constant. the slope varies, but the price elasticity is constant.
Answer:
the price elasticity varies, but the slope is constant
Explanation:
The demand curve is a curve that shows the relationship between price and quantity demanded. The demand curve is negatively sloped because the higher the price, the lower the quantity demanded. This is in line with the law of demand.
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
At the midpoint of the demand curve, demand is usually unit elastic. Above the midpoint of the demand curve, demand is elastic and blow the midpoint, demand is inelastic
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
