Reference no: EM131017546
Case 2
You are the Chief Financial Officer of Heavy Buds and are faced with the task of raising sales revenue per the units sold by your firm. Heavy Buds sold 120 million packs of beer annually at $3 per pack. The Chief Executive Officer suggested that you could raise an additional $120 million in annual revenue from any different quantity you sell by raising the price by $1 per pack of beer. What would you say about the prospects for raising $120 million in additional revenue?
Immediately after you heard the decision to raise the price of a pack by $1, you performed a market analysis on the demand Heavy Buds faces and its supply function, you discovered that:
a) The price-elasticity of the demand for beer facing Heavy Buds = -1.
b) Heavy Buds Supply function is perfectly elastic.
Give a precise answer to whether:
a) the suggested price increase by $1 will raise additional revenues by $120 million from whatever units will be sold,
b) why yes and why not, and
c) if the suggested price increase were incorrect, what should the correct one be?
d) verify that your answer is consistent with an elasticity of demand that equals to -1.
Use the mid-point formula to verify your answer.
What are her accounting profits
: Jaynet spends $25,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm - one offer was for $125,000 per year, and the other was for $105,000. However, she turned both jobs down to ..
|
What are the required basic financial statements
: Which financial statement do you believe is more important to the local citizen, and why?
|
Problem based on stone-weierstrass theorem
: Problem based on Stone-Weierstrass Theorem. Show that any continuous function on J x J ∈ R2 to R can be uniformly approximated by functions of the form f1(x)g1(y) + ... + fn(x)gn(y) where fi, gi, ∈ A.
|
What is the maximum axial stress in the bar
: Sketch the load diagram and the axial force diagram for the bar. Determine the axial stress on each segment in the axial force diagram. What is the maximum axial stress in the bar
|
What should the correct one be
: Give a precise answer to whether: the suggested price increase by $1 will raise additional revenues by $120 million from whatever units will be sold, why yes and why not.
|
What is the total impedance of the circuit
: In the circuit shown, if the value of the reactive component was increased, how would it change the waveforms - What is the total impedance of the circuit?
|
What would be the semi annual interest
: A company issues $100,000 of a 6% coupon, $1,000 par value bond. what would be the semi annual interest payment journal entry?
|
How do those affect how financial information is communicate
: Analyze Starbucks' methods for fixed asset and intangible asset acquisitions as well as depreciation and amortization, including asset categorization. How do these methods affect the balance sheet, income statement, and statement of cash flows?
|
Compute the net present value for each investment
: Direct labour is $16 per hour. There are 250 operating days in the year. Both the truck and the bagging machine are estimated to have seven-year lives. The minimum rate of return is 13%. However Snack Company Ltd has funds to invest in only one of..
|