Accounting Case Study: Managerial Accounting
MANAGERIAL ECONIMICS ASSIGNMENT
SUBMITTED TO PROFESSOR AMIT SHARMA
Answer 1
(a) Accounting costs are the actual outflows or expenses incurred by a firm which are recorded in its accounting statements.
So in this case the accounting costs will be $200000.
(b) Opportunity cost is the cost associated with choosing one alternative in place of the other we can also say that opportunity cost is the cost of making a decision.
So in this case the opportunity cost is $35000
(c) In order to make positive accounting profits she should earn more than $200000 per annum. And more than $235000 per annum to earn positive economic profits.
Answer 2
Equilibrium quantity is that quantity which is simultaneously equal for both quantity supplied and quantity demanded.
…show more content…
If the price of soda is $1 then we get the following quantity
Q = 10 – 8(1)
Q = 2
So, the quantity demanded at price of $1 is 2 units
Elasticity of demand can be defined as the responsiveness of quantity demanded of a particular commodity because of a change in its price, in other words elasticity of demand is the percentage change in the quantity demanded of a good due to one percent change in its price, ceteris paribus.
As solved earlier we know that at a price of $1 quantity demanded of the can is 2.
Now if the price of the can were $0. 75 then the quantity demanded would have been,
Q = 10 – 8(0.75)
Q = 4
At Price (P) = $1, Quantity demanded (Q) is 2 units
At Price (P) = $0.75, Quantity demanded (Q) is 4 units
Elasticity of demand (Ed) = change in quantity * P Change in price Q
= 2.00 * 1 0.75 2
= 1.33 The elasticity of demand of soda is 1.33
Since we get the elasticity of more than 1 this means that demand changes more with respect to change in price and hence we can conclude that the demand of soda is perfectly
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