4. Determinants of the price elasticity of demand

Consider some determinants of the price elasticity of demand:

A good with many close substitutes is likely to have relatively   demand, because consumers can easily choose to purchase one of the close substitutes if the price of the good rises.

A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?

Yacht

Chemotherapy for cancer patients

Price elasticity for a good depends on the share of a consumer's budget spent on a good. Other things being equal, which of the following goods has the most elastic demand?

TV and Internet service plan

Lightbulbs

Toothbrush

The price elasticity of demand for a good also depends on how you define the good.

Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.

The price elasticity of demand is also affected by the given time horizon.

Other things being equal, the demand for natural gas will tend to be   elastic in the short run than in the long run.

Identify Gov't spending as either local, state, or federal. Do you think this is smart spending? Where do you feel spending is needed, not needed?

The world’s most famous insurance organization began in Edward Lloyd’s coffeehouse in London. In 1688, ship owners and merchants bought marine insurance from Lloyd’s to cover the risks of sending goods to other countries. In the late 1800s, Lloyd’s of London expanded into nonmarine insurance. Over the years, this association of insurance underwriters has insured some unusual assets—the legs of Hollywood dancers, the voices of famous singers, and the athletic ability of sport stars. Other unusual coverage provided by Lloyd’s have included the following. ●Insurance policies providing protection against crocodile attack in northern Australia. ●Employers buying protection against staff members winning the British national lottery and not returning to work. ●Insurance coverage against death or injury caused by a piece of a disintegrating satellite falling from the sky. Lloyd’s of London is different from other insurance companies. This insurance society consists of investors called Names, who pool their money to cover possible financial risks. The Names profit when insurance claims are less than income. However, when a disaster occurs, the Names have to be prepared to pay for the financial losses from the disaster. In recent years, Lloyd’s has experienced lower profits due to natural disasters, environmental problems, and changing tax laws in Britain. These events have resulted in changes in the organization. Nonetheless, some traditions continue. In Lloyd’s headquarters is the bell from the Lutine, which shipwrecked in 1857. The bell tolls once for good news, twice for bad news. What actions might Lloyd’s take to expand its operations around the world?

If a market has highly specialized resources and falling demand, which of the following is true?

Which of the following happens when firms are earning short-run economic profits in perfect competition?

Which of the following is a main concern of market performance?

Which of the following exemplifies an efficient market?

Of the following, which does not represent a correct description of an efficient market?

1. Production Budget and Direct Materials Purchases Budgets

   Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first 4 months of the year is as follows:

   	Unit Sales		Dollar Sales ($)
   January	36,000		108,000
   February	38,000		114,000
   March	41,000		123,000
   April	43,000		129,000

   Company policy requires that ending inventories for each month be 25% of next month’s sales. At the beginning of January, the inventory of peanut butter is 9,300 jars.

   Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar set (a glass jar and lid). Company policy requires that ending inventories of raw materials for each month be 10% of the next month’s production needs. That policy was met on January 1.

   Required:

   1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

   Peanut Land Inc.
   Production Budget
   For the First Quarter of the Year
   	January	February	March	Total
   Sales
   Desired ending inventory
   Total needs
   Less: Beginning inventory
   Units produced

   2. Prepare a direct materials purchases budget for jars for the months of January and February.

   Peanut Land Inc.
   Direct Materials Purchases Budget for Jars
   For January and February
   	January	February	Total
   Production
   Number of Jars
   Jars for production
   Desired ending inventory
   Total needs
   Less: Beginning inventory
   Jars purchased

   Prepare a direct materials purchases budget for peanuts for the months of January and February.

   Peanut Land Inc.
   Direct Materials Purchases Budget for Peanuts
   For January and February
   	January	February	Total
   Production
   Ounces
   Ounces for production
   Desired ending inventory
   Total needs
   Less: Beginning inventory
   Ounces purchased

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Company policy requires that ending inventories for each month be 10% of next month's sales. At the beginning of January, the inventory of peanut butter is 31,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.

Required:

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Company policy requires that ending inventories for each month be 25% of next month's sales. At the beginning of January, the inventory of peanut butter is 34,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.

Required:

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

Production Budget and Direct Materials Purchases Budgets

Peanut Land Inc. produces all-natural organic peanut butter. The peanut butter is sold in 12-ounce jars. The sales budget for the first four months of the year is as follows:

Company policy requires that ending inventories for each month be 15% of next month's sales. At the beginning of January, the inventory of peanut butter is 33,000 jars.

Each jar of peanut butter needs two raw materials: 24 ounces of peanuts and one jar. Company policy requires that ending inventories of raw materials for each month be 20% of the next month's production needs. That policy was met on January 1.

Required:

1. Prepare a production budget for the first quarter of the year. Show the number of jars that should be produced each month as well as for the quarter in total.

2. Prepare a direct materials purchases budget for jars for the months of January and February.

Prepare a direct materials purchases budget for peanuts for the months of January and February.

A force of 9 N stretches a spring 1 m. A mass weighing 1.96 N is attached to the spring, and the system is then immersed in a medium that offers a damping force numerically equal to 1.2 times the instantaneous velocity. (a) Find the equation of motion if the mass is initially released from rest from a point 1 m above the equilibrium position. x(t) = m (b) Express the equation of motion in the form x(t) = Ae−λt sin ω2 − λ2 t + ϕ , which is given in (23) of Section 3.8. (Round ϕ to two decimal places.) x(t) = Incorrect: Your answer is incorrect. m (c) Find the first time at which the mass passes through the equilibrium position heading upward. (Round your answer to three decimal places.)

The average number of times Americans dine out in a week fell from 4.0 in 2008 to 3.8 in 2012 (Zagat.com, April 1, 2012). The number of times a sample of 20 families dined out last week provides the following data: 6 1 5 3 7 3 0 3 1 3 1 2 4 1 0 5 6 3 1 4

Complete the following in Excel:

a. Compute the mean and median.

b. Compute the first and third quartiles.

c. Compute the range and interquartile range.

d. Compute the variance and standard deviation.

e. The skewness measure for these data is 0.34. Comment on the shape of this distribution. Is it the shape you would expect? Why or why not?

f. Do the data contain outliers?