Answer:
C
Explanation:
Pepper Corporation owns 75 percent of Salt Company's voting shares. During 20X8, Pepper produced 50,000 chairs at a cost of $79 each and sold 35,000 chairs to Salt for $90 each. Salt sold 18,000 of the chairs to unaffiliated companies for $117 each prior to December 31, 20X8, and sold the remainder in early 20X9 to unaffiliated companies for $130 each. Both companies use perpetual inventory systems. Based on the information given above, what amount of cost of goods sold must be eliminated from the consolidated income statement for 20X8
Answer:
Please see below
Explanation:
Given that:
Number of chairs sold = 35,000
Cost per chair $79
The cost of goods sold that must be eliminated from the consolidated
= Number of chairs sold × Cost per chair
= 35,000 × $90
= $2,765,000
Therefore, for computing the cost of goods sold to be eliminated, we simply multiply the number of chairs sold with cost per chair.
A company reported annual sales revenue of $2,200,000 in 2019. During the year, accounts receivable decreased from a $56,000 beginning balance to a $48,000 ending balance. Accounts payable decreased from a $44,000 beginning balance to a $32,000 ending balance. How much is cash received from customers for the year
Answer:
$2,208,000
Explanation:
Calculation to determine How much is cash received from customers for the year
Using this formula
Cash Received=Annual sales revenue+(Beginning balance-Ending balance)
Let plug in the formula
Cash Received=$2,200,000 + ($56,000 – $48,000)
Cash Received=$2,200,000+$8,000
Cash Received = $2,208,000
Therefore The amount of cash received from customers for the year is $2,208,000
Martha has just started a small retail store in the city. There are popular and older retailers in the same locality. In the first two months, people have been reluctant to walk into Martha’s retail store. They seem to be happy with the more established retailers, even though Martha’s business delivers quality products. Which barrier to entry is Martha experiencing as a first-time entrepreneur? A. She does not gain the benefits of economies of scale. B. Her competitors enjoy good brand loyalty. C. She does not have sufficient capital to fund her business. D. She does not have access to the right distribution channels.
Answer:
B: Her competitors enjoy good brand loyalty
Explanation:
Plato
₥Ɏ ₲Ø₳Ⱡ₴ ₳ⱤɆ ฿ɆⱧł₦Đ ɎØɄⱤ Ʉ₦ĐɆⱤ₴₮₳₦Đł₦₲.
Answer:
fax bro?
Explanation:
POV: I'm the quiet kid
*pulls out AK - 47*
Answer:
POV : Rest Of The Class Run's And *Pumped Up Kicks* Stars Playing In The Background!!
stop, im both quiet and emo kid, us quiet kids arent actually like that even tho i as a quiet kid myself actually enjoy those memes cuz i like seeing those popular kids and the bullys get destroyed by us
A company with 82,146 authorized shares of $5 par common stock issued 31,717 shares at $14 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price was $26 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend
Answer:
$16,492.84
Explanation:
Calculation to determine the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend
Amount transferred to Paid-in capital accounts=(Common stock*Stock dividend declared percentage)*Market price
Let plug in the formula
Amount transferred to Paid-in capital accounts=(31,717 shares*2%)*$26 per share
Amount transferred to Paid-in capital accounts=634.34*$26 per share
Amount transferred to Paid-in capital accounts=$16,492.84
Therefore the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend is $16,492.84
Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands):
Software Division (Value Base) Consulting Division (Value Base) Venture Capital Division (Value Base)
Book Current Book Current Book Current
Sales $150,000 $150,000 $250,000 $250,000 $850,000 $850,000
Income 17,750 17,200 21,900 25,520 62,230 57,420
Assets 70,000 90,000 100,000 110,000 610,000 590,000
Liabilities 10,000 10,000 14,000 14,000 40,000 40,000
Required:
a. Compute the return on investment using both book and current values for each division.
b. Compute the residual income for both book and current values for each division.
Answer:
Envision Company
Software Division Consulting Division Venture Capital Division
(Value Base) (Value Base) (Value Base)
Book Current Book Current Book Current
a) Return on investment
= 25.3% 19% 21.9% 23.2% 10.2% 9.7%
b) Residual income = operating income - (minimum required return x operating assets)
= 9,350 6,400 9,900 12,320 (10,970) (13,380)
Explanation:
a) Data and Calculations:
Target return on capital = 12%
Software Division Consulting Division Venture Capital Division
(Value Base) (Value Base) (Value Base)
Book Current Book Current Book Current
Sales $150,000 $150,000 $250,000 $250,000 $850,000 $850,000
Income 17,750 17,200 21,900 25,520 62,230 57,420
Assets 70,000 90,000 100,000 110,000 610,000 590,000
Liabilities 10,000 10,000 14,000 14,000 40,000 40,000
Software Division Consulting Division Venture Capital Division
(Value Base) (Value Base) (Value Base)
Book Current Book Current Book Current
a) Return on investment = Income/Assets * 100
= 25.3% 19% 21.9% 23.2% 10.2% 9.7%
b) Residual income = operating income - (minimum required return x operating assets)
Minimum required returns (in dollar value) = 12% of Assets:
= 8,400 10,800 12,000 13,200 73,200 70,800
Residual income
= 9,350 6,400 9,900 12,320 (10,970) (13,380)
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O///O
Answer:
Ɏ₳₦₭ɆɆ ₩ł₮Ⱨ ₦Ø ฿Ɽł₥ back at ya
An organization wants to provide its employees information about what its goals are and what it expects employees to accomplish. It is planning to implement an incentive plan that helps employees understand the organization's goals. Which plan should be used by this organization?
Answer:
This question is incomplete, the options are missing. The options are the following:
a) A retention bonus
b) A piecework rate system
c) A merit pay system
d) The Scanlon plan
e) A balanced scorecard
And the correct answer is the option E: A balanced scorecard.
Explanation:
To begin with, the term known as "Balanced Scorecard" it is a very famous strategy method used in the fields of management and business in order to achieve higher levels of administration from the managers and owners. It is a technique that involves the company's short and long term goals and the way to plan how to incentive the employees of the company in order for them to grow and understand better the plans of the organization so that they could work better and increase the productivity that will consequently affect in the benefits of the enterprise as a whole.
Select the correct answer.
At the end of the year, Clean123 Inc. has a service revenue of $193,750, an accounts payable of $500, a notes payable of $ 17,800, a salaries
expense of $26,900, and a rent expense of $14,640. What is Clean123 Inc.'s net income?
ОА.
$134,410
OB.
$152,210
OC. $161,310
OD. $166,850
Reset
Next
Answer: $152,210
Explanation:
The net income is the income that remains after the expenses has been deducted from the revenue.
Clean123 Inc.'s net income will be calculated as:
Service revenue = $193,750
Less: Salaries expense = $26,900
Less: rent expense = $14,640.
Net income = $152,210
Therefore, the net income is $152210
An employee earns $6,050 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $204 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $172 and contributes $86 to a retirement plan each month. What is the amount of net pay for the employee for the month of January
Answer:
5,000
Explanation:
The amount of net pay for the employee for the month of January is $5,125.175.
What is net pay?
Net pay is the amount employees earn after all payroll deductions are deducted from their gross pay. This is the amount that each employee receives on payday. The net pay calculation is:
Gross pay minus payroll taxes and other deductions equals net pay.
The amount of net pay for the employee for the month of January is calculated as:-
Deductions = (Gross earning × Social security tax rate) + (Gross earning × Medicare tax rate) + Federal income taxes + Health insurance + Contribution of retirement plan
= ($6,050× 6.2%) + ($6,050 × 1.45%) + $204 + $172 + $86
= $375.1 + $87.725 + $204 + $172 + $86
= $924.825
Net pay = Gross earning - Deductions
= $6,050 - $924.825
= $5,125.175
Therefore, $5,125.175 is the net pay calculated using the above formula.
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Safari limited acquired 2 new 7-ton buses on 1 January 1990 for £129,150. The cash price of
these units was £90,000. The deal was financed by TPS (financing) ltd and the terms of the
hire purchase contract required a deposit of £30,000 on delivery followed by 3 instalments on
31st December 1990, 1991, and 1992 of £33,000, £33,000 and £33,150 respectively. The true
rate of interest was 30% per annum.
Required
Prepare the appropriate accounts in the books of safari ltd to record the above transactions.
Depreciation is to be charged on vehicles at 20% per annum, using straight line method.
Answer:
U little baka
Explanation:
Urnmy littttle bakaaaaa
A factory worker makes $17.50 per hour. Next month, she will receive a 1.5% increase in her hourly rate. What will her new hourly rate be?
Answer:
$19.00
Explanation:
Brewsters, a ice cream company, has been fairly successful in its market. Lydia sees an opportunity for profit and enters the market. After producing her profit-maximizing level of output, she finds that her average total cost per unit is $5, her average variable cost per unit is $3, and the market price is $2.50. In the short run, Lydia should Choose one: A. expand production because she is making a positive economic profit.
Answer:
A. shut down her business.
Explanation:
Given that
The average overall cost per unit is $5
The average variable cost per unit is $3
And, the market price per unit is $2.50
Based on the above information
In the short run, the lydia should shut down her business as the total cost is more than the market price due to which the company is suffering the loss instead of the profit
Therefore the correct option is a.
In August 2005, Hurricane Katrina damaged or destroyed oil platforms in the Gulf of Mexico, refineries along the Gulf coast, and the pipeline infrastructure that transports oil and gas to customers across the eastern United States. The winter of 2006 was unusually cold in many parts of the country. How did these events affect the market (equilibrium) price and quantity for natural gas
Answer:
Increased equilibrium market price Decreased equilibrium quantityExplanation:
As a result of the hurricane, oil platforms and refineries were destroyed. This reduced the amount of natural gas being processed by these facilities. With less natural gas being processed, less gas was being supplied to the country which means that the quantity supplied reduced.
This would shift the supply curve to the left and it would then intersect with the demand curve at a higher equilibrium price. This higher price reflects the relative scarcity of natural gas.
What are some recommendations for ways that Redbox can maintain its high market
share?
Answer:
Do online streaming
Explanation:
1: create commercials to spread the business
2: emphasize the good points for example, a movie ticket cost about $15 to $20 while a Redbox movie only cost about $2 and multiple people can watch the movie they bought.
3: place Redbox stations in high populated building for example, a mall, Publix, Walmart, Wawa, and Target.
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:
Project Soup Project Nuts
Initial investment $400,000 $600,000
Annual net income 30,000 46,000
Net annual cash inflow 110,000 146,000
Estimated useful life 5 years 6 years
Salvage value -0- -0-
The company requires a 10% rate of return on all new investments.
Present Value of an Annuity of 1
Periods 9% 10% 11% 12%
5 3.890 3.791 3.696 3.605
6 4.486 4.355 4.231 4.111
The net present value for Project Nuts is
QUESTION 2:
Benet Division of United Refinery Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Benet Division's ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?
A) Yes, since ROI will increase.
B) No, since ROI will be lowered.
C) Yes, since additional sales always mean more customers.
D) No, since loss will be incurred.
QUESTION 3:
The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?
QUESTION 4:
A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Variable
Fixed
Indirect materials $120,000 Depreciation $50,000
Indirect labor 160,000 Taxes 10,000
Factory supplies 20,000 Supervision 40,000
A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of:__________
QUESTION 5:
Cleaners, Inc. is considering purchasing equipment costing $60,000 with a 6-year useful life. The equipment will provide cost savings of $14,600 and will be depreciated straight-line over its useful life with no salvage value. Cleaners requires a 10% rate of return.
Present Value of an Annuity of 1
Period 8% 9% 10% 11% 12% 15%
6 4.623 4.486 4.355 4.231 4.111 3.784
What is the approximate profitability index associated with this equipment?
Answer:
1. $35,830
2. B) No, since ROI will be lowered.
3. $13 per DL
Explanation:
1. Present value of inflows = $146,000*Present value of annuity factor (10%,6)
Present value of inflows = $146,000 * 4.355
Present value of inflows = $635,830
Net present value = Present value of inflows - Present value of outflows
Net present value = ($635,830 - $600,000)
Net present value = $35,830.
So, the net present value for Project Nuts is $35,830.
2. ROI = Net income / Investment
ROI = (100000-60000-40000) / 150000
ROI = 0%
The ROI required is 25%. Hence, the new project should not be accepted as ROI will be lowered.
3. Direct labor price Variance = Actual hours (AR - SR)
$10,500 = 10,500 (AR - $12)
$10,500 = 10,500 AR - $126,000
AR = $10,500 + $126,000 /10,500
AR = $13 per direct labor hour.
So, the actual rate of pay for direct labor is $13 per DLH.
Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $340,000, and direct labor costs to be $170,000. Actual overhead costs for the year totaled $368,000, and actual direct labor costs totaled $192,000. At year-end, Factory Overhead account is: Multiple Choice Neither overapplied nor underapplied. Overapplied by $16,000. Overapplied by $22,000. Underapplied by $16,000. Overapplied by $192,000.
Answer:
Overapplied overhead= $16,000
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 340,000 / 170,000
Predetermined manufacturing overhead rate= $2 per direct labor dollar
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 2*192,000
Allocated MOH= $384,000
Finally, the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 368,000 - 384,000
Overapplied overhead= $16,000
What is an example of goods?
O a hotel room
O a good haircut
O a car wash
O a hard cover book
Answer:
Hotel Room
Explanation:
a
An example of goods in the case is a hard cover book.
What is a goods?Most time, this are often tangible product that are felt and seen, unlike the service which are rendered and often intangible product
An example of service includes a hotel room, a good haircut and a car wash.
Therefore, the Option D is correct.
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Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $11,000 and the year-end balance was $15,500. The additional paid-in capital account balance increased $3,600 during the year. The retained earnings balance at the beginning of the year was $65,000 and the year-end balance was $90,000. Net income was $37,000. How much were Superior's dividend declarations during its recent year of operation
Answer:
$12,000
Explanation:
Given the above information, we will apply the formula below:
The ending balance of retained earnings = Beginning balance of retained earnings + Net income - Dividend paid
$90,000 = $65,000 + $37,000 - Dividend paid
Dividend paid = $65,000 + $37,000 - $90,000
Dividend paid = $12,000
Therefore, the above balance of $12,000 would be displayed in the retained earnings statment
Lando Calrissian just won the lottery and is trying to decide between the options of receiving the annual cash flow payment option of $330,000 per year for 25 years beginning today, or receiving one lump-sum amount today. Lando can earn 4% investing this money. At what lump-sum payment amount would he be indifferent between the two alternatives
Answer:
the lump-sum payment amount would he be indifferent between the two alternatives is $5,361,497.79
Explanation:
The computation of the lump-sum payment amount would be shown below:
= Annual cash flow per year × present value of annuity due factor at 4% for 25 years
= $330,000 × 16.246963
= $5,361,497.79
Refer the present value of annuity due factor table for the same
hence, the lump-sum payment amount would he be indifferent between the two alternatives is $5,361,497.79
Phyllis, Inc., earns book net income before tax of $600,000. Phyllis puts into service a depreciable asset this year, and its first-year tax depreciation exceeds book depreciation by $120,000. Phyllis has recorded no other temporary or permanent book-tax differences. Assuming that the U.S. tax rate is 21%, what is Phyllis's total income tax expense reported on its GAAP financial statements
Answer:
$126,000
Explanation:
Calculation to determine Phyllis's total income tax expense reported on its GAAP financial statements
Using this formula
Total income tax expense=Net income before tax*U.S. tax rate
Let plug in the formula
Total income tax expense=$600,000*21%
Total income tax expense=$126,000
Therefore Phyllis's total income tax expense reported on its GAAP financial statements is $126,000
New Line Cinema is considering producing a new movie. To evaluate the proposal, the company needs to calculate its cost of capital. The firm has collected the following information:
a. The company wants to maintain is current capital structure, which is 20% equity, 20% preferred stock and 60% debt.
b. The firm has marginal tax rate of 34%.
c. The firm's preferred stock pays an annual dividend of $4.3 forever, and each share is currently worth $135.26.
d. The firm has one bond outstanding with a coupon rate of 6%, paid semiannually, 10 years to maturity, a face value of $1,000, and a current price of $1,163.51.
e. The company's beta is 0.8, the yield on Treasury bonds is is 0.6% and the expected return on the market portfolio is 6%.
f. The current stock price is $39.17. The firm has just paid an annual dividend of $1.13, which is expected to grow by 4% per year.
g. The firm uses a risk premium of 3% for the bond-yield-plus-risk-premium approach.
h. New preferred stock and bonds would be issued by private placement, largely eliminating flotation costs. New equity would come from retained earnings, thus eliminating flotation costs.
Required:
a. What is the cost of equity using the bond yield plus risk premium?
b. What is the midpoint of the range for the cost of equity?
c. What is the company's weighted average cost of capital?
Answer:
a.
7.00%
b.
5.96%
c.
1.20%
Explanation:
a.
First and foremost, we need to determine the yield to maturity on the bond, using a financial calculator as shown thus:
The financial calculator should be set to its default end mode before making the following inputs:
N=20(number of semiannual coupons in 10 years=10*2=20)
PMT=30(semiannual coupon=face value*coupon rate*/2=$1000*6%/2=$30)
PV=-1163.51(current price=$1,163.51)
FV=1000(face value of the bond=$1000)
CPT
I/Y=2.00%(semiannual yield=2%, annnual yield=2.00%*2=4.00%)
bond yield plus risk premium=bond yield(4.00%)+ risk premium(3%)
bond yield plus risk premium=7.00%
b.
In determining the midpoint range is the maximum plus minimum cost of equity divided by 2
Let us determine cost of equity using the Capital Asset Pricing Model and Constant Dividend Growth Model
cost of equity=risk-free rate+beta*(expected return on the market portfolio-risk-free rate)
risk-free rate=yield on Treasury bonds= 0.6%
beta=0.8
expected return on the market portfolio= 6%
cost of equity=0.6%+0.8*(6%-0.6%)
cost of equity=4.92%
cost of equity=expected dividend/share price+growth rate
expected dividend=last dividend*(1+growth rate)
expected dividend=$1.13*(1+4%)=$1.1752
share price= $39.17
growth rate=4%
cost of equity=($1.1752/$39.17)+4%
cost of equity=7.00%
midpoint range=(maximum cost of equity+minimum cost of equity)/2
midpoint rate=(7.00%+4.92%)/2
midpoint range=5.96%
c.
WACC=(weight of equity*cost of equity)+(weight of preferred stock*cost of preferred stock)+(weight of debt*after-tax cost of debt)
weight of equity= 20%
cost of equity=5.96%
weight of preferred stock=20%
cost of preferred stock=annual dividend/price
cost of preferred stock=$4.3/$135.26=3.18%
weight of debt=60%
aftertax cost of debt=4.00%*(1-34%)=2.64%
WACC=(20%*5.96%)+(20%*3.18%)*(60%*2.64%)
WACC=1.20%
On January 15, 2020, Vern purchased the rights to a mineral interest for $3,500,000. At that time, it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Vern incurred expenses during 2020 of $500,000. The percentage depletion rate is 22%. Determine Vern's depletion deduction for 202
Answer: $175,000
Explanation:
Vern's depletion deduction for 2020 will be calculated thus:
= (Cost - Salvage value) / (Estimated Number of units × Number of units extracted
= 3500000/500000 × 25000
= 7 × 25000
= $175000
Therefore, Vern's depletion deduction for 2020 is $175000
How do you deal with your distraction
Answer:
Proven Strategies for Overcoming Distractions
Put yourself in distraction-free mode. ...
Set three main objectives every day. ...
Give yourself a shorter time frame. ...
Monitor your mind wandering. ...
Train your brain by making a game out of it. ...
Take on more challenging work. ...
Break the cycle of stress and distraction.
Answer:
sticking to a schedule and taking breaks and get away from the thing that distracts u
i also like to put music when im
doing my work so that it wont get boring
Explanation:
Robert Parish Corporation purchased a new assembly process on August 1, 2017. The cost of this machine was $117,900. The company have a salvage value of $12,900 at the end of its service life. Its life is estimated 21,000 hours. Year-end is December 31. estimated that the machine would at 5 years, and its working hours are estimated at Instructions Compute the depreciation expense under the following methods. Each of the following should be considered unrelated.
(a) Straight-line depreciation for 201:7.
(b) Activity method for 2017, assuming that machine usage was 800 hours.
(c) Sum-of-the-years-digits for 2018.
(d) Double-declining-balance for 2018.
Answer:
8750
4000
$74,060
39,300
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
(117,900 - 12,900) / 5 = $21,000
the machine was used for 5 months in 2017. the depreciation expense in 2017 = 5/12 x $21,000 = $8750
b. Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
(800 / 21,000) x (117,900 - 12,900) = $4000
c. Sum-of-the-year digits = (remaining useful life / sum of the years ) x (Cost of asset - Salvage value)
remaining useful life in 2018 = (4 + 7/12) + 3 + 2 + 1 = 10.58
10.58 / 15 x (117,900 - 12,900) = $74,060
Refer to the HR Report section of the Inquirer. Digby will continue to keep their current hourly levels of training in order to help reduce turnover and improve productivity next year. How much must be spent per employee on an hourly basis to maintain the current training commitment
Explanation:
The amount that must be spent per employee per hour to maintain a high level of training must be consistent with the organizational planning and the estimated budget, since this activity will have as main objectives the retention of employees and the improvement of productivity, therefore this budget it must be calculated based on HR activities and considered as essential by management.
Adequate training helps employees to be more satisfied with their work, develop new skills and be more productive, helping the organization to achieve its objectives and goals.
the retained earnings of a corporation is ________. a. internally generated equity that is received from employee stock purchases b. externally generated equity that is acquired from banks and other creditors c. externally generated equity that is contributed by shareholders d. internally generated equity that is earned by profitable operations that is not distributed to stockholders
Answer:
internally generated equity that is earned by profitable operations that is not distributed to stockholders
Explanation:
Retained Earnings
This is simply known as an account used by a corporation to give a short breakdown or summary of the earned capital component of its shareholders' equity. Mathematically or primarily, it consist of the cumulative amount of net income over the life of the corporation, minus the cumulative amount of dividends that is paid out to shareholders.
It is often classified as stockholders equity account. It is a permanent or real account, as opposed to a temporary-equity or nominal account. Both cash dividends and stock dividends reduces retained earnings.
What is e- marketing
Answer:
marketing online pretty much
An early frost destroys 20% of the coffee bean crop. If the supply and demand for coffee beans are both relatively inelastic, and the frost does not impact the quality of the coffee beans that make it to market.
Required:
What will most likely occur to the equilibrium price and quantity of coffee beans?
Answer:
Option C, Price will increase, quantity will decrease
Explanation:
The options for the given question are
(A) Price and quantity will both increase
(B) Price and quantity will both decrease
(C) Price will increase, quantity will decrease
(D) Price will decrease, quantity will increase
(E) Price will not change, quantity will decrease
Solution
Inelastic demand of a product means that the price (high or low) of the product does not affect the demand.
Since the frost destroys the crop, then there are probabilities of variation in the price of coffee (price will rise). Price will be increased to fetch the loss because of frost.
Price will increase and quantity will decrease.
Hence, option C is correct