ACC 100 Lecture Notes - Lecture 9: Inferior Good, Antivenom, Normal Good

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apricotdog292

7 Dec 2017

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Price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price as we move along the demand curve. Positive percentage change in price (rise in price)leads to a negative percentage change in quantity demanded. Negative percentage change in price (fall in price) leads to a positive percentage change in the quantity demanded. Price of elasticity is always written as a negative. The greater the price elasticity of demand, the more responsive the quantity demanded is to the price. When price elasticity of demand is large - consumers change their quantity demanded by a large percentage compared with the percentage change in price. When price elasticity is small - when quantity demanded will fall by a small amount when price rises - is an inelastic demand. Perfectly inelastic demand = when the percentage change in the quantity demanded is zero and the price elasticity of demand is zero.

Related Questions

19. Which is the proper order of steps in the target costingprocess?

	A.	Analyze customer needs and wants, find the target cost, designthe product, determine the desired profit.
	B.	Design the product, analyze customer needs and wants, determinethe desired profit, find the target cost.
	C.	Analyze customer needs and wants, determine the desired profit,find the target cost, and design the product.
	D.	Analyze customer needs and wants, determine the desired profit,design the product, find the target cost.

2 points

Question 20

As the price increases, the quantity demanded willgenerally:

	A.	decrease.
	B.	increase and then decrease.
	C.	increase.
	D.	stay the same.

Question 23

Most of the manufacturing costs for a product are determined inthe:

	A.	design stage.
	B.	preproduction stage.
	C.	at maturity.
	D.	during production.

2 points

Question 24

Which of the following are relevant in deciding whether toaccept or reject a special order?

	A.	The impact the order will have on existing business.
	B.	The price that will be charged on the special order.
	C.	The incremental cost of filling the special order.
	D.	All of the above.

2 points

Question 25

Which of the following statements about prices and profit istrue?

	A.	Higher prices combine with lower demand to change the level ofprofits.
	B.	Higher prices always lead to lower demand and lower profits.
	C.	Higher prices will be offset by lower demand so profits willstay constant.
	D.	Higher prices always lead to higher profits.

Question 33

When preparing the operating section of a statement of cashflows using the indirect method, various adjustments are needed.Which of the following adjustments is incorrectly stated?

	A.	Add gains on sale of equipment.
	B.	Deduct any increases in inventories from net income.
	C.	Add to net income any increases in current liabilities.
	D.	Add to net income depreciation and amortization expense.

2 points

Question 34

Cash flows related to long-term liabilities and stockholders'equity items are classified as:

	A.	investing activities.
	B.	financing activities
	C.	operating activities.
	D.	non-cash activities.

ochrejackal936

I need a example question and answer for this topic regardingFIFO vs LIFO

LIFO vs FIFO Inventory Accounting at HomeDepot

Last Updated Dec 28, 2008 12:16 AM EST

Home Depot, Inc. announced a key change inaccounting principals in its third quarter filing with the SEC.After adopting a new enterprise resource planning system, otherwiseknown in the wholesale-retail world as an "ERP" system, Home Depotis now keeping track of inventory values in its Canada retailoperations using a weighted-average cost method. Previously Canadainventory values had been determined using a method based on whenthe items were bought called "first-in, first-out."

For some shareholders inventory accounting changes raise red flagsas such moves suggest the company is trying to manage its balancesheet values or profit margins. If price changes are nominal,inventory accounting methods typically render the same balancesheet values and profit levels. That is, First-in, First-out (FIFO)yields the same results as "Last-in, Last-Out" (LIFO) as the pricesare basically the same. However, when prices are rising fast, LIFOleads to falling inventory values on the balance sheet as theolder, lower priced items remain on the balance sheet. If thecompany is unable to pass along rising wholesale or materialsprices to their customers, margins also fall. Ergo, A change toFIFO is tempting.

Apparently, Home Depot management expects the change to aweighted-average cost (WAC) to provide a better match of the costof sales with the revenue generated. The more sophisticatedcalculation is made possible by the new ERP system. As it turnsout, the new accounting method produced an inventory value verynear what would have been reported had Home Depot Canada stuck withthe old FIFO method.

Home Deport operates about 165 stores in Canada. Managementindicates the Canada operation is profitable and same-store salesare positive, but the company does not disclose sales by geography.Total merchandize inventory was $11.9 billion at the end of thefiscal third quarter 2008 compared to $11.7 billion a year-ago.However, as Home Depot's sales in 2008 are off approximately 4%from 2007, going forward the 1.7% increase in total inventory couldbe a source of concern -- should sales continue to fall.

orchidfrog792

Suppose JCPenney and Macyâs were both vying to carry an exclusive line of Heidi Klum-designed outerwear. This would be an example of:

A. Parallel conflict.
B. Horizontal conflict.
C. Perpendicular conflict.
D. None of these.

It is common knowledge among consumers and retailers alike that apparel prices tend to be marked up artificially. Years of coupons and promotions have trained customers to wait for price reductions, only shopping at department stores when special sales are available. During the Great Recession, consumer confidence dropped and spending slowed dramatically. As the economy has improved, department stores such as Macy's and JCPenney have begun looking for ways to increase customer spending. Many department stores have once again turned to steep sales and special coupons, further encouraging the cycle of regular (lukewarm) business and sale-time frenzy.
Taking a different route, JCPenney moved to reduce the artificial markup so common to department store apparel. Borrowing Walmart's long-time "everyday low prices" strategy, JCPenney hoped to spur demand and reduce off-sale shopper apathy with basic contemporary apparel, promotions such as "Best Price Fridays," and special month-long values. Customers accustomed to receiving a coupon before shopping did not respond well to the new retail strategy, however, and JCPenney incurred substantial losses. The company launched an informative marketing campaign extolling the great values available without needing coupons or special sales, but the public remained unmoved. In April 2013, JCPenney ousted the man behind the change, Ron Johnson, as CEO and promised a return to coupon-based sales.

Dana Mattioli, "Penney to Tweak Message, but Not Its Strategy," Wall Street Journal, June 19, 2012, http://online.wsj.com/article/SB10001524052702303703004577476830407027186.html (Accessed March 26, 2013).
How could JCPenney have used shopper marketing to avoid alienating its customers and losing sales?

A. It could have partnered with brands to advertise the most desirable products.
B. It could have compared its loyal shoppers with brandsâ core target consumers.
C. It could have conducted a large-scale research project to gauge customersâ attitudes, perceptions, emotions, and behaviors.
D. It could have inspired managers to coordinate better, measure more, think more creatively, and move faster.
E. It could have done all of these.

sapphirelocust154

ACC 100 Lecture Notes - Lecture 9: Inferior Good, Antivenom, Normal Good

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