Price Elasticity of demand and supply

Assessment Question Week4: Price Elasticity of demand and supply Question 3The price for cigarettes sold by Big Tobacco Co Ltd was 6.00 per packet in March 2018. During the month of March, the consumption of cigarettes was 1000 packets. However, the Board of Directors of Big Tobacco Co Ltd decided to increase the price by 25% during the month of April. As a manager you noted that price elasticity of demand was 0.8. As a manager Big Tobacco Co Ltd:A. As a manager Big Tobacco Co Ltd store advise your management of the strategy that could be adopted by your firm to maintain sales. (5 Marks) B. Also, advise your government on recommended interventions in the cigarette market. (5 Marks)Assessment Question Week 5: Production costs Question 4John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering. In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills.Johns course was for 3 months. John had to pay $2,000 as tuition for the 3 months.After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year.Johns first year of business can be summarised as follows:Item Amount $ Revenue 250,000 Labour cost 120,000 Pizza ingredients 50,000 Equipment 10,000Calculate Johns accounting profit and economic profit? Show your work. (10 marks) Assessment Question Week 5: Production costs Question 4John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering. In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills. Johns course was for 3 months. John had to pay $2,000 as tuition for the 3 months.After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000 from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA.Johns first year of business can be summarised as follows:Item Amount $ Revenue- Pizza Section 400,000 Revenue- Beverages Section 190,000 2 Cashiers (wages per worker) 55,000 Pizza ingredients 50,000 Manager 75,000 3 Pizza bakers (wages per baker) 60,000 Equipment 10,000Based on your calculated accounting profit and economic profit, would you advise John to return to his teaching job? Show your work (10 marks)

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