AnswersFinancial MathModeling for Business: Part One

Modeling for Business: Part One — Test Answers

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21
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A hardware store purchases a drill for $⁢80 and marks it up by 60% They then offer a 20% discount on the marked-up price. The store manager calculates the final sale price as $⁢64 The manager's steps are shown below: Calculate the marked-up price: $⁢80+($⁢80⋅0.60)=$⁢128 Apply the discount: $⁢128−($⁢128⋅0.50)=$⁢64 Identify the mistake in the manager's calculation.

A
The manager used the wrong initial price.
B
The manager applied a 50 percent markup instead of a 60 percent markup.
C
The manager applied the discount to the original price instead of the marked-up price.
D
The manager applied a 50 percent discount instead of a 20 percent discount.
22
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Given the profit function P⁡(x)=−2⁢x^2+8⁢x−3 , graph the function and identify the graph that correctly represents the profit based on the number of units sold. The vertex indicates the maximum profit.

A
Image with description A coordinate plane with a parabola. The x-axis is labeled negative 1 to 5. The y-axis is labeled negative 15 to 15. Points on the parabola are at (0.5, 0), (2, 5), (5, negative 13).
B
Image with description A coordinate plane with a parabola. The x-axis is labeled negative 1 to 5. The y-axis is labeled negative 15 to 15. Points on the parabola are at (0, 3), (2, 11), (5, negative 12).
C
Image with description A coordinate plane with a parabola. The x-axis is labeled negative 1 to 5. The y-axis is labeled negative 15 to 15. Points on the parabola are at (0.5, 0), (2, negative 5), (5, 13).
D
Image with description A coordinate plane with a parabola. The x-axis is labeled negative 1 to 5. The y-axis is labeled negative 100 to 20. Points on the parabola are at (3, negative 40), (2, negative 20), (4, negative 60).
24

If the government sets a price ceiling of $⁢2 , what is the likely outcome in the smartphone market?

A
no effect on the market
B
smartphone shortage
C
market equilibrium
D
smartphone surplus
25

How does the increase in production capacity (shift in supply) affect the equilibrium quantity?

A
The equilibrium quantity remains unchanged.
B
The equilibrium quantity fluctuates unpredictably.
C
The equilibrium quantity decreases.
D
The equilibrium quantity increases.

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