Answer:
-4 units
Explanation:
Applying the midpoint method, Blake's income elasticity of demand for generic potato chips is determined by multiplying the change in demand (D) by his average income (I), then dividing by the product of the change in income and average demand:
Thus, Blake's income elasticity of demand equals -4 units.
Solution
1.Hotel’s cost structure Indications in percentage(%)
Revenue $ 2,000,000 (100)
Less: Variable expenses $ 1,300,000 65
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Contribution margin $700,000
Less: Fixed expenses $560,000 28
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Net income $140,000 7
2.Revenue declines by 30 percent
Revenue $ 1,400,000
Less: Variable expenses $910,000
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Contribution margin $490,000
Less: Fixed expenses $392,000
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Net income $98,000
3.Operating leverage factor when revenue is $2,000,000
Operating leverage = Contribution/ Net income
4.Operating leverage factor when increase in revenue by 25 percent
increase in revenue by 25 percent=
increase in contribution by 25 percent=
increase in net income by 25 percent =
Operating leverage = Contribution/ Net income