Suppose That We Are in a Condition of "Stuck" Prices

question 22

Essay

Suppose that we are in a condition of "stuck" prices so that the price of wooden chairs will not go above or below $125/unit.Further suppose that chair factories have been built on a business plan designed to deliver 200/month.How many chairs will be sold in a market in which demand (which includes a modest amount of inventory) is characterized by: (a) P = 425 - 1.5Q, (b) P = 530 - 1.5Q, and (c) P = 400 - 0.5Q, where P is in $/chair and Q is in chairs/month? In each case, what happens to planned inventory.

---

Definitions:

Outstanding Checks

Checks that have been written and recorded in the payer's accounting system but have not yet been cashed or cleared by the bank.

Adjusted Cash Balance

A financial metric representing the amount of available cash after accounting for adjustments such as outstanding checks or deposits in transit.

Check Register

A record book used to keep track of all the checks issued, deposits made, and current balance in a checking account.

Bank Statement

A summary of financial transactions that have occurred over a given period on a bank account.