You Are a Consultant and Have Been Employed by a Large

question 9

Multiple Choice

You are a consultant and have been employed by a large inner-city hospital called City Hospital to estimate the demand for its services.Your research indicates that the income elasticity of demand for the target market is +0.50;the price elasticity of demand is -0.15;and the cross-price elasticity of demand with respect to the price of services at Rural Hospital,a near-by hospital,is +0.35.Answer the following questions.
The price of services at City Hospital falls by 10%.What happens to the quantity of services demanded by Rural Hospital?

• A)Quantity demanded at City Hospital increases by 15.0%
• B)Quantity demanded at City Hospital increases by 1.5%
• C)Quantity demanded at Rural Hospital rises by 3.5%
• D)Quantity demanded at Rural Hospital falls by 5.0%
• E)Quantity demanded at City Hospital rises by 5.0%

Understand the degree of operating leverage and its use in measuring the sensitivity of operating income to changes in sales volume.

Interpret and analyze financial information to make informed business decisions related to sales, costs, and profit.

Understand the principles and applications of the percentage-of-completion method and completed contract method in revenue recognition.

Recognize the role of payments, including interest and progress payments, in the accounting for installment sales and construction contracts.

---

Definitions:

Stifles the Imagination

Refers to actions or conditions that suppress or limit creative thinking and the ability to generate novel ideas or solutions.

Appearance-reality Distinction

The ability to distinguish between how things appear and how they really are.

Piaget

A Swiss psychologist renowned for his theory of cognitive development that describes how children construct a mental model of the world.

Sesame Street

An educational television program designed for preschoolers, renowned for its creative use of puppetry, animation, and cultural references to teach various topics.