A Careful Analysis of Demand for Bubbles in Strasburg, North

question 15

Multiple Choice

A careful analysis of demand for Bubbles in Strasburg, North Dakota, reveals a strange segmentation in the market.(Recall Bubbles is the beverage which produces an unexplained craving for Lawrence Welk's music.It is produced by the process Q = min{R/3, W }, where R is the number of pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = $1, P_W = $5.) If demand for Bubbles by senior citizens is described by Q₀ = 500P^-3/2while demand by those under 65 years old is Q_y=50P^-5, how should Bubbles be priced to maximize profits?

• A)$24 for senior citizens and $10 for those younger
• B)$12 for senior citizens and $40 for those younger
• C)$8 for senior citizens and $26.67 for those younger
• D)$11.56 for all citizens of Strasburg
• E)$45 for senior citizens and $18.75 for those younger

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Definitions:

Inventories

Goods owned with the intention to sell them through standard business activities, in the stage of being made for sale, or as parts or materials meant for consumption in production activities or while offering services.

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements to combine the financial information of a parent company with its subsidiaries.

Subsidiary Entity

An entity that is controlled by another entity, the control often being evidenced through ownership of more than half of the voting rights or through other means of control.

Consolidation Adjustment

Adjustments made to eliminate intercompany transactions and balances during the preparation of consolidated financial statements for a group of companies.