In 2010,Sunny Electronics Expects to Sell 100,000 3-D Television Sets

question 52

Multiple Choice

In 2010,Sunny Electronics expects to sell 100,000 3-D television sets for an average price of $1,000.Expected production costs are $600 per unit.In 2011,volume is expected to increase by 10%,while inflation will increase both the sales price and the cost per unit by 3%.In real dollars,expected gross profit for 2011 is:

• A)$40 million.
• B)$45.32 million.
• C)$48.2 0 million.
• D)$50 million.

Analyze the consequences of shifts in supply and demand on equilibrium price and quantity.

Describe the relationship between price and quantity demanded (Law of Demand).

Describe the relationship between price and quantity supplied (Law of Supply).

Interpret demand and supply schedules and their graphical representations.

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Definitions:

Probability Distribution

A probability distribution is a statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project, calculating the net difference between present value of cash inflows and outflows over a period.

IRR

Stands for Internal Rate of Return, a metric used in financial analysis to estimate the profitability of potential investments.

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios).