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A Manufacturer of Gear Hobbers Has a 30 Percent Customer

question 97

Essay

A manufacturer of gear hobbers has a 30 percent customer retention rate. Their accounting department estimates the incremental contribution to profit and overhead as 20 percent. Customers purchase the workstations every two years at an average cost of $3,500. Determine the average value of a loyal customer.


Definitions:

Total Revenue

The total income generated from the sale of goods or services before any expenses are subtracted.

Demand for Labor

The total amount of labor (number of workers or hours worked) that employers want to hire at various wage rates.

Elastic

Describes a situation in which the demand for a product is sensitive to price changes; a small price change results in a significant change in quantity demanded.

Demand Schedule

A demand schedule is a table that shows the quantity of a good or service that consumers are willing to purchase at various price points.

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