Question 22

Part A

Demand at 120 = 10 – 120/60 = 8 unit

Demand at 300 = 10 – 300/60 = 5 unit

Change in price = (300 – 120) / ((300 + 120)/2) = 0.86

Change in quantity = (8 – 5) / ((8 + 5)/2) = 0.46

PED = 0.46 / 0.86 = 0.54

Part B

Demand at price of 400 = 10 – 400/60 = 3.33

Total revenue = 400*3.33 = 1333

Revenue at 300 unit = 300*5 = 1500

As the revenue decline at price of 400 as compared to price of 300, therefore the store

manager is not correct

Question 21

Part A

Alpha opportunity cost of popcorn = 250/150 = 1.67 peanut

Omega opportunity cost of popcorn = 100/300 = 0.33 peanut

Alpha opportunity cost of peanut = 150/250 = 0.6 popcorn

Omega opportunity cost of peanut = 300/100 = 3 popcorn

Therefore Omega has comparative advantage in popcorn and alpha has advantage in peanut

Alpha production = 250 peanut

Omega production = 300 popcorn

Part B

Alpha consumption after trade

175 peanut and 75 popcorn

Alpha gains as its opportunity cost of 75 peanut is 45 popcorn but instead it gets 75 popcorn,

therefore it gains 30 unit of popcorn

Omega consumption after trade

225 popcorn and 75 peanut

Omega gains as its opportunity cost of 75 popcorn is 25 peanut but instead it gets 75 peanut

therefore it gains 50 peanut

The ending raw material has decreased marginally means the company has used more raw

material during the year then it has purchased and ending WIP has increased means the

company has produced less finished goods during the year then the input in the production

process and more work is under process and similarly the ending finished goods has

decreased means that the company has sold more goods then it has manufactured during the

year.

Company has underapplied MOH and therefore when we close it to the COGS then the

COGS will increase leading to lower net income.

The work in process inventory has increased and finished goods inventory has decreased.

This means that the company has completed less number of boxes during the year as

compared to raw material used and has sold more number of boxes during the year as

compared to the boxes manufactured during the year leading to decline in finished goods

inventory.

Question 1
The case study revolves around the commitment of corporations towards its stakeholders and

whether the corporation objective of profit maximization for shareholders is more important

or its impact on the stakeholders as a whole in terms of customers, employees, society and

government is more important.

In the case study the example of Amazon Inc is taken and how it is negatively impacting the

society as a whole and how the objective of profitability for the shareholders has taken over

the Amazon responsibility towards its stakeholders.

The major issue raised in the case study is whether Amazon is ethical, secondly the issue

being raised is whether it is compulsory on the part of Amazon to be ethical and consider the

impact on its decision on the stakeholders in the society, thirdly what is the purpose of

company like Amazon whether to be profit maximizing towards shareholders or contribute

towards the general well being of the society and lastly how the society can play their role in

working with these companies to achieve the common goal.

Question 5

The major concern Amazon is facing is deficiency in the fulfillment of its duties towards the

society in terms of environmental impact, employee’s welfare, society and responsibility

towards other stakeholders. In the short term the company can be more vocal about ethical

actions and what steps they are taking for the betterment of the society. This can be done by

providing more disclosures, more press releases and real action in the society demonstrating

its commitment towards its stakeholders. As it is not possible to resolve all the issues in short

term or to satisfy all the stakeholders. As there is additional cost for fulfilling this

responsibility and the company also need to be in the business for long period. Therefore, in

the short term it can show its commitment towards the society and for the long term it can
develop alternate plans on how it will impact the society as a whole. The long-term plans can

include reducing the carbon footprint, employee welfare and betterment of the society. In the

long-term company can spend more on research and innovation and integrate all the

stakeholders together to arrive at common solution to resolve the problem.