# Law of Demand

* During the month of July, McElroy Company's direct labor cost totaled $36,000, and direct labor cost was 60% of prime cost. If total manufacturing costs during July were $85,000, the manufacturing overhead was:

a. $60,000

b. $25,000

c. $30,000

d. $51,000

* Suppose that the price of Product A falls from $20 to $15. In

response, the quantity demanded of A increases from 100 to 120 units.

The quantity demanded for Product B increases from 200 to 300. Calculate

the arc cross elasticity between Product B and Product A. Is B a

substitute or complement for A? Explain. Does Product A follow the "law

of demand?" Explain

* Suppose that the marginal product of labor is: MP = 100 - L, where L

is the number of workers hired. You can sell the product in the

marketplace for $50 per unit and the wage rate for labor is $100. How

many workers should you hire?

https://brainmass.com/business/business-math/law-of-demand-151119

#### Solution Preview

1.

Prime Cost = 36,000/60% = 60,000

Therfore overhead = 85,000 - 60,000 = 25,000

2.

change in price of A = -25%

Increase in demand of A = +20%

Increase in demand ...

#### Solution Summary

The Law of Demand is investigated. The solution is detailed and well presented. The response received a rating of "5/5" from the student who originally posted the question.