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###### Economics

1)Running Treadmills Inc. (RTI) is a treadmill manufacturer that sells the Extreme Climber for \$4,500, which includes a 24-month warranty. While not widely advertised, RTI's customers can purchase the treadmill without the warranty for \$4,000. RTI also offers the warranty on a stand-alone basis to its customers and those who purchased the treadmill at non-RTI outlets on a stand-alone basis for \$1,000.

RTI follows IFRS and allocates revenues to the component parts using the relative fair value method. Its policy is to recognize revenue from the sale of warranties on a straight-line basis over the life of the warranty.

Assume that an Extreme Climber is sold on January 1, 20X8, for \$4,500. RTI's year end is December 31. What is the total revenue reported by Running Treadmills in the month of January for this sale?

2)In 1916, the Ford Motor Company sold 500,000 Model T Fords at a price of \$440. Henry Ford believed that he could increase sales of the Model T by 1,000 cars for every dollar he cut the price. Use this information to calculate the price elasticity of demand for Model T Fords. Use the midpoint formula in your calculation. Assuming the price decreases by \$1, and the quantity increases by 1000 cars, the price elasticity of demand for Model T Fords is what?

## 2.88 USD

### Option 2

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