Income and 4 Ps allowance • What is the economic model of

Income 4 Ps the above table?

(Yd) allowance
6,000 6,000
8,000 5,500  •
Economic Model =
10,000 X1 5,000 Y1 • =
12,000 X2 4,500 Y2
• =
• = -0.25
• What “type of the • Changes in 4 Ps allowances is – 0.25 of Changes
slope” is this given in income.
table
• Since the Economic
Model has ( - )
• The slope is
downwards
Income and 4 Ps allowance • What will be 4 Ps allowance
Income 4 Ps when income become 13,000?
(Yd) allowance
6,000 6,000  •
Economic Model =
8,000 5,500 • -0.25 =
10,000 5,000 • -0.25 =
12,000 4,500 • -0.25 x 1,000 = Y2-4,500
X1 Y1
• - 250 = Y2 – 4,500
13,000 X2 ? Y2 • 4,500-250 = Y2
• 4,250 = Y2
• When income become 13,000 the 4 Ps allowance
will become 4,250
 Profit and Expense • What is the economic model of
Expense Profit the profit and Expense ?
 •
Economic Model =
• =
35,000 4,000 • =
40,000 X1 3,500 Y1 • = -0.1
45,000 X2 3,000 Y2
• Changes in profit is – 0.1 of Changes in expense.

• What “type of the • Since the Economic

slope of profit and Model has ( - )
expense ” • The slope is
downwards
 Profit and Expense • What is profit when Expense
Expense Profit become 20,000?
 •
Economic Model =
20,000 X2 ? Y2 • -0.1 =
35,000 X1 4,000 Y1
• -0.1 =
• - 0.1 x -15,000 = Y2 – 4,000
40,000 3,500
• 1,500 = Y2 -4,000
45,000 3,000 • 1,500+4,000 = Y2
• 5,500 = Y2
• When expense 20,000 the profit is 5,500
 Profit and Expense • What is profit when Expense
Expense Profit become 50,000?
 •
Economic Model =
20,000 • -0.1 =
35,000 4,000 • -0.1 =
• - 0.1 x 5,000 = Y2 – 3,000
40,000 3,500
• - 500 = Y2 - 3,000
45,000 X1 3,000 Y1 • - 500 + 3,000 = Y2
50,000 X2 ? Y2 • -2,500 = Y2
• When expense 20,000 the profit is 2,500