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1 year ago

The reason the substitution effect works to encourage a consumer to buy less of a product when its price increases is:

Business

1 answer:

ikadub [295]1 year ago

8 0

Answer:

The correct answer is the option C: the product is now relatively more expensive than it was before.

Explanation:

To begin with, the <em>substitution effect</em> is the term that, in economics, refers to the situation where a products or services increase or decrease its value in comparison with other and therefore it causes a substitution from the consumer regarding that change in the price.

Secondly, in the case where a product increases its price the substitution effect will cause that the consumer decides to purchase other products due to the fact that the first product is now relatively more expensive than it was before and therefore a substitution of the good takes place.

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Casey has $1 comma 000 to invest in a certificate of deposit. Her local bank offers her 2.50% on a twelve-month FDIC-insured

frutty [35]

Answer:

the risk premium = return of the deposit - risk free deposit return

risk premium = 5.2% - 2.5% = 2.7% or $27 for a $1,000 CD

Besides the investment risk, Casey must also consider the inflation rate and taxes. The inflation rate lowers the real interest earned by Casey: real interest rate = nominal interest rate - inflation rate. And she must also find out how the return from the non-financial institution is taxed, if it can be taxed as capital gains or regular income.

6 0

2 years ago

You are considering the following two mutually exclusive projects that will not be repeated. The required rate of return is 11.2

postnew [5]

Answer:

a. project A; because its NPV is about $335 more than the NPV of project B.

Explanation:

As in the question it is mentioned that the required rate of return for project A and project B is 11.25% and 10.75% respectively.

Here we have to determined the net present value for both projects having different required rate of return

So based on the net present value the first option is correct as the project A is more than the project B

Therefore the first option should be accepted

5 0

2 years ago

Resources are adequate, but demand varies widely over the life of the project. Delaying noncritical activities to lower peak dem

-BARSIC- [3]

Answer:

resource smoothing

Explanation:

According to the definition provided in the question we can say that this is regarding resource smoothing. Like mentioned in the question this term refers to a management technique that adjusts the resources so that the requirements do not surpass the resource limits that the company has specified, by delaying the noncritical activities in order to allow for the important ones first.

If you have any more questions feel free to ask away at Brainly.

3 0

2 years ago

Lucky louie just won the lottery!! he has a choice of taking $1,000,000 in cash or receiving $50,000 per year for 30 years begin

kipiarov [429]

Given that Lucky won $1000000 and has an option of receiving $50000 p.a for 30 years, the total amount received after 30 years in case he goes for option 2 will be:
amount=(yearly payment)+(number of years)
=(50000)×(30)
=$1,500,000
This implies that the second option is best choice. Given the information, we shall conclude that the best thing to do is to calculate the present value of the annuity payments.
The answer is D]

8 0

2 years ago

Read 2 more answers

Salaries Expense before adjustment at September 30, the end of the fiscal year, has a balance of $140,000. The amount of accrued

MatroZZZ [7]

Answer:

income summary 143,100 debit

salaries expense 143,100 credit

Explanation:

The company will do an adjusting entry to reocrd the expense for the accrued but not payed salaries of the year:

salaries expense 3,100 debit

salaries payables 3,100 credit

Thus, the total slaries expense for the year would be:

140,000 + 3,100 = 143,100

To close we will leave the expenses balance at zero thus, we will credit this amount against an auxiliary account called income summary.

5 0

2 years ago