Answer:
budget constraint
Explanation:
The slope of the budget constraint is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. Intuitively, the slope of the budget constraint represents how many of the goods on the y-axis the consumer must give up in order to be able to afford one more of the goods on the x-axis. the concept of budget line or what is also called budget constraint is essential for understanding the theory of consumer’s equilibrium.
A higher indifference curve shows a higher level of satisfaction than a lower one. Therefore, a consumer in his attempt to maximize his satisfaction will try to reach the highest possible indifference curve . But in his pursuit of buying more and more goods and thus obtaining more and more satisfaction he has to work under two constraints: first, he has to pay the prices for the goods and, secondly, he has a limited money income with which to purchase the goods. Thus, how far he would go in for his purchases depends upon the prices of the goods and the money income which he has to spend on the goods.
Answer:
Accounting Profit = $100
Economic profit = $80
Explanation:
Given that
Sales = 10
Cost = $10
The calculation of accounting profit and economic profit is shown below:-
Accounting Profit = Sales × Costs
= 10 × $10
= $100
For calculating accounting profit we simply multiply sales with costs.
Economic profit = Accounting profit - Opportunity cost
= $100 - 2 × $10
= $80
For calculating the economic profit we simply deduct the opportunity cost from accounting profit.
Answer:
C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Explanation:
given data
State 1 State 2 State 3
Probability 25% 50% 25%
Spot rate $ 2.50 /£ $ 2.00 /£ $ 1.60 /£
P* £ 1,800 £ 2,250 £ 2,812.50
P $4,500 $4,500 $4,500
solution
company holds portfolio in pound. so to get hedge, they will sell that of the same amount.
we get here average value of the portfolio that is
The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)
The average value of the portfolio = 2278.13
so correct option is C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Answer:
Time Interest Earned Ratio (TIE Ratio) = 5.8 times
Explanation:
Time Interest Earned Ratio (TIE Ratio) = Income Before Interest and Tax/ Interest Expense
Details Amount ($)
Sales 435,000
Less: Operating Cost 362,500
Income Before Interest and Tax (x) 72,500
Interest (y) 12,500
TIE Ratio (x/y) 5.8 times
