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.
Answer:
Coca Cola dominant strategy is strategy 1.
Explanation:
Dominant strategy is one in which the business adopts such a strategy which benefits it most among all other available alternative strategies. In the given case Coca Cola dominant strategy is strategy 1. This is because Coca Cola will get the highest possible payoff when it selects strategy 1.
Answer:
Sam’s Home Store can enforce the contract against Restore Construction Company
Explanation:
In contract law, only the parties involved in a contract can take action to enforce the contract. In this case Sam' Home Store signed the contract with Restore, so they can enforce it. Any third party beneficiaries from the contract, like United Building Supplies, are not entitled to enforce anything.
Answer:
1) The demand will decrease by 37% as a result of a 10% increase in price:
0.10 x -3.7 = -0.37 a ngevative impact in the maginitude of 37%
2) Revneue will fall
3) The decrease in revenues will be for 30.7%
Explanation:
<u>Revenues Price x Quantity</u>
P (1 + 0.1) Q (1 - 0.37) = (1.1)(0.63) = 0.693
we apply to the price the 10% increase
and we apply to the demand the 37% decrease in quantity
The revenue will fall to 0.693 = 69.3%
100 - 69.3 = 30.7%
Answer:
The gain of $18000 would be reported in income statement
Explanation:
At each reporting date, the investment needs to be recorded at fair value to reflect current market prices and realities.
As a result,the fair value increase in investment of $18000 (fair value less costs) would be shown in income statement as unrealized gain on investment since the investment has not been disposed of.
Under IFRS for instance the gain would be shown under other comprehensive in order to emphasis its unrealized nature.
