What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?.

Suppose you are a manager for a multinational company that produces a variety of beauty products. Heartland Company was founded

Vitek1552 [10]

Answer:

a. Partnership

Explanation:

Brazil is a market that can be tricky if exporting is used. Botanico is struggling at 2nd position with only 20% share but are efficient in manufacturing and distribution which can be utilized by Heartland. Heartland is known as trend setter which is something Botanica lacks currently to woo the young women and girls into buying their products A partnership would simply result that competitive edges of both the parties can be employed together to win over the market.

5 0

3 years ago

The price of Chive Corp. stock will be either $86 or $119 at the end of the year. Call options are available with one year to ex

Oliga [24]

Answer and Explanation:

a). Step 1: Calculate the option value at expiration based upon your assumption of a 50% chance of increasing to $119 and a 50% chance of decreasing to $86.

The two possible stock prices are:

S+ = $119 and S– = $86. Therefore, since the exercise price is $85, the corresponding two possible call values are:

Cu= $34 and Cd= $1.

Step 2: Calculate the hedge ratio:

(Cu– Cd)/(uS0– dS0) = (34 – 1)/(119 – 86) = 33/33 = 1

Step 3: Form a riskless portfolio made up of one share of stock and one written calls. The cost of the riskless portfolio is:

(S0– C0) = 97 – C0

and the certain end-of-year value is $86.

Step 4: Calculate the present value of $86 with a one-year interest rate of 5%:

$86/1.05 = $81.90

Step 5: Set the value of the hedged position equal to the present value of the certain payoff:

$97 – C0= $81.90

C0 = $97 - $81.90 = $15.10

b). Step 1: Calculate the option value at expiration based upon your assumption of a 50% chance of increasing to $119 and a 50% chance of decreasing to $86.

The two possible stock prices are:

S+ = $119 and S– = $86. Therefore, since the exercise price is $115, the corresponding two possible call values are:

Cu= $4 and Cd= $0.

Step 2: Calculate the hedge ratio:

(Cu– Cd)/(uS0– dS0) = (4 – 0)/(119 – 86) = 4/33

Step 3: Form a riskless portfolio made up of four shares of stock and thirty three written calls. The cost of the riskless portfolio is:

(4S0– 33C0) = 4(97) – 33C0 = 388 - 33C0

and the certain end-of-year value is $86.

Step 4: Calculate the present value of $86 with a one-year interest rate of 5%:

$86/1.05 = $81.90

Step 5: Set the value of the hedged position equal to the present value of the certain payoff:

$388 – 33C0= $81.90

33C0 = $388 - $81.90

C0 = $306.10 / 33 = $9.28

7 0

3 years ago

If a 7% increase in the price of cheese causes a 7% reduction in the total revenue received by cheese farmers, the demand for ch

Vanyuwa [196]

Answer:

C.Unit elastic

Explanation:

Unit elastic demand is the term that describes a scenario where a change in price causes a proportionate change in demand. It is one of the types of elastic demand. A good or service is said to have elastic demand if a small change in price causes a considerable change in the quantity demanded.

In the unit elastic demand, if a product price changes by a certain percentage, the demand will change by an equal percentage. In this scenario, a 7 percent price increase results in a 7 percent decrease in demand.

5 0

3 years ago

In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of ho

Allisa [31]

The cost are as follows:

rent, raw materials, production, utilities, shipping, insurance,

Answer:

Fixed cost> rent, insurance, utilities

Variable cost> raw materials, production cost, shipping cost

Explanation:

Remember, it was mentioned that Fixed costs are costs that must be paid regardless of how many units are produced and sold; which implies that they do not change so frequently.

Thus, we would expect rent paid by Crystal soap to be fixed overtime, her insurance payments as well as utilities she pays for like power etc would also fall under fixed cost.

Variable costs, on the other hand, fluctuate directly with sales volume. Therefore, Crystal soap business would incur varying cost amount for raw materials, production cost, and their shipping cost.

5 0

3 years ago

XYZ Development has just purchased a large tract of land that it plans to develop into 50 one-acre building lots. To have the ab

m_a_m_a [10]

To have the ability to sell off individual lots before paying off the entire balance due, the developer will need to obtain a blanket mortgage.

<h3>What is a blanket mortgage?</h3>

A blanket mortgage is a single mortgage that covers many properties and serves as security for the loan.
Real estate developers and larger investors frequently purchase multiple properties at once, thus a blanket mortgage allows them to consolidate such deals into a single loan.
Consider the money you'd save on closing fees, both for the original mortgage and any subsequent refinances.
Refinancing from numerous loans to a single blanket mortgage may also result in lower monthly payments, which may increase your cash flow.

Therefore, to have the ability to sell off individual lots before paying off the entire balance due, the developer will need to obtain a blanket mortgage.

Know more about a blanket mortgage here:

brainly.com/question/14455197

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6 0

2 years ago