Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption
1 answer:
The price of the water needs to be raised by 40% when the consumption of water reduces by 10% and the price elasticity of demand results to 25%.
<h3>What is meant by the price of elasticity of demand?</h3>The price elasticity of demand is determined as the proportionate variation in quantity with respect to variation in the price of a good.
Given values:
Change in water consumption (fall): 10%
Price elasticity of demand: 25%
Computation of percentage change in the price of water:
Therefore, there is an increase in water price by 40%.
Learn more about the price elasticity of demand here:
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Answer:
23.56
Explanation:
Standard deviation of the first stock (σ1) = 20%
Standard deviation of the second stock (σ2) = 37%
The correlation coefficient between the returns (ρ) = 0.1.
Proportion invested in the first stock (W1) = 43%
Proportion invested in the second stock (W2) = 57%
The standard deviation of a two-stock portfolio's returns is given by
The standard deviation of this portfolio's returns IS 23.56%
Answer:
A) One year ago, Saul's investment was worth less than Trek's investment. B)
Explanation:
Computation of Saul's Investment Rate of Interest
A = P(1 + r)^t
Where: A = Final amount
P = Principal amount
r = Interest rate
t = Time period in years.
A = $800
P = $500
r = Unknown
t = 4 years
800 = 500(1 + r)^4
Divide both sides by 500
800/500 = (500(1 + r)^4 )/500
1.6 = (1 + r)^4
Take the fourth root of both sides
=
1.1246826504 = (1 + r)
1.1246826504 = 1 + r
Subtract 1 from both sides
1.1246826504 - 1 = 1 -1+ r
0.1246826504 = r
Convert 0.1246826504 to percentage and to 2 decimal places
r = 12.47%
That is, Saul investment is at 12.47% interest rate
Computation of Trek's Investment Rate of Interest
A = $800
P = $600
r = Unknown
t = 4 years
800 = 600(1 + r)^4
Divide both sides by 600
800/600 = (600(1 + r)^4 )/600
1.333333333 = (1 + r)^4
Take the cube root of both sides
=
1.100642416 = (1 + r)
1.100642416 = 1 + r
Subtract 1 from both sides
1.100642416 - 1 = 1 -1+ r
0.100642416 = r
Convert 0.100642416 to percentage and to 2 decimal place
r = 10..06%
That is, Trek investment is at 10..06% interest rate
It can be observed that Saul earns a higher rate of return than Trek. The fact that both investment have equal returns today, it means Saul's investment was worth less than Trek's investment one year ago.