If a coconut is a normal good and the price of coconuts increases, then the movement that would take place in the model could be B to A.
<h3>What happens when prices rise?</h3><h3 />For Normal goods, a rise in prices would mean a fall in the quantity demanded. This is shown by the demand curve which shows the relationship between the quantity demanded and price.
When there is a price change, the movement will be along the demand curve which means that the demand curve would see a movement from Point B to Point A for coconuts.
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Explanation:
Credit purchase : When goods are purchased on credit , cash does not go out , but supplier or creditor becomes the giver. Therefore , goods or purchases account is debited and supplier or creditor account is credited.
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The consideration given to the bank for providing loan facility, in return of such facility an amount is paid which is over and above the principle amount of loan, this amount can be said as interest.
Interest are of two types i.e. (a) Simple interest (b) compound interest
<h3>simple interest</h3>The amount of interest which is calculated at a fixed predetermined rate every year on the principle amount and paid until the loan is settled in full.
Given in the Question
Principle is $20,000
Rate is 3%
Time is 1 year
<h3>Calculation</h3>The simple interest is calculated by multiplying principle with the rate and than the outcome is multiplied with time to find simple interest.
Therefore the amount of interest received by Michael at the end of first year on an amount of $20,000 at a interest rate of 3%will be $600.
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