The demand for a good increase when the price of a substitute in consumption decreases and also decreases when the price of a complement in consumption increases.
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What is demand and supply?</h3>
- Supply and demand is an economic theory that describes how prices are set in a market in microeconomics.
- In a competitive market, it is hypothesized that all else being equal, the unit price for a specific good or other traded good, such as labor or liquid financial assets, will fluctuate until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.
- It is the theoretical cornerstone of contemporary economics.
Therefore, the demand for a good increases when the price of a substitute in consumption decreases and also decreases when the price of a complement in consumption increases.
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Answer:
A. The profits of the two firms will decrease.
Explanation:
An oligopoly is when there are few large firms operating in an economy. There are usually significant barriers to entry of firms in an oligopoly.
If both firms reduce price and average cost stays the same, it indicates that there's no change in production and price has reduced. Profit would fall as a result.
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Answer:
15.16%
Explanation:
The computation of expected return on the portfolio is shown below:-
Expected return on portfolio = (Return on Stock X × Weight of Stock X) + (Return on Stock Y × Weight of Stock Y) + (Return on Stock Z × Weight of Stock Z)
= (12% × 22%) + (15% × 37%) + (17% × 41%)
= 2.64% +5.55% + 6.97%
= 15.16%
So, for computing the expected return on the portfolio we simply applied the above formula.
Answer:
ke = D1/Po + g
Ke = $1.45/$22.50 + 0.0650
Ke = 0.1294 = 12.94%
Explanation: Cost of equity is a function of dividend in 1 year's time(D1) divided by the current market price(Po) plus growth rate.
Answer:
Reliability and validity are concepts used to evaluate the quality of research. They indicate how well a method, technique or test measures something. Reliability is about the consistency of a measure, and validity is about the accuracy of a measure.
Explanation: