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Serjik [45]
3 years ago
11

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everythi

ng else​ constant, how would this affect the market for video game consoles​?
A) The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease.
B) The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles.
C) The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease.
D) The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.

Business
1 answer:
BabaBlast [244]3 years ago
7 0

Answer:

The answer is C) The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease.

Explanation:

If there are changes in production costs, the entire supply curve will shift. A shift in supply means a change in the quantity supplied at every price.A decrease in production costs will cause the supply curve to shift to the right ( increase in supply). The effect is shown in the diagram attached.

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According to the Bureau of Labor Statistics​ (BLS) high-paying jobs in health care and jobs in​ leisure, hospitality, and educat
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What are things you can do to manage the risks in your life to reduce any financial losses?
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3 years ago
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $150,000 or $290,000 with equal
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Answer:

(A) The price you will be willing to pay for the portfolio is $194,690.

(B) The expected rate of return is 13%.

(C) The price you will be willing to pay for the portfolio is $181,818.

Explanation:

A. If you require a risk premium of 7%, how much will you be willing to pay for the portfolio?

The amount you be willing to pay for the portfolio can be calculated using the following formula:

The price you will be willing to pay for the portfolio = Expected cash flow / (1 + Required rate of return) ................... (1)

Where;

Expected cash flow = ($150,000 * 0.5) + ($290,000 * 0.5) = $220,000

Required rate of return = Risk free rate + Risk premium = 6% + 7% = 13%, or 0.13

Therefore, we have:

The price you will be willing to pay for the portfolio = $220,000 / (1 + 0.13) = $220,000 / 1.13 = $194,690

B. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return on the portfolio be?

The expected rate of return (E(r)) can be calculated using the following formula:

Amount to be paid for the portfolio * [1 + E(r)] = Expected cash flow

Therefore, we have:

$194,690 * [1 + E(r)] = $220,000

$194,690 + ($194,690 * E(r)) = $220,000

$194,690 * E(r) = $220,000 - $194,690

$194,690 * E(r) = $25,310

E(r) = $25,310 / $194,690 = 0.13, or 13%

Therefore, the expected rate of return is 13%.

C. Now suppose you require a risk premium of 15%. What is the price you will be willing to pay now?

Required rate of return = Risk free rate + Risk premium = 6% + 15% = 21%, or 0.21

Using equation (1) in part A, we have:

The price you will be willing to pay for the portfolio = $220,000 / (1 + 0.21) = $220,000 / (1.21) = $181,818

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