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3 years ago

Goods are ________ when the income elasticity of demand is positive

1 answer:

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Goods are in high demand.

positive income elasticity of demand is coordinated with normal goods. and the basic rules are when production increases, income will increase as well and the demands of the good will increase. These goods are demanded by each of the levels of the prices.

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Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has six year

ella [17]

Answer:

a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave?

Bond Sam's price will change by -9.12%
Bond Dave's price will change by -18.05%

b. If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave?

Bond Sam's price will change by 10.26%
Bond Dave's price will change by 24.35%

Explanation:

Bond Sam

9% / 2 = 4.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 4.5%)¹² = $589.66
PV of coupon payments = 35 x 9.11858 (PV annuity factor, 4.5%, 12 periods) = $319.15

new market price = $589.66 + $319.15 = $908.81

if interest increases by 2%, present value (market value) will decrease by $91.19 ⇒ 9.12% decrease

if market interest rates decrease by 2%:

5% / 2 = 2.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 2.5%)¹² = $743.56
PV of coupon payments = 35 x 10.25776 (PV annuity factor, 2.5%, 12 periods) = $359.02

new market price = $743.56 + $359.02 = $1,102.58

if interest decrease by 2%, present value (market value) will increase by $102.58 ⇒ 10.26% increase

Bond Dave

9% / 2 = 4.5% semiannual payments

19 years to maturity = 38 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 4.5%)³⁸ = $187.75
PV of coupon payments = 35 x 18.04999 (PV annuity factor, 4.5%, 38 periods) = $631.75

new market price = $187.75 + $631.75 = $819.50

if interest increases by 2%, present value (market value) will decrease by $180.50 ⇒ 18.05% decrease

if market interest rates decrease by 2%:

5% / 2 = 2.5% semiannual payments

6 years to maturity = 12 payments

present value = future value = 1000

PV of face value = 1,000 / (1 + 2.5%)³⁸ = $391.28
PV of coupon payments = 35 x 24.3486 (PV annuity factor, 2.5%, 38 periods) = $852.20

new market price = $391.28 + $852.20 = $1,243.48

if interest decrease by 2%, present value (market value) will increase by $243.48 ⇒ 24.35% increase

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3 years ago

One of your firm’s suppliers discounts prices for larger quantities. The first 1000 parts are $15 each. The next 1500 are $13 ea

AfilCa [17]

Answer:

a) Average cost of producing 650 units will be $15

Marginal cost will also be $15

b) Marginal cost = $13

Average cost = $14.6

c) Marginal cost = $11

Average cost = $13.8

d) Marginal cost = $11

Average cost = $13

Explanation:

Data provided in the question:

Cost of first 1000 parts = $15 each

Cost of next 1500 parts = $13 each

Cost of parts excess in 2500 = $11 each

Now,

Marginal cost is the additional cost of producing one extra unit of a good

a) 650

Since cost of first 1000 parts in $13 each

Therefore,

as 650 is below 1000 i.e lies in the range of first 1000 units

Average cost of producing 650 units will be $15

Marginal cost will also be $15

b) 1250

the 1251th unit will lie in the range on next 1500 units

Thus,

Marginal cost = $13

Total cost of producing 1250 units

= $15 × 1000 + [(1250 - 1000) × $13]

= $15000 + $3250

= $18,250

Average cost = Total cost ÷ Total units

= $18,250 ÷ 1250

= $14.6

c) 2500

the 2501th unit will lie in the range on excess to 2500 units

Thus,

Marginal cost = $11

Total cost of producing 2500 units

= $15 × 1000 + [(2500 - 1000) × $13]

= $15,000 + $19,500

= $34,500

Average cost = Total cost ÷ Total units

= $34,500 ÷ 2500

= $13.8

(d)3500

the 3501th unit will lie in the range on excess to 2500 units

Thus,

Marginal cost = $11

Total cost of producing 3500 units

= $15 × 1000 + [(2500 - 1000) × $13] + [ ( 3500 - 2500 ) × $11]

= $15,000 + $19,500 + $11,000

= $45,500

Average cost = Total cost ÷ Total units

= $45,500 ÷ 3500

= $13

4 0

3 years ago

Kyle burroughs left his car parked on the street all night. when he came out in the morning all four of his tires had been slash

TEA [102]

Based on the damages that Kyle's automobile acquired, the automobile insurance that would cover this damage would be a COMPREHENSIVE PHYSICAL DAMAGE. This kind of insurance is what protects your vehicle and since it is comprehensive, other damages including fire and theft could also be covered.

7 0

4 years ago

The study of moral choices and values; involves choosing between right or wrong

BartSMP [9]

Answer:

The words "moral" and "ethics" (and cognates) are often used interchangeably. However, it is useful to make the following distinction: Morality is the system through which we determine right and wrong conduct -- i.e., the guide to good or right conduct. Ethics is the philosophical study of Morality.

5 0

3 years ago

Jane's aunt wants a cashmere blanket to put over her legs when she watches television from her favorite chair. Jane could drive

FrozenT [24]

Answer:

Situational Factor

Explanation:

The factor has to do with Jane's involvement in the task of buying the blanket. Jane cannot afford to drive 50 miles to buy the blanket at a cheaper price because she works a full time job and takes care of her three children. although it is cheaper she cannot afford the time it takes to drive 50 miles on her busy schedule and finds it easier to order it online as it will be delivered to her door step.

4 0

3 years ago