It is an elastic good and to increase the revenue, the producer should decrease the price of the good.
<u>Explanation:</u>
The good that has a price elasticity of demand with a coefficient of 1.6, the good is said to have elastic demand. For such a good, the producer should decrease the price of that good to increase its revenue. With the decrease in the price, the demand of the good will increase significantly. This will help him increase his revenue.
Answer:
The company's current stock price is $ 18.62.
Explanation:
To calculate the company's current stock price we have to use first the following formula to calculate the: Expected Return of stock
Expected Return of stock = Risk Free Rate+ Beta * Market Risk Premium
Expected Return of stock= 4+1.15*5
=4+5.75
Expected Return = 9.75%
Then, we can calculate the stock price with the following formula:
Price = Dividendat year 1/ Return- Growth
D1 =0.75*105.5%
=0.79125
Price =0.79/( 0.0975-0.055)
=18.62
The price is $ 18.62
