Answer:
The correct answer is the option A: the price of canned beans.
Explanation:
To begin with, the term known as <em>"ceteris paribus"</em> in the field of economics refers to the situation where in a formula or function every variable stays the same and that means that they remain constant and just one variable is altereted, which in this case is the most important and influential variable in the equation, therefore the price is the one that does change because of the huge impact and influece it has in the function of the demand in this case. The other variables, like the income of the consumers, and the cost of the production of the canned and the price of other product does influece in the equation but not as much as the price and that is why when in "ceteris paribus" those variable are constants.
Answer:
raises
rises
rises
increase
higher
decrease
rise
away from bread and toward cereal
rises
Explanation:
Complementary goods are goods that are consumed together
If the price of chowder falls, the quantity demanded of chowder increases in law with the law of demand.
According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
If the quantity demanded of chowder increases, the demand for oyster increases also.
Due to the increase in the demand for oysters, suppliers would want to increase their supply of oysters. This would lead to an increased demand for inputs of which wheat flour is one of them. So, the quantity demanded of wheat would increase.
The increase in demand for flour would shift the demand curve for flour to the right and this would lead to a rise in price of flour.
The increase in price of flour would increase the cost of making bread. As a result, the supply of bread would fall. the fall in supply would lead to a rise in price of bread. As a result of the rise in price of bread, the demand for a substitute (cereal) would increase
Substitute goods are goods that can be used in place of another good.
Answer:
= $93.64
Explanation:
Price = D1/ (r-g)
D1 = Dividend next year =D0(1+g)
D1 = 2(1.03) =2.06
g; growth rate = 3%
r= required return (Use CAPM to find it) as shown below;
CAPM ;r = risk free + beta(MRP)
beta = 40% *1 ( since market beta is equal to 1)
therefore, Beta = 0.4
CAPM; r = 2% + (0.4*8%) = 5.2%
Next, use the rate of return i.e 5.2% , to calculate the price of the stock;
Price = D1/ (r-g)
= 2.06 / (5.2% -3%)
Price = $93.64
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