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Marysya12 [62]
2 years ago
8

There are many options available to consumers when it comes to breakfast cereals. So, if Kellogg's significantly increases the p

rice of Rice Krispies, consumers are more apt to buy alternate cereals instead. This illustrates which concept?1) cross-price elasticity
2) the income effect
3) the target return effect
4) the substitution effect
5) the break-even point
Business
1 answer:
Natalka [10]2 years ago
8 0

Answer:

4) the substitution effect

Explanation:

When a product's change in price (increase) directly influences the consumers to switch to lower-cost alternatives, it is called the substitution effect.

Usually, it is applicable for similar kinds of FMCG goods. Of course, personal spending power and consumer habits are of great importance too, but the substitution effect best describes what happens with the consumer choice when the price of a particular good increases.

The substitution effect describes situations <u>when the product's price increases, but the spending power remains on the same level</u>. If the change in spending power was the input for <em>consumer choice</em>, than it would be the <em>income effect</em>.

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The risk-free rate and the expected market rate of return are 0.06 and 0.12, respectively. According to the capital asset pricin
zavuch27 [327]

Answer:

<u>13.2%</u>

Explanation:

As per Capital Asset Pricing Model (CAPM),

Expected Rate Of Return = R_{f}  \ +\ B(R_{m} \ -\ R_{f} )

wherein, R_{f} = Risk free rate of return on treasury bonds

               B= Beta , which represents the degree of sensitivity of security return to the market return.

               R_{m} = Return on market portfolio

Thus, Expected rate of return of security X = 6 + 1.2(12 - 6)

                                                                        = 13.2%

CAPM model is used for calculating expected rate of return. As per the model, the investors expect a risk premium represented by excess of rate of return of market portfolio over risk free rate , in addition for the risk free rate of return.

The risk premium serves as a compensation for investing in risky securities instead of risk free securities.

5 0
3 years ago
A few years ago, Toyota found that consumers wanted cars to last longer and be more environmentally friendly. GM, however, enjoy
Allushta [10]

Answer:

General Motors had more of a Production Orientation

Explanation:

The company which is production oriented focuses on the production and company's production processes and runs campaigns to sell the product produced or the product they are producing. General motors produced the products which it is good in producing the products and won the market against great giants like Ford, Toyota and German auto companies. Whereas Toyota was developing market which is newly born and started pricing their products on the basis of products that were desired (environmentally friendly products) and lost the market because of lost of market share as this market was in introduction phase and Toyota left a market which was at maturity. Then it is obvious that Toyota has revenue losses due to leaving its concentration and marketing of products to mature market and was busy in developing environmentally free products market in US.

7 0
2 years ago
The amount of goods or services that consumers are willing and able to buy is determined by
RoseWind [281]
The best answer is "C" or demand. Consumers will buy more or less depending on the demand. 

I hope this helps!
<em>~cupcake</em>
5 0
2 years ago
24. Armin is trying to decide whether to buy a season pass to his college basketball team’s 20 home games this season. The cost
aksik [14]

Answer:

13 Home games

Explanation:

A season pass cost for home games =$175

Individual ticket per game    =$14

For season pass to be less than  total home game tickets  

i.e $175 must be than ($14 X Homegames )  

i.e 175 = 14XHG

    HG=   175/14=12.5 Approx. 13 games

    Total cost of 13 games is ($13X14)=$182. {$175 is less that $182}

Ardim must attend 13 games.

8 0
3 years ago
What happens when a bond becomes due?
katen-ka-za [31]
<span>When you buy a bond, you're lending your money to a company or a government (the bond issuer) for a set period of time (the term). The term can be anywhere from a year or less to as long as 30 years. In return, the issuer pays you interest. On the date the bond becomes due (the maturity date), the issuer is supposed to pay back the face value of the bond to you in full.</span>
6 0
3 years ago
Read 2 more answers
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