Answer: Decrease, Increase, Price flexibility.
Explanation: According to classical economics, a decrease in aggregate demand causes the price level to DECREASE in the long run. On the other hand, an increase in aggregate demand causes the price level to INCREASE in the long run. These changes occur because of PRICE FLEXIBILITY.
In a flexible market the forces of demand and supply determines the prices of commodities in the market.
As the demand Falls the prices also fall as the demand rises the prices of commodities also rises.
Answer:
2.2
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
18% = 7% + Beta × 5%
18% - 7% = Beta × 5%
11% = Beta × 5%
So, the beta would be
= 2.2
The (Market rate of return - Risk-free rate of return) is also known as market risk premium and the same has applied.
Answer:
If Impala decides to buy from the external source , it would then save the fixed of $1,750
Decision: Impala should be buy from the external source
Explanation:
<em>To determine the appropriate course of action, we shall determine whether there would be a net savings in cash flow as a result of purchasing externally or not.</em>
The relevant cash flows figures include:
- Internal variable cost of production
- External purchase price
- Savings in internal; fixed cost as result of buying outside
Variable cost of internal production = 42,000 + 8,750 + 15,750 = 66,500
Increase in variable cost if purchased externally = 66500 - 66500 = 0
If Impala decides to buy from the external source , it would then save the fixed of $1,750
Decision: Impala should be buy from the external source
