Answer:
The opportunity cost of a city block used for a parking lot in an expensive city compare to a small town would be MUCH HIGHER.
Explanation:
Resources are scarce, and the scarcer they are, the more expensive they tend to be. A city block used for parking space in a large city is worth a lot of money, while a similar lot in a small town would be worth much less. The demand for land in a large city is much greater and the availability of land is much lower.
A continuous decrease in the level of prices over time is called deflation. It involves the contraction of the supply of money in an economy. The opposite of such is inflation. During this time, the power of the currency and the wages are high than what is normal. It causes for capital, goods, services and labor costs to be lower. Monetary deflation can be caused by the decrease in supply of money or instruments that can be redeemed by money. In present, the supply of money is influenced by the central bank of each nation. Price deflation can be caused by a decrease in the demand of the goods and services and also increase in the productivity of the economy.
Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach
The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).
A linear relationship between the required return on investment and risk is established by this financial model.
Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.
The calculation is shown below.
Cost of equity = Risk-free rate + (beta * Market risk premium)
Cost of equity = 4.10% + (0.70 * 5.25%)
Cost of equity = 4.10% + 3.675%
Cost of equity = 7.77% or 7.78%
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If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will set lower price in the market that is more price elastic.
Under price discrimination, a monopolist charges different prices in different sub-markets. Thus, a monopolist divides the market into sub-markets based on their price elasticity of demand.
So, if there are two identifiable markets, where the customer would want to buy from you, these markets will differ with respect to their price elasticity of demand and here resale is impossible.
Hence, a firm with market power will set lower price in the market that is more price elastic.
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Answer:
D. $5
Explanation:
Accountants calculate only explicit costs, or costs that are directly attributed to the process. (This is different than how an economist would calculate costs, because economists would also include the implicit costs such as the opportunity cost of the wages Walter could be earning at the store if he wasn't making bird houses).
