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nalin [4]
3 years ago
14

A firm knows that Mike’s income elasticity of demand for hair ties is 5 while for Sally it is 0.2. A firm can reason that a hair

tie is a(n) ________ good for Mike while it is a(n) ________ good for Sally.
Business
1 answer:
bonufazy [111]3 years ago
6 0

Answer:

1) Luxury

2) Necessity

Explanation:

1)The hair tie is a luxury good for Mike because Mike has a income elasticity of 5 which means that if mike's income decreases 1% his demand for the good decreases 5%, which shows that his demand for this good is highly sensitive to his income which is a characteristic of luxury goods, as you only buy luxury goods when your income increases.

2) It is a necessity for Sally because her income elasticity to the good is 0.2 which means every 1% change in income changes her demand by just 0.2%, which shows demand is not very sensitive to income and the quantity she buys them in dont rely much on her income, which is a sign of a necessity, you buy a certain amount of necessities regardless of your income.

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According to MM proposition II, as debt increases. the firm's return on assets remains constant even while its return on equity
MissTica

Answer:

<u>decreases</u>

Explanation:

As per modigliani- miller approach, the value of a firm is not dependent upon the choice of capital structure of the firm.

Capital structure refers to the the blend or mix of different sources of capital a firm avails to raise funds. Such as debt and equity.

As per MM proposition 2, the expected yield of a stock is equal to equity capitalization rate plus an additional compensation for risk assumed by employment of debt in the capital structure due to which the debt-equity ratio rises.

As proportion of debt is increased in the capital structure, the earnings available to stockholders rise but this rise is offset by the rise in the expectation of shareholders which offsets the effect and thus value of firm remains the same.

Return on equity is given by  \frac{net\ income}{stockholders\ equity}

Thus, as the return on equity increases , the amount of equity in capital structure decreases as this net income rises owing to employment of more and more debt in the capital structure.

4 0
2 years ago
The following selected transactions were completed by Capers Company during October of the current year:
Zarrin [17]

Answer:

Date   Accounts title and explanations   Debit$      Credit$

1-Oct   Merchandise inventory                    15458

                  Accounts payable - Sabol imports            15458

3-Oct  Merchandise Inventory                     9850

                   Accounts payable- Saxon Co.                   9650

                   Cash account                                              200

4-Oct   Merchandise Inventory                     13550

                   Accounts payable- Schnee Co.                       13550

6-Oct    Accounts payable -Schnee Co        4350

                    Merchandise inventory                                4350

13-Oct    Accounts payable-Saxon Co          9650  

                      Cash account                                              9457

                       Merchandise inventory                               193

                        (9650*2%)

14-Oct    Accounts payable-Schnee Co        9200  

                      Cash account                                               9016

                       Merchandise inventory                                 184

                       (9200*2%)

19-Oct    Merchandise inventory                    27270

                        Accounts payable - Southmont Co           27270

19-Oct    Merchandise inventory                       375

                        Cash account                                              375

20-Oct    Merchandise inventory                     21400  

                        Accounts payable -Stevens                      21400

30-Oct   Accounts payable-Stevens                 21400

                         Cash account                                             21186

                          Merchandise inventory                             214

                           (21400*1%)  

31-Oct    Accounts payable-Sabol imports      15458  

                      Cash account                                                 15458

31-Oct    Accounts payable -Southmont Co    27270  

                   Cash account                                                    27270

7 0
3 years ago
Calculate the total producer surplus at the market equilibrium price and quantity
IgorLugansk [536]

Answer:

a is the answer

Explanation:

5 0
2 years ago
kofi electronics bought a shipment of Tvs at a net price of $477.36 each, after discounts of 15%,10% and 4%. what is the list pr
Liono4ka [1.6K]

Answer:

$650

Explanation:

Let x be the list price of the Tvs

85% of x = 0.85x

90% of 0.85x = (0.9)(0.85)x

96% of (0.9)(0.85)x = (0.96)(0.9)(0.85)x

The net price is given by $477.36

Therefore, $477.36 = (0.96)(0.9)(0.85)x

Hence x = $477.36 / (0.96)(0.9)(0.85)

x = $477.36 / 0.7344

x = $650

So, the list price is the list price

5 0
3 years ago
How do changes in planned expenditures affect the aggregate demand​ curve?
vagabundo [1.1K]

Answer:

When there is change in income level which determines the level of planned expenditures, there is a movement along the Aggregate expenditure curve but a shift towards the left or right on the Aggregate Demand curve.

Explanation:

Planned expenditures depicts the relationship between total spending, which is determined by income level in the economy; and the level of real GDP produced,  with price level kept constant. Hence, an increase in income causes a movement along the Aggregate Expenditure curve.

Aggregate Demand depicts the relationship between price level and the level of real GDP produced, with income level kept constant. Hence, an increase in price level triggers a movement along the Aggregate Demand curve.

Therefore when income level changes which by extension means a change in planned expenditures, there is a movement along the aggregate expenditure curve but an left (inward) or right (outward) move on the Aggregate Demand curve; as long as price levels remain constant

6 0
3 years ago
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