Answer:
The correct answer is letter "B": consume more of good B and less of good A.
Explanation:
Marginal Utility is a common economic term referring to the extra benefit or satisfaction obtained by buying one additional unit of a good or service. Something has utility in economics if it meets any consumer desire or needs, whether for use or pleasure. People buy when the marginal utility is greater than the marginal cost, and when the marginal utility is less than the marginal cost, they do not.
Thus, if good A is twice the price of good B both having the same marginal utility, g<em>ood B should be consumed more because good A marginal utility is less than </em><u><em>its</em></u><em> marginal cost compared to good B</em>.
Suppose there is a decrease in the price of butter.There will be an increase in demand for bread.
<h3>Option (B) is correct</h3>
<u>Explanation:</u>
Bread and butter are complementary goods. They are demanded and consumed together. So their demand are positively correlated which means an increase in demand of one will lead to the same increase the demand of other
If the Price of butter decreases, it will lead to an increase in the demand for butter. With the increasing demand for butter, the demand for bread will automatically increase. Both demands will move in the same direction.
Answer:
WACC is 16.5%
Explanation:
Given:
Weight of equity is 75% or 0.75
Weight of debt is 25% or 0.25
Total value of firm is 1 (0.75 + 0.25)
Cost of debt is 6% or 0.06
Cost of equity is 20% or 0.2
WACC = (weight of debt × cost of debt) + (weight of equity × cost of equity)
= (0.25 × 0.06) + (0.75 × 0.2)
= 0.165 or 16.5%
Therefore WACC is 16.5%
