the government believes that the equilibrium price is too low and tries to help almond growers by settinga price floor at Pf. Wh
at are represents the portion of consumer surplus that have been transsferred to produce surplus as a result of the price floor.
1 answer:
Answer: D) B
Explanation:
The Producer Surplus refers to the area below the Price Floor but above the Supply Curve and left of the new Quantity supplied. It comprises of areas B and E.
Before the Price Floor was introduced, area A, B and C were the Consumer Surplus as they were above the price but below the Demand Curve.
After the Price Floor was introduced however, area B has become a Producer Surplus.
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Answer:
Ans. The expected rate of return on the Inferior Goods Co. stock is 5.90%
Explanation:
Hi, you just have to multiply the expected earnings by the probability of occurance of a certain event and then add up all the products. Here is the information all organized to be processed.
Item Prob Earn
Booming 20% -6%
Normal 55% 7%
Recession 25% 13%
Ok, now let´s calculate the expected rate of return.
So the expected rate of return of the stock is 5.90%
Best of luck.
Answer:
The second project should be chosen. Because the present value of the second project is greater than that of the first project.
Explanation:
The project that should be chosen can be determined by comparing the present value of both projects.
Present value is the cash flows from a project discounted at the discount rate.
Present value can be found using a financial calculator;
For project 1,
Cash flow each year from year one to six is $52,000
Discount rate = 15%
Present value =$196,793.10
For project 2,
Cash flow each year from year one to eight is $48,000
Discount rate = 15%
Present value =$215,391.43
The second project would be chosen because its present value is greater than that of the first project.
I hope my answer helps you
