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BartSMP [9]
3 years ago
11

Suppose Pump-U-Up lowers the price of its gym membership by 10 percent and as a result, Sweat-It-Out experienced a 16 percent de

cline in its gym membership. What is the value of the cross-price elasticity
Business
1 answer:
konstantin123 [22]3 years ago
5 0

Answer:

The Cross elasticity of demand will be the change in demand at Sweat-it-out divided by the change in price at Pump-U-Up

=-0.16/-0.1

= 1.6

Explanation:

The Price decrease from Pump-U-up = 10%

And the resultant decline in Gym membership at sweat-it-out is 16%

The Cross elasticity of demand will be the change in demand at Sweat-it-out divided by the change in price at Pump-U-Up

=-0.16/-0.1

= 1.6

A Positive Cross - Price elasticity indicates both Gyms are close substitutes of one another.

An attempt by one to lower its price will directly impact negatively in membership of the other.

The strategy often adopted in such line of Business is to keep prices at Par or offer distinctive services outside of the traditional, e.g include a Spar into the gym membership, or access to discounted toning or body building products etc.

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Refer to Exhibit 7.4, which shows short-run average cost curves. Average cost is lowest for a medium plant when output is _____
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Answer: c) between Qa and Qb

Explanation:

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What is the opportunity cost of studying for an important exam
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3 years ago
There have been several instances in the last 150 years when valuable materials such as diamonds have been found contained in gl
Lana71 [14]

Answer:

<u>Lateral moraine</u>

Explanation:

It is important to note the duration of years here; 150 years ago. The Lateral moraine is a very familiar image when dealing with glaciers.

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6 0
3 years ago
The market capitalization rate for Admiral Motors Company is 8%. Its expected ROE is 10% and its expected EPS is $5. The firm's
pashok25 [27]

Answer:

(A) 6%

(B) 20

Explanation:

The market capitalization rate for Admiral motors is 8%

= 8/100

= 0.08

The expected ROE is 10%

= 10/100

= 0.1

The expected EPS is $5

The Plowback ratio is 60%

= 60/100

= 0.6

(A) The growth rate can be calculated as follows

= Plowback ratio × ROE

= 0.6 × 0.1

= 0.06×100

= 6%

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= 20

Hence the P/E ratio is 20

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