Answer:
B. The elasticity of demand is -0.126
Explanation:
% Change in Quality demand = -2.65% (this is negative because of drop in prenatal smoking)
% Change in price = 21%
Elasticity of demand is given by the formula below:
Elasticity of demand = % change in quantity demanded ÷ %change in price
Elasticity of demand = -2.65 / 21
Elasticity of demand = -0.126
Answer:
$ 315
Explanation:
Given that
Pure premium = $300
Insurance company charges = 5%
Thus,
Amount of insurance company changes = 300 × 5%
= 300 × 0.05
= $15
Therefore,
Total premium = pure premium + insurance company charges
= 300 + 15
= $ 315
Note that: Premium is simply the amount to be paid regularly to an insurance company for an insurance policy. It is the money paid periodically by the insured to the insurer.
Answer:
Price discrimination is when a producer charges different prices, to different consumers for the same good or service. Therefore, an airline that charges different prices to different passengers for the same flight is practicing a third degree price discrimination because consumers are charged different prices based on their different demand elasticities.
Economic efficiency is when scarce resources are used in the most efficient way to produce maximum output; it consists of productive efficiency and allocative efficiency. For price discrimination to be possible, the firm must have a certain degree of monopoly power; that is, the firm must be a price maker. Monopolies typically fit into this description as they discriminate by charging consumers with an inelastic demand higher prices; this reults in allocative ineffciency because price is greater than the Marginal Cost (P>MC).
On the other hand price discrimination could increase efficiency; price discrimination aims to convert consumer surplus to producer surplus, thereby increasing the profit of the firm. An increase in profits could be dedicated to investement in research and development; this could see such a firm achieve dynamic efficiency (long-run productive efficiency). Secondly, due to the increased profits and the potential for more profits, output is increased and price moves closer to the MC (Closer to allocative efficiency). In addition, an increase output would mean that the firm is making use of its spare/idle capacity in production, moving output towards optimum. From another perspective, a firm can reap economies of scale through price discrimination; this is because price discrimination leads to an increase in output and a reduction in average cost.
Explanation:
Answer:
Bond Price = $875.6574005 rounded off to $875.66
Explanation:
To calculate the price of the bond today, we will use the formula for the price of the bond. We assume that the interest rate provided is stated in annual terms. As the bond is an annual bond, the coupon payment, number of periods and annual YTM will be,
Coupon Payment (C) = 1,000 * 0.05 = $50
Total periods (n) = 3
r or YTM = 0.10
The formula to calculate the price of the bonds today is attached.
Bond Price = 50 * [( 1 - (1+0.10)^-3) / 0.10] + 1000 / (1+0.10)^3
Bond Price = $875.6574005 rounded off to $875.66
<h2>Reducing the "Entertainment " will hold good for the given scenario</h2>
Explanation:
There things which a man needs like food, water, shelter, etc.
Savings
: This aspect is necessary for helping us in crucial point. It can serve as an another hand on demand.
Groceries
: This is most important component of every men and women for living. So it cannot be reduced.
Utilities
: This is equally important.
Entertainment
: This shows luxurious aspect and not a mandatory one. So the amount spent in this category should be reduced.
