The switching between the two goods allows the line to linear rather than bowed out.
Answer and Explanation:
The computation is shown below:
a. The value of P is $31,000 i.e. equivalent to the estimated value of the current market value
b. The value of n is 3 years
c, The value of S is $18,000 i.e. equivalent to the estimated value of the market
d. The AOC value is $21,000 per year i.e. equivalent to the M&O cost
Answer:
When PED is greater than one, demand is elastic. This can be interpreted as consumers being very sensitive to changes in price: a 1% increase in price will lead to a drop in quantity demanded of more than 1%. When PED is less than one, demand is inelastic.
so it is true
Explanation:
Answer:
When a percentage change in price leads to the same percentage change in the quantity supplied. This means that supply is unit elastic
Explanation:
Price elasticity of supply measures the responsiveness of quantity supplied to changes in price of the good.
Price elasticity of supply = percentage change in quantity supplied / percentage change in price
Supply is unit elastic if a small change in price has an equal and proportionate effect on quantity supplied.
For example, a 20% increase in price leads to 20% increase in the quantity supplied
Elasticity of supply = 20% / 20% = 1
Answer:
6.11%
Explanation:
For computing the variance, first we have to determine the expected return which is shown below:
= (Expected return of the boom × weightage of boom) + (expected return of the normal economy × weightage of normal economy) + (expected return of the recession × weightage of recession)
= (12% × 5%) + (10% × 85%) + (2% × 10%)
= 0.6% + 8.5% + 0.2%
= 9.30%
Now the variance would equal to the
= Weightage × (Return - Expected Return) ^2
For boom:
= 5% × (12% - 9.3%) ^2
= 0.3645
For normal economy:
= 85% × (10% - 9.3%) ^2
= 0.4165
For recession:
= 10% × (2% - 9.3%) ^2
= 5.329
So, the total variance would be
= 0.3645 + 0.4165 + 5.329
= 6.11%
