All categories

4 years ago

When quanity demanded is completely responsive to price, what is the value of price

Business

1 answer:

Bogdan [553]4 years ago

7 0

Answer:

The value of price will be exactly what demand is willing to pay, without possibility of change.

Explanation:

We call that a perfectly elastic demand. When we have that kind of price elasticity, any change in price upwards will affect the demand, making it fall to almost zero. On the opposite, if we have a change in price downwards, the demand will not increase. Bread, books, and pencils are good examples of that.

You might be interested in

Mariah is single and has a monthly disposable income of $3,200. Her monthly cash outflow is approximately $2,800. Mariah include

Kryger [21]

It is d. Her plan for protecting her assets. In case of an emergency, she should have renters insurance for her apartment.

Mariah has saved $15,000, from which, she will have $10,000 for a house down payment leaving her $5,000. Considering that she has to buy furnishings, her $5,000 will likely be used. Thus, she has to consider her spending.

5 0

3 years ago

You are given the following data concerning Freedonia, a legendary country: Consumption Function: C = + Y Investment: I =

Grace [21]

Answer and Explanation:

Given that

Consumption function C = 200 + 0.9Y

Investment I = 300

Aggregate expenditure AE = C + I

Equilibrium AE = Y

Based on the above information

a. The level of equibrium income is

Y = AE = C + I

Y = 200 + 0.9Y + 300

0.1Y = 500

Y = 5000

b. The value of the investment multiplier is

= 1 ÷ (1 - MPC)

= 1 ÷ (1 - 0.9)

= 10

c. The change in the level of equilibrium income if investment increases by 10 is

Y = 200 + 0.9Y + 310

0.1Y = 510

Y = 5100

Change is

= 5,100 - 5,000

= 100

6 0

3 years ago

Is eating a tomato bias?

Alex787 [66]

Hmmmmmmmmmmmmmmmmm no

5 0

3 years ago

Read 2 more answers

On January 1, 20Y8, Crabb & Co. sold land to ASP, Inc. and accepted a two-year, $500,000 face value note as payment. 6% inte

jeka94

Answer:

1. Discount

2. $449,298.47

3. $369,298.47 gain

4. land reduces by $80,000, investment increases by $449,298.47, reserves increases by $369,298.47

Explanation:

Question 1

Using the formula below

$Price=\frac{I_{1}}{1+r} +\frac{I_{2}+F}{(1+r)^{2}}$

where

I = interest rate, which is 6% of 500,000 = 30,000

F = Face value, 500,000

r = borrowing cost = 12%

Therefore, the price of the note at the time it was used for payment was

$Price=\frac{30,000}{1.12} +\frac{30,000+500,000}{(1.12)^{2}}$

= $449,298.47.

As the price is lower than the face value of the note, the note was issued at a discount.

Question 2

The fair market value of the note is $449,298.47, the compute price in question 1.

Question 3

The gain/loss on the sale of the land

= sale price - purchase price

= $449,298.47 - 80,000

= $369,298.47.

Question 4

The transaction would affect Crabb & Co's balance sheet as follows.

Asset side:

land reduces by $80,000

investment increases by $449,298.47

Equity & liabilities side:

reserves increases by $369,298.47

3 0

3 years ago

The lower the concentration ratio the

Papessa [141]

More competitive the industry.

7 0

3 years ago