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3 years ago

How to estimate elasticity?

1 answer:

7 0

The formula for calculating elasticity is: Price Elasticity of Demand=percent change in quantitypercent change in price Price Elasticity of Demand = percent change in quantity percent change in price .

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Consider a hypothetical closed economy in which households spend $0.75 of each additional dollar they earn and save the remainin

Nata [24]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

1) Marginal propensity to consume (MPC) for this economy is 0.75 as it denotes the spending of the household and saving of 0.25 and the spending multiplier for this economy is

= Spending Multiplier(M)

= 1 ÷ 1 - MPC

= 1 ÷ 1-0.75

= 1 ÷ 0.25

= 4

2). Decrease in government purchases will lead to a decrease in income, generating an initial change in consumption

= -Amount of Government Decrease Purchases by × MPC

= -$250 billion × 0.75

= -$187.5 billion

3). Decrease income again, causing a second change in consumption

= Amount Decrease in Government Purchases × MPC

= -$187.5 billion × 0.75

= $140.6 billion

4).Total change in demand resulting from the initial change in government spending

= Amount of Government Decrease Purchases by × Spending Multiplier(M)

= $250 × 4

= $1,000 billion

= $1 trillion

As we can see that the income falls by $1000 billion in the end, so AD shifts to the left by the size of $1 trillion

In the question the graph is missing. Kindly find the attachment for both of question and answer

5 0

3 years ago

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua

Veseljchak [2.6K]

Answer:

Bond price=$888.35

Explanation:

The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate

Value of Bond = PV of interest + PV of RV

The value of bond for Local School District can be worked out as follows:

Step 1

PV of interest payments

PV = A × (1+r)^(-n)/r

A-annul interest payment:

= 7.5% × 1,000× = 75

r-Annual yield = 8.6%

n-Maturity period = 25

PV of interest payment:

=75× (1- (1+0.086)^(-25)/0.086)

= 761.22

Step 2

PV of Redemption Value

= 1000 × (1.017)^(-25)

= $127.131

Step 3

Price of bond

=761.222 + 127.13

=$888.35

6 0

3 years ago

African Americans have a higher unemployment rate than whites. If someone were to make the argument that African Americans are m

sleet_krkn [62]

Answer:

Cultural Racism

Explanation:

Cultural racism can be regarded as

neo-racismand can be explained as the cultural differentiation which could exist among ethnic groups as well as racial group .it is also regarded as postmodern racism.

6 0

3 years ago

The Environmental Protection Agency was investigating whether Exgrow, Inc. violated the Clean Air Act. Exgrow refused to give th

Mice21 [21]

Answer:

a subpoena duces tecum

Explanation:

In law, a subpoena duces tecum is a court order that requires a witness or a defendant to supply documents that are considered evidence in a court case.

The translation of duces tecum is "production of evidence" and it clearly defines its use. As any subpoena, the witness or defendant has to comply with it, or face possible time in jail and other monetary fines.

7 0

3 years ago

Debits and Credits Study Appendix 15B. Determine for the following transactions whether the account named in parentheses is to b

lana [24]

Explanation:

The following accounts are debited or credited

1. Sold merchandise (Merchandise Inventory), $1,000 = Since merchandise inventory is sold so this account should be credited

2. Received cash from customers on accounts due (Accounts Receivable), $2,450 = Since cash is received so we debited the cash account and credited the account receivable account

3. Paid rent in advance (Prepaid Expenses), $1,250 = Since the rent is paid in advance so we debited the prepaid expenses account and credited the cash account

4. Borrowed money from First National Bank (Notes Payable), $12,000 = Since the money is borrowed so we debited the cash account and credited the note payable account

5. Paid dividends (Cash), $800 = Since the dividend is paid so we debited the dividend account and credited the cash account

6. Delivered merchandise to customers (Merchandise Inventory), $3,500 = Since the merchandise is delivered to customers so we credited the merchandise inventory account

7. Paid O’Brien Associates $3,000 owed them (Accounts Payable) = Since the amount is paid so we debited the account payable and credited the cash account

8. Bought merchandise on open account (Accounts Payable), $5,400 = Since the merchandise is bought on account so we debited the merchandise inventory and credited the account payable account

3 0

3 years ago