Answer:
Economic models often vary greatly in assumptions and simplifications.
Explanation:
Most models in Classical Economics are based on a lot of generalizations and simplifications, that intend to model the behavior of the situations of the real world but often fail to encompass all the intricacies and complications that even most straightforward situations present. These simplifications help the Economists figure out the mathematical laws that are governing the real world economic systems. Therefore making the economic modeling a simpler process.
Classic economics implies three basic assumptions:
1- People behave rationally in any situation.
2- Firms and individual want to maximize profit and utility
3- People act independently based on available information.
Answer:
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Answer:
$2,700
Explanation:
Calculation for the expected value of the outcomes
Using this formula
Expected value=respective outcome*Respective probability
Let plug in the formula
Expected value=(0.25*1100)+(0.55*2300)+(0.20*5800)
Expected value=$275+$1,265+$1,160
Expected value=$2,700
Therefore the expected value of the outcomes will be $2,700
Answer: unitary price elastic
Explanation:
A good is unitary price elastic if a change in price leads to the same proportional change in quantity demanded.
The coefficient of a good with unitary elasticity is 1 .
Coefficient of elasticity = percentage change in quantity demanded / percentage change in price
= 5% / 5% = 1
I hope my answer helps you
Answer:
annuity factor for 20% and 6 periods = 3.326
Explanation:
the IRR represents the discount rate at which a project's NPV = 0
NPV = initial outlay + PV of future cash flows
NPV = 0
initial outlay = -$831,500
PV of future cash flows = $831,500 = cash flow x annuity factor
annuity factor = $831,500 / $250,000 = 3.326
using an annuity table and looking for the annuity factors for 6 periods, we find that the annuity factor for 20% and 6 periods = 3.326.
So our IRR = 20%
