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mars1129 [50]
3 years ago
9

In words, what does it mean when an economic consultant states:" kevin's income elasticity of red wine is equal to 6?

Business
1 answer:
Lady_Fox [76]3 years ago
6 0

When an economist says that "Kevin's income elasticity of red wine is 6" he means that if Kevin's income increases by 10%, the quantity of red wine demanded by Kevin rises by 60%. So, red wine is income elastic. Since the income elasticity is greater than 1, red wine is a luxury good for Kevin.


Income elasticity measures the change in the quantity of goods demanded relative to a change in income.

If an increase in income results in a decrease in the quantity of goods demanded, then that good is an inferior or cheap good. The income elasticity of a cheap good is negative.

If the demand for a good rises with an increase in income, then that good is a normal good. The income elasticity of normal goods is greater than zero.

If an increase in income results in a greater increase in the quantity of goods demanded, then that good is a luxury good. The income elasticity of a luxury good is greater than 1.

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Your company, Beta Corporation, is considering a new project which you must analyze. Based on the following data, what is the pr
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Answer:

Net operating cash flow= $9,300

Explanation:

Giving the following information:

Sales $22,000

Depreciation $8,000

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Sales= 22,000

Other operating costs= (12,000)

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EBIT= 2,000

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Depreciation= 8,000

Net operating cash flow= 9,300

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3 years ago
ne of the most common mistakes new business owners make is A. not establishing a good relationship with a financial institution.
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3 years ago
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Suppose that the central bank has increased the money supply such that there is an additional $ 868981 in excess reserves. If th
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Answer:

$7,899,827

Explanation:

The computation of the maximum increase in money supply is shown below:

Data given in the question

Additional value in excess reserves = $868,981

Reserve ratio = 11%

By considering the above information, the maximum increase in money supply is

= Additional value in excess reserves × 100 ÷ reserve ratio

= $868,981 × 100 ÷ 11

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3 0
3 years ago
Calculate the yield to maturity (YTM) for a one-year bond with a purchase price of $8,000, a face value of $10,000, and a curren
Mazyrski [523]

Answer:

yield to maturity YTM = 35%

Explanation:

given data

purchase price = $8,000

face value = $10,000

current yield = 10%

solution

we get here yield to maturity YTM

so first we get Annual Coupon by current yield that is express as

Current yield = annual coupon  ÷ current price   ..............1

put here value we get

Annual Coupon = 10 % ×  8,000

Annual Coupon = $800

now we get YTM by purchase price  that is  

purchase price = Annual Coupon ÷ ( 1+YTM ) + face value ÷ ( 1+YTM )  .......2

put here value we get

8,000 =  \frac{800}{1+YTM} +\frac{10000}{1+YTM}

solve it we get

yield to maturity YTM = 35%

5 0
3 years ago
Cost outlays are recorded as an expense when they are incurred to earn revenue in the _______________ accounting period
Deffense [45]

Answer:

Present

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