Answer:
B. It would increase each year by 3 percent.
Explanation:
Given
Pension = $50,000 in first year
Increment = 5%
Inflation = 2%
Inflation doesn't only affect the value of an investment, it also influence the liabilities of a pension fund.
Consider a pension plan which gives a worker a benefit based on final average salary; A slight increase in the inflation would reduce the worker's real benefits in the years after retirement.
So, instead of Terry's pension to increase by 5% each year,
It'll increase by 3%
This is calculated by subtracting the inflation rate from the real increment rate.
5% - 2% = 3%
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Answer:
The correct answer is option A.
Explanation:
The price of good A is initially at $11.
The initial demand of A is 400 units.
The price increases to $33.
The demand of A , as a result, falls to 200 units.
The demand for good C is initially at 150 units.
With increase in price of A, the demand rises to 250 units.
The positive cross elasticity as given in the figure represents that the two goods are substitutes. When price of A increases, consumer will prefer its cheaper substitute. So, the demand for good C will increase.
Answer:
The correct answer is Fixed overhead costs.
Explanation:
Fixed overhead costs are those costs incurred by a company that do not depend on the scale of production. There are two main types of expenses in relation to the financial balance of a company. The other type is variable expenses.
A company may encounter many different types of fixed expenses, but they all have something in common. Unlike variable expenses, fixed expenses will be maintained even if the company stops producing goods and services for a while or even if its production increases.
An example of a fixed cost would be the license that a company may need each year to operate, but whose amount does not vary if production increases. If production were increased, the value obtained thanks to that license would increase, but the cost would remain the same. Therefore, fixed costs are essential to take advantage of economies of scale.