Answer:
positive relationship between consumption and disposable income
Explanation:
The consumption function shows the relationship between consumer spending and disposable income.
the formula used to calculate consumption function is:
C = A + MY
- C = consumer spending
- A = autonomous spending
- M = MPC or marginal propensity to consume
- Y = disposable income
The consumption function has a upward slope since the relationship between consumer spending and disposable income is always positive, i.e. the more disposable income you have, the more you will consume.
Answer:
I would advise Mr. Raiman to reduce the quantity of output produced.
Explanation:
Mr. Raiman produces 12 pairs of shoes per week.
The marginal cost incurred in producing the 12th pair is $84.
The marginal revenue earned from the 12th pair is $70.
The marginal cost is greater than marginal revenue. This means that Mr. Raiman is having a loss.
In order to maximize profits, he should produce at the point where the marginal cost is equal to marginal revenue.
So, I would suggest him to reduce the output to the level where marginal cost is equal to marginal revenue.
Answer:
c
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested. It is a capital budgeting method.
IRR can give conflicting answers when negative cash flow in mixed with positive cash flows during the life of the project. that is the negative cash flow does not occur at the beginning of the project
IRR considers the time value of money
Consider two sceneries
In the first scenario, 50,000 is invested in a project, the cash flow in year 1 and 2 is 0. the cash flow in year 3 is 150,000. IRR is 44.2%
n the second scenario, 50,000 is invested in a project, the cash flow in year 1 is 50,000. cash flow in year 2 100,000 and 3 is 0 . IRR is 100%
IRR gives higher value to cash flows occurring in earlier years
Answer:
n= 65.27 years
Explanation:
Giving the following information:
Present value (PV)= $2,000
Future value (FV)= $4,500
Interes rate (i)= 1.25% annual compounding
<u>To calculate the number of years required to reach the objective, we need to use the following formula:</u>
n= ln(FV/PV) / ln(1+i)
n= ln(4,500 / 2,000) / ln(1.0125)
n= 65.27 years