In this market for sunscreen, there is a decrease in the price of zinc oxide, an input into sunscreen, and more producers enter
the market. The equilibrium price: a) increases and the equilibrium quantity decreases. b) decreases and the equilibrium quantity increases. c) is ambiguous and the equilibrium quantity increases. d) decreases and the equilibrium quantity is
1 answer:
Answer:
b) decreases and the equilibrium quantity increases.
Explanation:
If there is a decrease in the price of zinc oxide, an input into sunscreen, the cost of production decreases and supply increases. This shifts the supply curve to the right.
If more producers enter the market, supply would increase and the supply curve would shift to the right.
The rightward shift of the supply curve would reduce equilibrium price and equilibrium quantity would increase.
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Answer:
A) Market Value: $1,251.2220
B) Market Value: $898.94
C) the price of the bonds will decrease over time. As the nominal amount will suffer from less discounting over time at maturity will match the nominal amount of $ 1,000. To do so It need to decrease over time.
Explanation:
The value of the bonds will be the present value of the future coupon payment and maturity at the new rate of 6%
PV of the coupon payment
C 50.000 (1,000 x 10% / 2 ayment per year)
time 16 (8 year to maturity x 2 payment per year)
rate 0.03 (6% over two payment per year)
PV $628.0551
PV of the maturity
Maturity 1,000.00
time 16.00
rate 0.03
PV 623.17
PV c $628.0551
PV m $623.1669
Total $1,251.2220
<em><u>If the rate is 12%</u></em>
PV of the coupon payment:
C 50.000
time 16
rate 0.06
PV $505.2948
PV of the maturity:
Maturity 1,000.00
time 16.00
rate 0.06
PV 393.65
PV c $505.2948
PV m $393.6463
Total $898.9410