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BARSIC [14]
3 years ago
5

Lucia lives in Miami and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is pr

iced at $1.50, and a piece of pecan pie is priced at $4.50. At her current consumption point, Lucia's marginal rate of substitution (MRS) of yogurt for pie is 3. This means that Lucia is willing to trade three bowls of yogurt per week for one piece of pie per week. Does Lucia's current bundle maximize her utility in other words, make her as well off as possible? If not, how should she change it to maximize her utility?
a. Lucia's current bundle maximizes her utility, and she should keep it unchanged.
b. Lucia could increase her utility by buying more yogurt and less pie per week.
c. Lucia could increase her utility by buying less yogurt and more pie per week.
Business
1 answer:
nika2105 [10]3 years ago
4 0

Answer:

a. Lucia's current bundle maximizes her utility, and she should keep it unchanged.

Explanation:

The computation is shown below:

As we know that the utility would be maximized when the marginal rate of substitution is equivalent to the price ratio

I.e.

MRS = Price ratio

Here, Price ratio is

= $4.5  ÷  $1.5

= 3

So the 3 would also represent the marginal rate of substitution (MRS)

Therefore the correct option is a.

hence, the rest of the options would be incorrect

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Answer: b. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate

Explanation:

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This is why the graph that relates bond prices to yield is concave and I attached a graph as proof.

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3 years ago
Internet is both boon and curse. Justify the statement​
Andre45 [30]

Why Internet is a boon :-

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Education got globalized. Students can take any course in any college through E-learning.

New innovations and resources can now be shared easily.

Transfer of files was made easy.

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Communication has never been this easier.

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We can find information about anything.

We can develop our skills through many free courses available in internet.

Internet can be used for entertainment such as playing video games, watching movies etc.

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4 0
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koban [17]

Answer:

Risk-free rate (Rf) = 8%

Return on market portfolio (Rm) = 15%

Beta (β) = 1.2

Ke = Rf + β(Rm - Rf)

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Ke = 8 + 1.2(7)

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Current market price (Po)

= Do<u>(1 + g) </u>  

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      0.044

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Explanation:

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