The price elasticity of demand measures by what percent the quantity demanded will change following a 1% price increase.
<h3>What is the price elasticity of demand?</h3>
The price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
For example if price increases by 10% and quantity demanded decreases by 20%, the price elasticity of demand would be 2.
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Answer:
Nominal GDP is $74,437.50
Real GDP is $37,250
Explanation:
The computation of the nominal GDP is shown below:
Year 2 = Corn bread quantity × corn bread price + Software quantity × software price
= 125 × $1.5 + 825 × $90
= $187.50 + $74,250
= $74,437.50
And, the computation of the real GDP equals to
= Year 1 corn bread price × year 2 corn bread quantity + Year 1 software price × year 2 software quantity
= $1 × 125 + $45 × 825
= $125 + $37,125
= $37,250
Answer:
Required Rate of return is 11.6%
Explanation:
Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.
As we have the value of the share, we need to calculate the required return rate using following formula.
As the dividend is also given for the next period so we don't need to grow it.
Value of Share = Dividend / (Rate of return - Growth rate)
$25 = $1.40 / ( r - 6% )
r - 0.06 = $1.40 / $25
r - 0.06 = $1.40 / $25
r - 0.06 = 0.056
r = 0.056 + 0.06
r = 0.116
r = 11.6%