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Aleks04 [339]
3 years ago
11

The income elasticity of demand for peanut butter is 0.1. From this, we know that peanut butter is a(n) __________ because _____

_____.
a) normal good; elasticity is negative
b) inferior good; elasticity is negative
c) normal good; elasticity is positive
d) inferior good; elasticity is positive.
Business
1 answer:
musickatia [10]3 years ago
6 0

Answer:

Option B:

inferior good; elasticity is negative

Explanation:

The income elasticity of demand is a measure of the rate at which a particular commodity is demanded, even after there is a change in the real income of the consumers.

It is a known fact that for inferior goods, once the real income of the consumers increases there is a higher tendency for them to switch to other premium commodities. Such goods are said to have a negative elasticity.

The income elasticity of demand can be calculated with this formula

percentage change in quantity demanded / percentage change in income.

If this gives a value that is less than 1, it means that the percentage change in the quantity of goods demanded is actually less than the percentage change in the income level of the consumers. Hence, the good is an inferior good. This is because when the consumers are earning more, they buy less of the product.

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17-2. Assume that an average firm in the office supply business has a 6% profit margin, a 40% total liabilities/assets ratio, a
S_A_V [24]

Answer:

No it will not, the statement is incorrect.

Explanation:

if the firm is making a profit, then it means it is growing, so we must determine the firm's growth rate:

firm's growth rate = return on assets (ROA) x (1 - dividends paid)

since we are not given ROA, we must calculate it first:

ROA = net profit x asset turnover =  6% x 2 = 12%

now we go back, firm's growth rate = return on assets (ROA) x (1 - dividends paid) = 12% x (1 - 40%) = 12% x 0.6 = 7.2%

The firm can manage to support an annual growth rate of up to 7.2% before it needs to borrow money or issue new stocks.

6 0
3 years ago
A company is investing in a solar panel system to reduce its electricity costs. The system requires a cash payment of $125,374.6
tatyana61 [14]

Answer:

NPV is positive,the project should be accepted

Explanation:

In determining whether or not the project should be accepted ,we need to ascertain the Net Present value of the project which is present value of cash inflows of $13,000 for 35 years minus the initial investment of $125,374.60 committed today.

The annuity factor for 8% for 35 year horizon is 11.6546 using annuity table.

Present of cash inflow=cash inflow*annuity factor=$13,000*11.6546=$151,509.80  

Net present value=$ 151,509.80-$125,374.60=$ 26,135.20  

The investment has a positive NPV,hence should be accepted

4 0
3 years ago
The number of jobs available in the U.S. economy is largely determined by the number of workers private firms choose to hire. In
skelet666 [1.2K]

Answer:

The Federal Reserve is in charge of the monetary policy in the United States. It expands or reduces the money supply (the total amount of money in the economy) by raising or lowering the interest rate.

There is a relationship, in the short run, between unemployment and money supply. The higher the money supply, the lower the unemployment rate, and viceversa: the lower the money supply, the higher the unemployment rate.

This relationship exists because when the money supply increases, the interest rate falls, if the interest rate falls, investing becomes cheaper, and as a result, firms invest more and hire more workers.

The opposite happens when the money supply is contracted: interest rates rise, investing becomes more expensive, and firms hire less people.

This is why the Fed has a great deal of power when it comes to employment in the economy.

7 0
3 years ago
Please help me on my homework come on bro
lidiya [134]

Answer:

what

Explanation:

5 0
3 years ago
The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the
mr_godi [17]

The question is incomplete. Here is the complete question:

The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the stock’s expected return and standard deviation of returns? E(R) = 8.5% ; σ = 22.70%; mean = $7.50; standard deviation = $2.50

State              Prob     E(R)

Boom             10%     40%

Normal           60%     20%

Recession       30%   - 25%

Answer:

The expected return of the stock E(R) is 8.5%.

The standard deviation of the returns is 22.7%

Explanation:

<u>Expected return</u>

The expected return of the stock can be calculated by multiplying the stock's expected return E(R) in each state of economy by the probability of that state.

The expected return E(R) = (0.4 * 0.1)  +  (0.2 * 0.6)  +  (-0.25 * 0.3)

The expected return E(R) = 0.04 + 0.12 -0.075 = 0.085 or 8.5%

<u>Standard Deviation of returns</u>

The standard deviation is a measure of total risk. It measures the volatility of the stock's expected return. The standard deviation (SD) of a stock's return can be calculated by using the following formula:

SD = √(rA - E(R))² * (pA) + (rB - E(R))² * (pB) + ... + (rN - E(R))² * (pN)

Where,

  • rA, rB to rN is the return under event A, B to N.
  • pA, pB to pN is the probability of these events to occur
  • E(R) is the expected return of the stock

Here, the events are the state of economy.

So, SD = √(0.4 - 0.085)² * (0.1) + (0.2 - 0.085)² * (0.6) + (-0.25 - 0.085)² * (0.3)

SD = 0.22699 or 22.699% rounded off to 22.70%

7 0
3 years ago
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