Answer: D) Output decreases by more than 25 percent
Explanation:
When a firm is said to be experiencing Increasing Returns to Scale, it means that for every additional unit of a factor of production, the firm experiences a higher increase in production than the additional unit. For example, if a Firm's output increases by 1.5 every time they hire an extra worker, the firm is said to be going through Increasing Returns to Scale.
With that same logic, if factors of production were reduced, the company undergoes a reduction in output that is bigger than the reduction in the factor of production.
For this reason, option D is correct in saying that Output decreases by more than 25 percent.
Answer:
$68.70
Explanation:
Risk free rate: 3.6 %
Market risk premium: 8.6 %
Beta: 0.65
Current stock price: $64.60
Annual dividend: $1.84
The expected rate of return = 3.6% + 0.65*8.6%
The expected rate of return = 0.036 + 0.0559
The expected rate of return = 0.0919
The expected rate of return = 9.19%
Required return = (P1-P0+Dividends)/P0
9.19% = [(Price + 1.84)/64.60 ] - 1
9.19% + 1 = (Price + 1.84)/64.60
64.60*(0.0919 + 1) = Price + 1.84
70.53674 = Price + 1.84
Price = 70.53674 - 1.84
Price = $68.69674
Price = $68.70
Answer:
$41.69.
Explanation:
P9 = Next dividend / Required rate - Growth rate
P9 = $5 / 8% - 2%
P9 = $5 / 6%
P9 = $5 / 0.06
P9 = $83.33
So, the stock price for 9th year is $83.33
Current stock price = P9 / (1 + Required rate of return)
Current stock price = $83.33 / (1+0.08)^9
Current stock price = $83.33 / (1.08)^9
Current stock price = $83.33 / 1.9990046271
Current stock price = 41.68574643115692
Current stock price = $41.69
Therefore, the current stock price is $41.69.
Answer:
Increased spending power.
Explanation:
At a lower price level, consumers are likely to have higher disposable income and therefore spend more.
Change in the price of the good results in the movement along the same demand curve.
Factors other than price results in the shift in demand curve.
A rightward shift in demand would increase the quantity demanded at all prices compared to the original demand curve.
While a left shift indicates decrease in demand.
In the given graph , there is a rightward shift of the demand curve from left to the right ( D1 to D2), Thus we can say that there is an increase in demand.
