Answer: b. +3; normal
Explanation:
Income elasticity measures the responsiveness of quantity demanded to a change in consumer's income. When demand for a good increases with an increase in income, it is termed as a normal good. While, when demand for a good decreases with an increase in income it is termed as an inferior good.
Using the mid-point method,
Therefore, income elasticity is 3 and the good is a normal good as rise in income increases demand.
Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach
The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).
A linear relationship between the required return on investment and risk is established by this financial model.
Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.
The calculation is shown below.
Cost of equity = Risk-free rate + (beta * Market risk premium)
Cost of equity = 4.10% + (0.70 * 5.25%)
Cost of equity = 4.10% + 3.675%
Cost of equity = 7.77% or 7.78%
Learn more about retained earnings:
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Answer:
D- the price of Key raw material increases
Explanation:
Supply is the size or quantity of goods and services that sellers are willing to avail to the market at a set price. By supplying products and services, suppliers satisfy a need in society and also make profits. As business people, suppliers will be happy to sell more when the profit margins are high.
An increase in the price of a key raw material increases the cost of production. Suppliers may lack sufficient resources to purchase the raw material at a high price, which decreases production. Again, the increased cost of production reduces the profits margin from the product. A reduction in profits margin makes a business unattractive to suppliers.
The other options decrease the cost of production, which results in a higher output.
Answer and Explanation:
The Direct incentive is the incentive that has an instant impact on the users of the resources and the returns to the investments are directly influenced
On the other hand, the indirect incentives have an indirect impact for changing overall conditions of the framework
Therefore the categorization is as follows
For direct incentive
1. car alarms
2. Frequent filter points
For indirect incentive
1. raising corporate income
2.Government-funded debt
