Answer: Businesses sell goods and services in product markets.
Explanation: Circular flow diagram shows the flow of goods and services from Firms to the Households and Factors of production from the Households to the Firms. The firms money from the sale of those goods and services and the households get factor payment.
Thus, Business are sell goods and services in product markets in a circular flow diagram.
The expected annual medical expenses of a high-risk person is $3000 per year while that of a low-risk person is $1000 per year.
The expected annual medical expenses of a high-risk person will be calculated as:
= Probability of falling ill × Expenses in case of illness
= 30% × $10000
= 0.3 × $10000
= $3000
The expected annual medical expenses of a low-risk person will be calculated as:
= Probability of falling ill × Expenses in case of illness
= 10% × $10000
= 0.1 × $10000
= $1000
It should be noted that in a situation where the individuals are risk neutral, the low-risk persons will not buy insurance as only the high-risk individuals will be expected to buy<em> insurance.</em>
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Answer:
One share of this stock worth today if the required rate of return is 7.4 percent is $ 3.24
Explanation:
According to the details the dividend for the next 2 years = $1.80 a share and the required return is=7.40%.
Hence to calculate current price of stock we have to use the following formula:
current price= present value of future cash flows
current price=$1.80/1.074 + $1.80/1.074∧2
current price= $ 3.24
current price of stock is $ 3.24
Answer:
Gross profit equals the difference between sales revenue and cost of goods sold.
Explanation:
The gross profit is calculated by subtracting total cost of goods sold from total sales. Both the total sales and cost of goods sold are found on the income statement.
Gross profit = Sales revenue - cost of goods sold.
It is one of three profit metrics used in business statement reports
