Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is S2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross- price elasticity of demand for beans and rice is A. -0.71, and they are complements B. 0.71, and they are substitutes. C. 1.4, and they are substitutes D. -1.4, and they are complements

Answers

Answer 1

Answer:

Final answer:

Maddy's cross-price elasticity of demand for beans and rice is -1, and they are complements.

Explanation:

The cross-price elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. It is calculated as the percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good. In this case, Maddy's cross-price elasticity of demand for beans and rice can be calculated using the formula:

Cross-Price Elasticity = ((Q2 - Q1) / (Q1)) / ((P2 - P1) / (P1))

Calculating the values:

Q1 = 2 pounds of beans per month

Q2 = 1 pounds of beans per month

P1 = $2 per pound of beans

P2 = $3 per pound of beans

Substituting the values into the formula:

Cross-Price Elasticity = ((1 - 2) / (2)) / ((3 - 2) / (2)) = -0.5 / 0.5 = -1

The cross-price elasticity of demand for beans and rice is -1, which indicates that they are complementary goods. When the price of beans increases, the quantity demanded of beans decreases, and as a result, Maddy purchases less rice as well.

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Assume the spot market exchange rate for $1 is currently A$1.1904. The expected inflation rate is 3.3 percent in Australia compared to the U.S. rate of 2.8 percent. What is the expected exchange rate one year from now if relative purchasing power parity exists?a. $1.1844
b. $1.2062
c. $1.1964
d. $1.2286

Answers

Answer: c. $1.1964

Explanation:

The Expected Rate is calculated as follows,

Expected Rate = ((1+ Australia inflation rate)/(1+ U.S inflation rate)) *spot rate

Plugging in the figures therefore we will have,

Expected Rate = ((1+0.033) / (1 + 0.028)) * 1.1904

Expected Rate = $1.1964

$1.1964 is the expected exchange rate one year from now if relative purchasing power parity exists.

Answer:

Expected exchange rate $1 = A$1.1962

Explanation:

The purchasing power parity theory states the future spot rate and and he current spot exchange rate between two currencies can be linked to the relative inflation rate between the two currencies. This also known as the law of one price.

The model is given as follows:

S = So× (1+Fc)/(1+Fh)

Fc - inflation rate in Australia - 3.3

Fh- Inflation rate in the US- 2.8

S- Future spot rate- ?

So- Current spot rate- A$1.1904

Expected exchange rate one year from now

= 1.1904× (1.033)/(1.028)

= 1.19618

= A$1.1962

) A homeowner is considering putting solar panels on the roof of his house. The installed cost of putting 3 kW of solar panels is $6000 and the panels come with a 25 year guarantee. The panels would be able to meet the average monthly electrical consumption of 850 kW-hrs for the house. a) If the homeowner has the $6000 available for the project, what would the cost of electricity from the power company need to be greater than ($/kW-hr) to make the project viable if other investments are providing 8% interest. ($0.0545/kW-hr) b) If the homeowner had to borrow the $6000 from the bank at 5% interest for 10 years (monthly payments) what would the cost of electricity need to be greater than in $/kWhr from the power company to make the project viable if other investments are providing 8% interest. ($0.0476/kW-hr)

Answers

Answer:

a) If the homeowner has the $6000 available for the project, what would the cost of electricity from the power company need to be greater than ($/kW-hr) to make the project viable if other investments are providing 8% interest. ($0.0545/kW-hr)

we can use the present value of an annuity formula:

PV = monthly savings x annuity factor

PV = $6,000
Annuity factor, 300 periods, 0.6667% = 129.52005

monthly savings = $6,000 / 129.52005 = $46.3249

price of kW-hr = $46.3249 / 850 = $0.054499851 ≈ $0.0545

b) If the homeowner had to borrow the $6000 from the bank at 5% interest for 10 years (monthly payments) what would the cost of electricity need to be greater than in $/kWhr from the power company to make the project viable if other investments are providing 8% interest. ($0.0476/kW-hr)

the monthly payment to cover the loan = PV / annuity factor

PV = $6,000
Annuity factor, 120 periods, 0.4167% = 94.28033

monthly payment = $6,000 / 94.28033 = $63.64

price of kW-hr = $63.64 / 850 = $0.074870588 ≈ $0.0749

When other things remain equal, buyers are expected to stock up from the normal product that they expect its market price to decline significantly in the soon future.a) true
b) false

Answers

Answer:b) false

Explanation:

They would not want to stock up on something that the market price will decline significantly on, they would do the opposite

Answer:

False

Explanation:

This is false, they would want to do the opposite, not stock up

Climate change is expected to have a major impact on local weather patterns across the United States (and the world). Use a spatial equilibrium model for simple system of two cities to predict the effect of climate change on 1) A place where climate change lowers that amenity value of the local climate (call this place Miami) and 2) A place where climate change does not change the local amenity value (call this place Chicago). Which of the following best describes the prediction of your model?A. Real estate prices in Miami will rise, real estate prices in Chicago will fall.
B. Real estate prices in Miami will fall, real estate prices in Chicago will fall.
C. Real estate prices in Miami will rise, real estate prices in Chicago will rise.
D. Real estate prices in Miami will fall, real estate prices in Chicago will rise.
E. None of the above.

Answers

Answer:

D. Real estate prices in Miami will fall, real estate prices in Chicago will rise.

Explanation:

Real estate prices in Miami will fall because according to the model, climate change will lower the amenity value of the local climate. This means that climate change will make the climate of Miami less desirable for potential residents, causing a drop in the price of the real estate of the city due to less demand.

Chicago on the other hand, will have the amenity level of its climate increased, and this will attract more potential residents who will drive up demand, causing Chicago's real estate prices to rise.

Which of the following statements will an auditor most likely add to the negative from of confirmations of accounts receivable to encourage timely consideration by the recipient? A. "This is not a request for payment; remittances should not be sent to our auditors in the enclosed envelope"
B. "Report any differences on the enclosed statement directly to our auditors; no reply is necessary if this amount agrees with your records"
C. "If you do not report any differences with 15 days, it will be assumed that this statement is correct"
D. "The following invoices have been selected for confirmation and represent amounts that are overdue"

Answers

Answer:

The correct answer is letter "C": "If you do not report any differences with 15 days, it will be assumed that this statement is correct".

Explanation:

Accounts Receivable, or AR, is an accounting term used to refer to the money that is owed to a company by its customers. The customers, who may be individuals or corporations, are the debtors since they owe money for the goods or services provided by the company. When the product is sold in credit the company sets a number of days so that the customer can pay the bill amount. The term usually is 30, 60 or 90 days.

In that sense, and auditor may find 15 days suitable for a debtor for report changes in a statement, otherwise, it is considered as correct.

Suppose that France and Germany both produce fish and olives. France's opportunity cost of producing a crate of olives is 4 pounds of fish while Germany's opportunity cost of producing a crate of olives is 10 pounds of fish. By comparing the opportunity cost of producing olives in the two countries, you can tell that __________ has a comparative advantage in the production of olives and _______ has a comparative advantage in the production of fish.

Answers

Answer:

France

Germany

Explanation:

A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.

France has a lower opportunity cost in the production of olives compared to Germany.

It means that Germany would have a lower opportunity cost in the production of fish when compared to France.

I hope my answer helps you

Final answer:

France has a comparative advantage in the production of olives because it gives up less fish to produce them than Germany does. Conversely, Germany has a comparative advantage in fish production as it sacrifices less to produce fish than olives.

Explanation:

Comparative advantage is an economic concept that identifies the goods a country can produce in a cost-effective way compared to other countries. In the scenario where France's opportunity cost for producing one crate of olives is 4 pounds of fish and Germany's opportunity cost for the same crate of olives is 10 pounds of fish, we can deduce that France has a comparative advantage in olive production and Germany has a comparative advantage in fish production since it gives up less to produce the same amount of fish as opposed to olives.

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