One thousand dollars is invested at 5% continuous annual interest. This means the value of the investment will grow exponentially, with k equaling the decimal rate of interest. What will the value of the investment be after 7 1/2 years

Answers

Answer 1

Answer:

$1454.99

Explanation:

Just did this question the other day


Related Questions

Hyundai's Assurance program empathized with American consumers during uncertain financial times, helping to create a psychological and emotional:_______

a. brand association.
b. differentiation strategy.
c. consumer response.
d. marketing campaign.

Answers

The correct answer is B. Differentiation strategy

Type your answer in the box.
For a population with u = 25 and = 5, we would expect 90% of all x's calculated from n = 35 to
fall between
and
(Round to two decimals.)
Do you know the answer?
D Read about this
I know it
Think so
Unsure
No idea

Answers

Answer:

Your answer is given below:

Explanation:

Suppose the ABC bank has excess reserves of $3,000 and checkable deposits of $50,000. If the reserve requirement is 20 percent, what is the size of the bank's actual reserves?
a. $53,000
b. $13,000
c. $10,000
d. $7,000

Answers

Answer:

b. $13,000

Explanation:

Calculation to determine the size of the bank's actual reserves

Using this formula

Actual reserves size=Excess reserves+(Checkable deposits*Reserve requirement)

Let plug in the formula

Actual reserves size=$3,000+(.20*$50,000)

Actual reserves size=$3,000+$10,000

Actual reserves size=$13,000

Therefore the size of the bank's actual reserves is $13,000

A manufacturer produces two types of computer software, Word processing (W) and Spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the maximum price each retail outlet is willing to pay for each individual software product.
Product W Product S
Retail #1 $170 $105
Retail #2 $95 $135
What is the optimal pricing strategy that will maximize revenue for the manufacturer, given the maximum the retail outlets are willing to pay?
a. Bundle both products (W and S) and sell them at $275.
b. Price product W at $95 and Product S at $105.
c. Price product W at $170 and Product S at $170.
d. Price product W at $170 and Product S at $135.
e. Bundle both products (W and S) and sell them at $230.

Answers

Answer:

e. Bundle both products (W and S) and sell them at $230.

Explanation:

Calculation to determine the optimal pricing strategy that will maximize revenue for the manufacturer

Using this formula

Optimal pricing=Retail #2 Product W+ Retail #2 Product S

Let plug in the formula

Optimal pricing=$95+$135

Optimal pricing=$230

Therefore based on the above calculation the OPTIMAL PRICING STRATEGY that will MAXIMIZE REVENUE for the manufacturer, given the MAXIMUM the retail outlets are willing to pay will be to BUNDLE BOTH PRODUCTS (W and S) AND SELL THEM AT $230.

In 20X4, Bosh Corporation had income of $60,000 using absorption costing. Beginning and ending inventories were 13,000 and 8,000 units, respectively. The fixed manufacturing overhead cost was $4.00 per unit. What was the net income using direct/variable costing

Answers

Answer:

Net income under variable costing $80,000

Explanation:

The computation of the net income using direct/variable costing is shown below:

Net income under absorption costing $60,000

Add fixed cost under applied $20,000

Net income under variable costing $80,000

Working

Beginning inventory 13000

Less ending inventory -8000

Decrease in inventory 5000

Now under applied inventory $20,000

Select the behavior related to dress or posture that will be most effective in helping Shawna accomplish her goals.

a. Shawna clasps her hands behind her back so that the audience cannot see them shaking, and to project confidence.
b. Shawna has her formal gown dry-cleaned so that it will be ready for her to wear at the event.
c. Shawna crosses her arms to appear powerful and in charge.
d. Shawna wears a hard hat and kitchen apron to emphasize the hard work done by volunteers.

Answers

Answer: b. Shawna has her formal gown dry-cleaned so that it will be ready for her to wear at the event

Explanation:

The behavior that's related to dress or posture that will be most effective in helping Shawna accomplish her goals is that Shawna has her formal gown dry-cleaned so that it will be ready for her to wear at the event.

Unlike other options such as her clasping her hands behind her back so that the audience cannot see them shaking, and to project confidence and her crossing her arms to appear powerful and in charge, having her dress ready for the event is appropriate as it will help achieve her goal

Therefore, the correct option is B.

a. If a wage of $10.25 were to be imposed on this market, such that the market was not longer strictly competitive, what would be the value for labor supply?
b. At the imposed wage of $10.25 what would be the value for labor demand?
c. Provide a properly labeled and appropriately articulated Labor Market Model given the labor supply and demand equations provided and the imposed wage of $10.25.
d. Based on the labor market model you’ve now illustrated, how would you describe the current condition of this market given the imposed wage?

Answers

Solution :

Given the wage = $ 10.25 that is to be imposed to the market.

Given equation :

[tex]L_D[/tex] = 500 – 45W and [tex]L_S[/tex] = -200 + 25W

If the wage of $10.25 is to be imposed to the market, the value of the labor supply can be found by putting the value of the wage in the labor supply equation.

At W = 10.25

Putting this value in the above equation, the labor supply would be

[tex]L_S[/tex] = -200 + 25W

[tex]L_S[/tex] = -200 + 25(10.25)

     = 56.25

When W = 10.25, the value for the labor demand can be found by :

[tex]L_D[/tex] = 500 – 45W

[tex]L_D[/tex] = 500 – 45(10.25)

[tex]L_D[/tex] = 500 – 461.25

[tex]L_D[/tex] = 38.75

Therefore, the labor demand and the labor supply model is

[tex]L_D[/tex] = 400 - 45 x 10.25

[tex]L_S[/tex] = -200 + 25 x 10.25

ABC Company operates two divisions with the following operating information for the month of May:

Division 1: sales, $128,000; operating income, $39,680; operating assets, $320,000.
Division 2: sales, $84,000; operating income, $42,336; operating assets, $420,000.

ABC Company expects a minimum return of 10% should be earned from all investments.

Required:
Prepare ABC Company’s ROI analysis using the DuPont model for each division.

Answers

Requiere abc no minimum da carne

Your broker suggests that the stock of DUH is a good purchase at $25. You do an analysis of the firm, determining that the recent $1.40 dividend and earnings should continue to grow indefinitely at 5 percent annually. The firm's beta coefficient is 1.3, and the yield on Treasury bills is 1.4 percent. If you expect the market to earn a return of 8 percent, what is your valuation of DUH

Answers

Answer:

The correct answer is "$28.03".

Explanation:

The given values are:

Good purchase,

= $25

Dividend,

= $1.40

Annually earning,

= 5%

Beta coefficient,

= 1.3

Treasury bills,

= 1.4%

Now,

= [tex]1.4+1.34\times 8-1.4[/tex]

= [tex]1.34\times 8[/tex]

= [tex]10.244[/tex] (%)

hence,

The fair value will be:

= [tex]1.4\times \frac{1.05}{.10244}-.05[/tex]

= [tex]28.03[/tex]

Absolutely, the proposal including its brokerage must be adopted because as fair market value was almost $25.

Everything else equal, if the United States runs a large foreign trade deficit, the financing of the deficit will: a. increase government subsidies. b. increase interest rates. c. decrease sales of Treasury securities. d. increase the money supply. e. decrease tax revenue.

Answers

Answer: decrease tax revenue

Explanation:

A trade deficit occurs when the import of a country's is more than the export of the country for a given period of time period. The main cause is when there's an imbalance between the savings of a country and the investment rates.

In this case, financing the deficit will lead to the reduction in the tax revenue. When part of the tax revenue gotten from economic agents are used in the finance of the deficit, there'll be a reduction in the tax revenue.

What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way

Answers

Answer:

collection plan

Explanation:

The rent collection plan is a system that is used for the enforcement of rent, in terms of late rent payment as well as lease terms. This is more than just telling the tenant when the rent is due. It has all of the information on all the ways that rent could be paid and also the repercussions for late rent payment or a situation whereby the rent is not even paid at all.

who has given general principle of management?​

Answers

Answer:

I think it's " Henri Fayol's "

Answer:

14 management principle of Henri Fayol

Explanation:

1.  Division of work or division labor.

2. Balancing Authority and responsibility.

3. Discipline.

4. Unity of command.

5. Unity of Direction.

6. Subordination of individual interest to the general interest.

7. Remuneration.

8. Centralization.

9. Scalar chain.

10. Order.

11. Equity.

12. Stability of tenure of personal.

13. Initiative.

14. Esprit de corps.

Monopoly in the competitive environment a. is enjoyed by few organizations as sole suppliers of a good or service. b. is typical of public utilities -- even more so now than twenty years ago. c. cannot be achieved temporarily even through the use of patents and similar legal devices. d. is the logical extension of a firm's control of its production and labor resources. e. is, all in all, the most common type of competition in the U.S. market.

Answers

Answer:

b

Explanation:

and services.

An example of a monopoly is a utility company

A natural monopoly occurs due to the high start-up costs or a large economies of scale.

Natural monopolies are usually the only company providing a service in a particular region  

Because the demand curve for a monopoly is downward sloping, marginal revenue is less than price. As prices fall, more units of the product are bought.

In a monopoly When the average cost is falling, the marginal cost lies below the average cost. If the government sets price to be equal to marginal cost, which lies below the average cost, the monopoly would incur losses.

Given that the DM price of the ECU was 2.0583 and the DG price of the ECU was 2.3194. Then the DG price of the DM by cross rates is given by:______
a. DM = about 4.73 DG.
b. DM = about .26 DG.
c. DM = about 1.13 DG.odno
d. DM = about .89 DG.

Answers

Answer:

Option c (DM = about 1.13 DG) is the right approach.

Explanation:

Given:

DM price,

= 2.0583

DG price,

= 2.3194

Now,

By cross rates, the DG price of DM will be:

= [tex]\frac{2.3194}{2.0583}[/tex]

= [tex]1.13[/tex]

Thus the above is the correct option.

Periodic inventory by three methods The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are shown below:
Number
Date Transaction of Units Per Unit Total
Jan. 1 Inventory 7,500 $75.00 10
Purchase 85.00 22,500 11,250
28 Sale $562,500 1,912,500 1,687,500
562,500 150.00 30 Sale 3,750 150.00
Feb. 5 Sale 1,500 150.00 225,000
10 Purchase 54,000 87.50 4,725,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar. 5 Purchase 45,000 89.50 4,027,500
14 Sale 30,000 160.00 4,800,000
25 Purchase 7,500 90.00 675,000
30 Sale 26,250 160.00 4,200,000
1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.
2. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.
3. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system.
4. Compare the gross profit and the March 31 inventories, using the following column headings.

Answers

Answer:

1. We have:

Inventory on March 31 = $1,010,625

Cost of merchandise sold for the three-month period = $10,891,875

2. We have:

Inventory on March 31 = $881,250

Cost of merchandise sold for the three-month period = $11,021,250

3. We have:

Inventory on March 31 = $980,975.27

Cost of merchandise sold for the three-month period = $10,921,524.73

4. We have:

Details                               FIFO               LIFO                Weighted Average

                                              $                     $                                 $

Sales                            19,875,000      19,875,000                 19,875,000

Cost of Goods sold    (10,891,875)      (11,021,250)                 (10,921,525)  

Gross Profit                  8,983,125        8,853,750                     8,953,475

Inventory, March 31       1,010,625           881,250                      980,975

Explanation:

1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Note: See part 1 of the attached excel file for the determined inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

From the part 1 of the attached excel file, we have:

Inventory on March 31 = $1,010,625

Cost of merchandise sold for the three-month period = $10,891,875

2. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Note: See part 2 of the attached excel file for the determined inventory on March 31 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

From the part 2 of the attached excel file, we have:

Inventory on March 31 = $881,250

Cost of merchandise sold for the three-month period = $11,021,250

3. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system.

Note: See part 3 of the attached excel file for the determined inventory on March 31 and the cost of merchandise sold for the three-month period, using the weighted average cost method and the periodic inventory system.

From the part 3 of the attached excel file, we have:

Inventory on March 31 = $980,975.27

Cost of merchandise sold for the three-month period = $10,921,524.73

4. Compare the gross profit and the March 31 inventories, using the following column headings.

Details                               FIFO               LIFO                Weighted Average

                                              $                     $                                 $

Sales                            19,875,000      19,875,000                 19,875,000

Cost of Goods sold    (10,891,875)      (11,021,250)                 (10,921,525)  

Gross Profit                  8,983,125        8,853,750                     8,953,475

Inventory, March 31       1,010,625           881,250                      980,975

Which economic concept helps explain the changing demand for jewelry?

A. fungibility
b. non-excludability
c. substitution
d. elasticity

Answers

Answer:

A.fungibility is a economic concept which helps explain the changing demand for jewelry.

As

Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets .

Could anyone help with this question?

Answers

I think the second choice is the answer.

A state is conducting an examination of mortgage loan originator Basil Thyme. During the examination, the agency is authorized to do all of the following, except:a. Administer oaths or affirmationsb. Control access to Basil’s officec. Subpoena witnessesd. Require production of relevant documents

Answers

Answer: B. Control access to Basil’s office.

Explanation:

During the conduct of the examination of mortgage loan originator Basil Thyme, the agency is authorized to administer oaths or affirmations, subpoena witnesses and require production of relevant documents.

The agency cannot control the access to Basil's office. It can only control access to any records or documents of an individual whim is under investigation.

Q2. With the help of book please elaborate What is the difference between a corporate strategy and a competitive strategy? Give three examples of each. (Words limit up to 150)

Answers

Answer and Explanation:

Competitive and corporate strategy are very important for the success and good management of a business. Competitive strategy is one that allows a company to promote elements capable of making it different from its competitors. Examples of competitive strategy are offering lower prices, higher quality products and negotiation between customers.

Corporate strategy, on the other hand, is one that allows the company to generate elements that will increase its profit and strengthen its capacity to be more competitive. Examples of this type of strategy are the acquisition of subsidiary companies, the merger of competing companies and the restructuring of the company.

For each of the following sentences, select the phrase or group of words that best completes the statement. Earnings per share Dividend yield ratio Dividend payout ratio Return on assets ratio Return on common stockholders' equity ratio

Answers

Answer:

Note See complete and organized question as attached as picture below

1. Dividend yield ratio

Correct phrase: Relationship between dividends and the market price of a company's stock.

2. Dividend payout ratio

Correct phrase: Percentage of earnings paid out as dividends.

3. Return on assets ratio

Correct phrase: Measure of a company's success in earning a return for all the providers of the capital.

4. Return on common stockholders' equity ratio

Correct phrase: Measure of a company's success in earning a return for the common stockholders.

For each transaction:
a. analyze the transaction using the accounting equation
b. record the transaction in journal entry form
c. post the entry using T-accounts to represent ledger accounts.

1. On May 15, DeShawn Tyler opens a landscaping company called Elegant Lawns by investing $7,000 in cash along with equipment having a $3,000 value in exchange for common stock.
2. On May 21, Elegant Lawns purchases office supplies on credit for $500.
3. On May 25, Elegant Lawns receives $4,000 cash for performing landscaping services.
4. On May 30, Elegant Lawns receives $1,000 cash in advance of providing landscaping services to a customer.

Answers

Answer:

Elegant Lawns

a. Analysis of transactions using the accounting equation:

1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000

2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500

3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000

4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000

b. Journal Entries:

Date          Account Titles        Debit        Credit

1. May 15, Assets: Cash         $7,000

Assets: Equipment                $3,000

Equity: Common stock                             $10,000

2.

May 21, Assets: Office supplies $500

Liabilities: Accounts Payable                       $500

3. May 25, Assets: Cash       $4,000

Equity: Service Revenue                          $4,000

4. May 30, Assets: Cash       $1,000

Equity: Service Revenue                          $1,000

c. T-accounts:

Cash

Date          Account Titles        Debit        Credit

1. May 15   Common stock     $7,000

3. May 25, Service revenue    4,000

4. May 30, Service revenue    1,000

Equipment

Date          Account Titles        Debit        Credit

1. May 15   Common stock     $3,000

Office Supplies

Date          Account Titles        Debit        Credit

2. May 21, Accounts Payable $500

Common Stock

Date          Account Titles        Debit        Credit

1. May 15   Cash                                        $7,000

1. May 15   Equipment                                3,000

Accounts Payable

Date          Account Titles        Debit        Credit

2. May 21, Office supplies                         $500

Service Revenue

Date          Account Titles        Debit        Credit

3. May 25, Cash                                       $4,000

4. May 30, Cash                                          1,000

Explanation:

a) Data and Analysis with Accounting Equation:

1. May 15, Assets Cash $7,000 Equipment $3,000 Equity: Common stock $10,000

2. May 21, Assets: Office supplies $500 Liabilities: Accounts Payable $500

3. May 25, Assets: Cash $4,000 Equity: Service Revenue $4,000

4. May 30, Assets: Cash $1,000 Equity: Service Revenue $1,000

Given below are several ratios. Select the accounts or amounts that would be used in order to calculate the ratio. You will have more than one response to each ratio. Some accounts or amounts may not be used at all. (Select all that apply.) Debt-to-equity ratio a.Cash paid for acquisitions b.Interest expense c.Total dividends paid d.Cash flow from operations before interest and tax payments e.Total stockholders' equity f.Net income g.Total liabilities h.Cash flow from operations

Answers

Answer:

Total stockholders' equity.Total liabilities.

Explanation:

The Debt to equity ratio shows the proportions of the financing options used to finance the operations of the company namely debt and equity.

It is calculated by the formula:

= Total liabilities / Total stockholders' equity * 100%

As shown by the formula , the relevant accounts are:

Total stockholders' equity.Total liabilities.

Workman Software has 11 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 108.3 percent of par. a. What is the current yield on the bonds

Answers

Answer:

10.16%

Explanation:

Coupon amount = 11% * 1000

Coupon amount = $110

Price of bond = 1000*108.3%

Price of bond = $1,083

Current yield = Coupon amount / Price of bond

Current yield = $110 / $1,083

Current yield = 0.1015697

Current yield = 10.16%

So, the current yield on the bonds is 10.16%.

how did you find the fv factor values

Answers

Answer:

v5th factor in solve......

Gilmore, Inc., had equity of $135,000 at the beginning of the year. At the end of the year, the company had total assets of $290,000. During the year, the company sold no new equity. Net income for the year was $29,000 and dividends were $3,400. a. What is the sustainable growth rate for the company

Answers

Answer:

A. 18.96%

B. 18.96%

C. 15.94%

Explanation:

A. Calculation to determine the sustainable growth rate for the company

First step is to calculate the Ending equity

Ending equity = 135,000 + 29,000 -3,400

Ending equity=$160,600.

Second step is to calculate the return on equity

Return on equity =29,000/160,600

Return on equity=0.18057285

Third step is to calculate the retention ratio

Retention ratio =(Net income- dividends) / Net income

Retention ratio= (29,000-3400) / 29,000

Retention ratio=25,600 /29,000

Retention ratio=0.88275862.

Now let calculate the Sustainable growth rate using this formula

Sustainable growth rate = (Return on equity *Retention ratio) / [1-(Return on equity*retention ratio)]

Let plug in the formula

Sustainable growth rate=(0.18057285*0.88275862)/ [1-(0.18057285*0.88275862)]

Sustainable growth rate=0.15940224/ [1-0.15940224]

Sustainable growth rate=0.1896*100

Sustainable growth rate=18.96%.

b. Calculation to determine the sustainable growth rate if you use the formula ROE band beginning of period equity

First step is to calculate the return on equity using beginning of the period equity

Return on equity using beginning of the period equity=$29,000 /135,000

Return on equity using beginning of the period equity=0.21481481.

Now let calculate the sustainable growth rate if you use the formula ROE band beginning of period equity

roe * b = 0.21481481*0.88275862

ROE band=0.1896*100

ROE band=18.96%.

c.return on equity using ending of period equity = 29,000/160,600

=>0.18057285

roe*b=>0.18057285*0.88275862

=>0.1594

=>15.94%.

Suppose independent truckers operate in a perfectly competitive constant cost industry. If these firms are earning positive economic profits, what happens in the long run to the following: The price of trucking services

Answers

Answer:

The price of trucking services would fall until equilibrium prices are reached. Only normal profit would be earned in the long run

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

Problems and Applications Q11 You are the curator of a museum. The museum is running short of funds, so you decide to increase revenue. When should you raise the admission price in order to increase revenue

Answers

Answer: Only when demand is inelastic

Explanation:

For a product that has an inelastic demand, the demand of a buyer with regards to a product has minimal changes when when there is a change in price. In such case, an increase in the price will lead to an increase in revenue.

On the other hand, for a product that has an elastic demand, there will be a greater change in the demand of the buyer when when there is a change in price. In such case, an inrease in the price will lead to an reduction in revenue as buyers will go for other products.

Therefore, the admission price should be increased when demand is inelastic in order to increase revenue.

Which of the following is considered the process in the systems thinking example of a decision support system?
a. transaction
b. processing system.
c. optimization
d. forecasts

Answers

Answer: C. Optimization

Explanation:

In the decision making system, TPS is considered to be the input in the systems thinking example.

In the decision making system, optimization is considered to be the process in the systems thinking example.

In the decision making system, TPS is considered to be the input in the systems thinking example.

In the decision making system, a forecast is considered to be the output in the systems thinking example.

Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not.

a. In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed.
b. The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug.
c. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks.
d. In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors.

Answers

Answer:

1. not a competitive market

2. not a competitive market

3. competitive market

4. not a perfectly competitive market

Explanation:

To answer this question, i will first start by explaining what a competitive market is and the assumption of a perfectly competitive market as well

A competitive market is a market that has many producers and buyers of a particular product. The producers are usually in a competition to meet up with the needs of the buyers.

some assumptions of the market:

large sellers/producersidentical or homogenous goodsfree entryno discriminationperfect knowledge

a. in this question this is not a competitive market. the reason is simple. It says that there are only two providers of internet. So there are no enough producers or sellers

b. The government has limited entry into this market by giving patent to only one pharmaceutical company.

c. yes this market is competitive since there are many producers of the product and the consumers regard the products as identical or homogenous. this meets with all of the assumptions of a perfectly competitive market.

d. the product here is not homogenous or identical as this is not a perfectly competitive market since buyers would prefer to buy the coffee that tastes better and leave that of the competitors

thank!

Kawamura, a careful utility maximizer, consumes peanut butter and ice cream. Assume that both peanut butter and ice cream are normal goods and that diminishing marginal utility applies to both goods. Right after he achieves the utility-maximizing level of consumption of the two goods, the price of peanut butter falls. After he adjusts to this event, the marginal utility of peanut butter goes _____ and that of ice cream goes _____.

Answers

Answer:

The marginal utility of peanut butter goes down and that of ice cream goes up.

Explanation:

The substitution effect states that when the price of a product falls, it will lead to a rise in the quantity demanded of the product as buyers will buy more of the product that is now relatively cheaper.

And as more of a good is bought, its marginal utility falls. And as less of a product is bought, its marginal utility increases.

Based on the above explanation therefore, the marginal utility of peanut butter goes down and that of ice cream goes up after Kawamura adjusts to the event.

This is because as more of peanut butter is bought due to the fall in its price, its marginal utility falls. And as less of ice cream is bought as it is now relatively more expensive, its marginal utility increases.

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