Riskier investments tend to sell for:
A. lower prices so they provide a higher expected rate of return to compensate for risk.
B. higher prices so they provide a higher expected rate of return to compensate for risk.
C. higher prices; that is why they are considered to be riskier.
D. prices directly correlated with expected rates of return.
A. lower prices so they provide a higher expected rate of return to compensate for risk
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Suppose that a local supermarket sells apples and oranges for 50 cents apiece, and at these prices is able to sell 100 apples and 200 oranges per week. One week, the supermarket lowered the price per apple to 40 cents and sold 120 apples. The next week, they lowered the price per orange to 40 cents (after raising the price per apple back to 50 cents) and sold 240 oranges. These results imply that
the a. price elasticity of apples is lower than the price elasticity of oranges b. price elasticity of apples is higher than the price elasticity of oranges c. demand for apples is more price sensitive than the demand for oranges d. demand for oranges is more price sensitive than the demand for apples e. price elasticities of demand for apples and oranges are the same over these price ranges
In the short run, the relevant costs for a firm to consider whether to shut down production are:
A. average total costs. B. average variable costs. C. average fixed costs. D. fixed costs.