If stock prices are in-line with their fundamental determinants and interest rates do not change, then a change in the profit expectations by 20%
A. will change the stock price by exactly 20% regardless of the expected distribution of the earnings over time.
B. will change the stock price by more than 20% regardless of the expected distribution of the earnings over time.
C. will change the stock price by more or less than 20% depending on the expected distribution of the earnings over time.
D. will change the stock price by less than 20% regardless of the expected distribution of the earnings over time.
Answer: C
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Suppose a consumer has an income of $800 per month and that she spends her entire income each month on beer and bratwurst. The price of a pint of beer is $5, and the price of a bratwurst is $4 . Which of the following combinations of beers and bratwursts represents a point that would lie directly on the consumer's budget constraint?
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