Economic theory simplifies relationships to explain how the relationships interact.
Answer the following statement true (T) or false (F)
True
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Are the short-run and long-run average cost curves U-shaped for the same reason? Explain
What will be an ideal response?
Explain why on average the profit levels for invention and entrepreneurship are generally so low.
What will be an ideal response?
Answer the following statement(s) true (T) or false (F)
1. Happiness decreases with higher income. 2. Most economists believe countries should vigorously pursue policies of income redistribution for equality. 3. Total equality of family income would hurt people with small families the most. 4. Women now comprise more than half of the labor force. 5. Wage disparities between white and black workers are attributed solely to racism by most economists.
A stock has a current annual dividend of $6.00 per year and it is expected to grow by 3% (0.03) a year. It is expected that two years from now the stock will sell for $90.00 a share. If the interest rate is 5% (0.05), the dividend-discount model predicts the stock's current price should be:
A. $101.30 B. $94.30 C. $94.90 D. $93.29