You Have to Decide Whether to Buy Shares in a Company

question 82

Essay

You have to decide whether to buy shares in a company selling surfboards or a company selling roller skates. The income elasticity for roller skates is - 0.2 and the income elasticity for surfboards 0.9. Most economists are predicting that consumer income will rise over the next few years. Which company should you invest in and why?

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Definitions:

The Swing

A famous Rococo painting by Jean-Honoré Fragonard, depicting a young woman swinging while being watched by her lover, embodying the playful and sensual style of the period.

Rococo

An 18th-century artistic movement and style, originating in France, characterized by elaborate ornamentation, asymmetrical values, pastel color palette, and themes of love, nature, and light-heartedness.

Fragonard

Jean-Honoré Fragonard was a French painter whose works are emblematic of the Rococo style, known for its playful, sensuous expression.

Jean-Jacques Rousseau

A Genevan philosopher, writer, and composer of the 18th century, whose ideas influenced the Enlightenment across Europe, as well as aspects of the French Revolution.