Suppose Apples and Peaches Are Substitutes

question 85

Multiple Choice

Suppose apples and peaches are substitutes.Holding everything else constant,if the price of apples increases,then the demand for _____ will _____.

• A) peaches;increase
• B) peaches;decrease
• C) apples;increase
• D) apples;decrease

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Definitions:

Net Present Value

This refers to the calculation used to determine the current value of a series of future cash flows by applying a discount rate.

Initial Cash Outlay

The upfront amount of cash needed to initiate a project or investment, including acquisition costs and other initial expenses.

SML Approach

Stands for Security Market Line, a graphical representation that shows the expected return of an investment as a function of its risk.

Cost of Equity

The return that investors require for an investment in a firm's equity, representing the compensation for bearing risk.