Figure 4-9 -Refer to Figure 4-9.The Graphs Show the Demand for Cigarettes.In

question 142

Multiple Choice

Figure 4-9

-Refer to Figure 4-9.The graphs show the demand for cigarettes.In Panel (b) ,the arrows are consistent with which of the following events?

• A)an increase in the price of cigarettes
• B)placing a tax on cigarettes
• C)the prohibition of cigarette advertisements on television
• D)decreasing the price of marijuana,given that tobacco and marijuana are complements

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Definitions:

Crossover Rate

The crossover rate is the rate of return at which two projects have the same net present value (NPV), used in capital budgeting to compare the desirability of investments or projects.

Profitability Index

A financial tool used to evaluate the attractiveness of an investment by dividing the present value of future cash flows by the initial investment cost.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Required Return

The lowest profit anticipated by an investor from a specific asset or project investment.