Determinants

Examples of Determinants in the following topics:

• Cost of capital

  • It determines the minimum return that investors expect for providing capital to the company.
  • In order to determine a company's cost of capital, the cost of debt and the cost of equity must be calculated.
  • The cost of equity is determined by comparing the investment to other comparable investments with similar risk profiles.
  • This determines the "market" cost of equity.

• Determinants of Supply

  • Supply levels are determined by price, which increases or decreases supply along the price curve, and non-price factors, which shifts the entire curve.

• Monopoly Production Decision

  • When a monopolist produces the quantity determined by the intersection of MR and MC, it can charge the price determined by the market demand curve at the quantity.
  • In short, three steps can determine a monopoly firm's profit-maximizing price and output:
  • Identify the point at which the marginal revenue and marginal cost curves intersect and determine the level of output at that point

• Marginal Revenue Productivity and Wages

  • Just as in any market, the price of labor, the wage rate, is determined by the intersection of supply and demand.
  • To determine demand in the labor market we must find the marginal revenue product of labor (MRPL), which is based on the marginal productivity of labor (MPL) and the price of output.
  • The graph shows that a factor of production - in our case, labor - has a fixed supply in the long run, so the wage rate is determined by the factor demand curve - in our case, the marginal revenue product of labor.

• The Wage Rate

  • The wage rate is determined by the intersection of supply of and demand for labor.
  • The wage rate is determined by their intersection.

• Shifts in the Money Demand Curve

  • A shift in the money demand curve occurs when there is a change in any non-price determinant of demand, resulting in a new demand curve.
  • The shift of the money demand curve occurs when there is a change in any non-price determinant of demand, resulting in a new demand curve.
  • Non-price determinants are changes cause demand to change even if prices remain the same.
  • The demand for money determines how a person's wealth should be held.

• Determinants of Price Elasticity of Demand

  • A good's price elasticity of demand is largely determined by the availability of substitute goods.
  • The PED for a given good is determined by one or a combination of the following factors:

• The Relationship Between Risk and Return and the Security Market Line

  • The security market line is useful to determine if an asset being considered for a portfolio offers a reasonable expected return for risk.
  • In finance, the capital asset pricing model (CAPM) is used to determine the required rate of return of an asset, taking into account an asset's sensitivity to non-diversifiable or systematic risk.
  • The market risk premium is determined from the slope of the SML.
  • The SML is a useful tool in determining if an asset being considered for a portfolio offers a reasonable expected return for risk.

• Introducing Aggregate Supply

  • The equation used to determine the short-run aggregate supply is: Y = Y* + α(P-Pe).
  • The equation used to determine the long-run aggregate supply is: Y = Y*.
  • Its intersection with aggregate demand determines the equilibrium quantity supplied and price.

• Government Activity

  • The long-run growth is determined by percentage of change in the real gross domestic product (GDP) .
  • The long-run economic growth is determined by short-run economic decisions.
  • The change in GDP is used to determine economic growth within a country.