Today the common stock of Gresham Technology closed at $24.6024.60 per share, down $0.350.35 from yesterday. If the company has 4.64.6 million shares outstanding and annual earnings of $11.211.2 million, what is its P/E ratio today? What was its P/E ratio yesterday?

10.10 is its P/E ratio today

10.25 was its P/E ratio yesterday

Solution:

The ratio of a firm's share price to its earnings per share is the measure of the profit-earnings, also known as the P / E ratio, P / E or PER.

Yesterdays price: 24.60 + 0.35 = $24.95

Earnings per share: 11.2m/4.6m = $2.435

Today's , P/E: 24.60/2.435 = 10.10

Yesterday's , P/E: 24.95/2.435 = 10.25

So, 10.10 is its P/E ratio today , 10.25 was its P/E ratio yesterday.

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.