If Price Elasticity of Demand is -2.4, the product is:
a) Inferior.
b) Elastic.
c) Inelastic.
d) Unit elastic.
Answer: b) Elastic.
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What is asymmetric information?
What will be an ideal response?
When consumers or businessmen stop collecting information to make decisions at the point where marginal cost of data collection equals the marginal utility of the data, economists would call the decisions based on existing data
a. perfect decisions. b. optimally imperfect decisions. c. joint decisions. d. rent seeking.
Say the supply of a product falls while the demand stays the same. This causes the free market ________
a. price to increase and equilibrium quantity to increase b. price to increase and equilibrium quantity to decrease c. price to decrease and equilibrium quantity to increase d. price to decrease and equilibrium quantity to decrease
Figure 7.6 shows prices, demands, and cost data for the only restaurant in a small town. What is its profit from senior customers under the senior discount policy of a $7 senior price and a $10 non-senior price?
A. $1,200 B. $1,500 C. $2,280 D. $2,560