The market demand for a gallon of mineral water is P = 10 - .05Q. The producer wants to produce where the elasticity of demand is unity. What price should she charge and what quantity should be sold to achieve that goal?
What will be an ideal response?
Unity elasticity is the midpoint of demand so she should price at 5 and sell 100 gallons.
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A surplus of cardboard boxes means that
A) at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. B) at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. C) the current price of a cardboard box is less than the equilibrium price. D) at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium. E) More information is needed to determine if the price of cardboard boxes is higher than, lower than, or equal to the equilibrium price.
For a monopolistically competitive market, the number of firms in the market implies that
A) each firm faces a perfectly elastic demand. B) all firms will make losses. C) each firm acts independently of other firms. D) firms will collude to set monopoly price and output.
A major characteristic of the theory of oligopoly is that:
a. there are no real-world examples. b. the reactions of each firm depends on how the firm believes rivals will react. c. in reality few oligopolies survive more than 10 years. d. none of these.
GDP, according to the income method, is the sum of:
a. wages, rent, interest, and profits. b. consumption, gross investment, depreciation, and net exports. c. depreciation, net factor income from abroad, and indirect business taxes. d. gross investment, wages, profits, rent, and indirect business taxes. e. consumption, profits, interest, rent, and net exports.