Assume that the demand curve for a commodity is represented by the equation Q = 25 - 1.3P. Calculate the change in total spending for this commodity when price falls from $4.50 to $4.20
a. Total spending rises by $4.11.
b. Total spending declines by $4.11.
c. Total spending declines by $8.20.
d. Total spending rises by $8.20.
B
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The market demand curve shows the relationship between the price and the quantity demanded by all consumers, everything else being equal
Indicate whether the statement is true or false
When deriving an Engel curve, the prices of both goods
A) are held constant. B) increase by the same percentage as income. C) decrease by the same percentage as income. D) can either decrease, increase or stay the same.
The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. Assuming a fixed cost of entry, the outcome will be that the incumbent
A) deters entry. B) chooses the Stackelberg leader level of output but the potential entrant does not enter anyway. C) chooses the Stackelberg leader level of output and the potential entrant enters. D) deters entry and earns zero profit.
To create a market
A) roles must be assigned. B) agents need instructions. C) property rights must be defined. D) transactions costs must be zero.