Consider the following linear demand function where QD = quantity demanded, P = selling price, and Y = disposable income: QD = ?36 ?2.1P + .24Y The coefficient of P (i.e., ?2.1) indicates that (all other things being held constant):
a. for a one percent increase in price, quantity demanded would decline by 2.1 percent
b. for a one unit increase in price, quantity demanded would decline by 2.1 units
c. for a one percent increase in price, quantity demanded would decline by 2.1 units
d. for a one unit increase in price, quantity demanded would decline by 2.1 percent
e. none of the above
b
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Suppose that in the market for paper, demand is p = 100 - Q. The private marginal cost is MCp = 10 + Q. Pollution generated during the production process creates external marginal harm equal to MCe = Q
What specific tax would result in a competitive market producing the socially optimal quantity of paper?
Economic growth is best measured by the increase in
A. nominal GDP. B. potential output. C. disposable personal income in current dollars. D. disposable personal income in real dollars.
A tariff has the effect of granting ____ a larger share of the domestic market.
A. domestic consumers B. foreign consumers C. domestic producers D. foreign producers
Which of the following would shift the world supply curve up?
A. An appreciation of the U.S. currency B. A decision by the Chinese to allow the yuan to appreciate C. Continuing devaluation of the yuan by the Chinese D. Government policies that lower wages in foreign countries