If the quantity demanded of a good is Q when the price for the good is P, the price elasticity of demand for that good at that point is:
A. (Q/P) × (1/slope)
B. Q × P × (1/slope)
C. (P/Q) × (slope)
D. (P/Q) × (1/slope)
Answer: D
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Which of the following is NOT one of the functions of money?
A) protection from increases in prices of goods and services B) store of value C) medium of exchange D) unit of accounting
If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will
A) incur an economic loss. B) make zero economic profit, that is, its owners make a normal profit. C) make an economic profit of $4 million. D) make an economic profit of $16 million.
From 1800 to 1940, the price level in the United States
A) trended neither upward nor downward. B) fluctuated wildly. C) declined slowly. D) increased slowly.
Sarah and Andrew are two traders in a pure exchange economic with two goods, Bikes (B) and Computers (C). Sarah's preferences are described by the Cobb-Douglas Utility function:
US = BS1/3CS2/3 Andrew's preferences are given by: UA = BA1/2CA1/2 Assume the price of Bikes is 1 and the price of computers is p. The initial endowments are BA = 10, BS = 20, CA = 20 and CS = 10. Solve for the competitive equilibrium prices (relative prices) and quantities.