The demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. The own price elasticity of good X is
A. -2.5
B. 4.0
C. -2.5 percent
D. 4.0 percent
Answer: A. -2.5
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Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?
A) removing property rights B) subsidizing production C) marketable permits D) running a lottery E) imposing Coasian taxes
A person is risk neutral if:
A. her indifference curve is concave to the origin. B. her indifference curve is convex to the origin. C. her indifference curve coincides with the expected consumption line. D. her indifference curve coincides with guaranteed consumption line.
Private costs of an economic activity exceed social cost when external benefits are created
a. True b. False Indicate whether the statement is true or false
The GDP tends to:
a) overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives. b) understate economic welfare because it includes expenditures undertaken to offset or correct pollution. c) understate economic welfare because it does not take into account increases in leisure. d) overstate economic welfare because it does not reflect improvements in product quality.