A simple linear demand function may be stated as Q = a - bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for c, we can use observed values for Q and I and then set the estimated income elasticity of demand equal to:
What will be an ideal response?
c(I/Q).
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Suppose all producers in a given industry charge exactly the same price for their product. Uniform prices across an industry proves
A) industry competetitiveness. B) industry monopolization. C) producers cannot be earning monopoly profits. D) absolutely nothing about whether the industry is adequately competitive.
A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe that some people still do not take the bus even after the price of a ticket fell
a. Is the model incorrect? b. How would you test this model?
A firm's short-run average total cost curve is parallel to its short-run average variable cost curve
Indicate whether the statement is true or false
In which case do firms have some control over their price?
a. monopolistic competition and perfect competition b. oligopoly but not perfect competition c. perfect competition but not monopoly d. neither monopolistic competition nor oligopoly