The price elasticity of demand for gasoline is estimated to be -0.2. Two million gallons are sold daily at a price of $1. Use this information to calculate a demand curve for gasoline assuming it is linear
What will be an ideal response?
Elasticity = slope (p/Q), -0.2 = slope (1/2 ).
The slope equals -0.4.
Thus Q = a - 0.4p or 2 = a - 0.4(1).
Solving yields a = 2.4. The demand curve is Q = 2.4 - 0.4p (where Q is expressed in million gallons).
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Interlace, Inc produces and a unique soda. The company cannot price discriminate. The figure above shows Interlace's demand curve, marginal revenue curve, and marginal cost curve
The quantity of soda Interlace Inc will choose to produce is ________ because when this quantity is produced, ________. A) efficient; marginal social benefit exceeds marginal social cost B) efficient; marginal social benefit equals marginal social cost C) not efficient; marginal social benefit exceeds marginal social cost D) not efficient; marginal social benefit equals marginal social cost
In a market for emission permits, firms that emit over their allowed limits
A) are forced to shut down. B) are taxed by the government for the amount of emissions. C) receive a subsidy for the amount of emissions. D) pay a price of these emissions.
If the government removes a binding price ceiling from a market, then the price received by sellers will
a. decrease, and the quantity sold in the market will decrease. b. decrease, and the quantity sold in the market will increase. c. decrease, and the quantity sold in the market will increase. d. increase, and the quantity sold in the market will increase.
In the United States, the average length of time people spend unemployed is
A) approximately one month. B) between two and three months. C) between ten and eleven months. D) greater than twelve months.