Explain why the price elasticity varies even when a firm faces a linear demand curve.
What will be an ideal response?
A linear demand curve has a constant slope. A constant slope implies only that absolute changes in quantity demanded remain unchanged with respect to a unit change in price. However, the concept of price elasticity is based on percentage change rather than absolute change. Thus, even if the slope of a demand curve is constant, percentage change in quantity demanded and percentage change in price between two different points vary.
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What are the typical types of risk faced by a firm?
What will be an ideal response?
Microeconomics
A. is generally too complex and abstract to be of much use in making real-world business decisions. B. studies the behavior of individual economic units or segments of the economy. C. contributes to the understanding of ordinary business practices or tactics. D. all of the above. E. both b and c.
When a person smokes a cigarette in his car and throws the butt out of the window, this is a(n)
A) marginal cost. B) external cost. C) marginal personal benefit. D) internal benefit.
A surplus will occur if a ________ is set ________ the equilibrium price.
A. price floor; above B. price floor; below C. price ceiling; below D. price ceiling; above