Let the demand function for a product be Q = 50 ? 5P. The inverse demand function of this demand function is:
A. Q = 25 + P
B. P = 10 + 0.2Q
C. P = 50 ? 0.2Q
D. P = 10 ? 0.2Q
Answer: D
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Labor unions support the minimum wage because
A) the increased unemployment is good for labor. B) the value associated with the deadweight loss goes to labor unions. C) labor unions prefer to operate in black markets. D) it puts upward pressure on all wages. E) union members are usually paid the minimum wage.
According to the Keynesian model, the optimal fiscal policy is to
a. increase cyclical but not structural deficits during a recession. b. reduce cyclical and structural deficits during a recession. c. increase structural deficits during an recession. d. maintain a balanced budget in case of national emergency.
The difference in present value between a perpetuity that promised $1 per year starting today and one that promised $1 per year starting next year is
a. 0. b. $1. c. $1/(1 + r). d. $r/(1 + r).
In Table 13-1, the Federal Reserve System has
a. sold $10 million in government securities to banks, taking payment in cash. b. sold $10 million in government securities to banks, taking payment from the bank's reserves. c. purchased $10 million in government securities from banks, paying for them with increases in banks' reserves. d. purchased $10 million in government securities from banks, paying for them with new Federal Reserve notes.