As the price of video games is raised from $40 to $45, their quantity demanded fell from 1.5 million copies to 1.2 million copies. The elasticity of demand of video games is:
a. 0.25
b. 1.89
c. 1.66
d. 2.08
b
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A plastics factory emits water pollutants into a nearby river
The marginal private cost of producing plastics is constant, the marginal external cost of the pollutants increases with the quantity of plasticis, and the demand for plastics is downward sloping. What happens to the socially optimal level of output and market price if the marginal external cost curve shifts upward? A) Optimal price and quantity decrease B) Optimal price increases, optimal quantity remains unchanged C) Optimal price increases, optimal quantity decreases D) Optimal price and quantity decline
A linear total cost function implies that:
a. marginal costs are constant as output increases b. average total costs are continually decreasing as output increases c. a and b d. none of the above
Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus?
A. 55. B. 30. C. 0. D. 45.
When income ________, the money ________ curve shifts to the right
A) increases; demand B) increases; supply C) decreases; demand D) decreases; supply