A 2 percent rise in the price of a good leads to a 10 percent decrease in quantity demanded. The absolute price elasticity of demand is

A) 5.
B) 10.
C) 0.1.
D) 1.0.


A

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A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 20 ? Q and a 50 percent chance it will be P = 40 ? Q. The marginal cost of the firm is MC = Q. The expected profit-maximizing price is:

A. $20. B. $10. C. $15. D. $5.

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What will be an ideal response?

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The marginal cost of pollution abatement is graphically illustrated by

A. a vertical curve. B. a downward sloping curve. C. a horizontal curve. D. an upward sloping curve.

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