In a competitive market where the elasticity of the market demand curve is -1.5, the number of firms is 20, and an individual firm faces a residual demand curve with an elasticity of -68. What is the elasticity of the supply curve?
A) 0.5
B) 1.2
C) 2
D) Cannot be determined.
C
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Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. If Alice produces 5,000 cubic yards per year, what is Kate's inverse demand function?
A. P = 75 - 0.005QK B. P = 75 - 0.005QA C. P = 150 - 0.005QK D. P = 175 - 0.005QA
When the Fed unexpectedly increases the money supply, it will cause an increase in aggregate demand because: a. real interest rates will fall, stimulating business investment and consumer purchases
b. the dollar will depreciate on the foreign exchange market, leading to an increase in net exports. c. lower interest rates will tend to increase asset prices, which increases wealth and thereby stimulates current consumption. d. of all the above reasons.
If a corporation issues bonds that it cannot sell, this is an indication that
A. The coupon rate is too low. B. Dividends are too low. C. The opportunity cost of the bonds is too low. D. Expectations of future sales are low.
In the above figure for a monopolistically competitive firm, the profit-maximizing output and price are respectively
A. 50 units and $8. B. 80 units and $11. C. 60 units and $9. D. 60 units and $14.