Econ questions help?
Elasticity of demand by people with small cars for a car wash is -4. Elasticity of demand by people with big cars for a car wash is -6. If you charge people with ordinary cars $20 for a car wash, how much should you charge owners of big cars for a car wash?
Suppose there are just two countries, A and B, in the oil market and the inverse demand for oil is given by P = 150 – Q. The marginal cost for both countries is $30. The price charged by each firm in the Bertrand equilibrium is?
Suppose that the inverse demand for a product is represented by the equation P = 60 – Q, where P is the price in USD and Q is the annual output. Suppose that only one firm produces this product and that the marginal and average cost is $10. What is the deadweight loss at the profit maximising quantity?
A monopolist has determined that at the current level of output the price elasticity of demand is -0.15. Which of the following statements is true?
A: The firm should reduce output
B: This is typical for a monopolist; output should be left unchanged.
C: The firm should increase output
D: It is impossible to say what the firm should do unless we have more information.
- OiyLv 62 months ago
Clearly, the answer is B or $15. If the demand is elastic, the percentage of the increase in quantity demanded will be higher than the percentage of the price reduction. That is the meaning that -6.