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ECO 561 WEEK 6 KNOWLEDGE CHECK

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Question;1.;If the demand curve is QD = 100 ? 10P and there is a $1 price increase, then;the elasticity of demand at P = 2 is;A.;-0.25;B.;-0.75;C.;-0.50;D.;-0.30;2.;If the absolute value of a demand elasticity is less than 1, then;A.;the demand is inelastic, and a price rise will reduce the total revenue;B.;the demand is inelastic, and a price rise will increase the total revenue;C.;the demand is elastic, and a price rise will reduce the total revenue;D.;the demand is elastic, and a price rise will increase the total revenue;3.;If the cross-price elasticity is negative, then the two goods are;A.;unrelated;B.;substitutes;C.;complements;D.;normal goods;4.;Under perfect competition, a firm maximizes its profit by setting;A.;P = MC because P = MR.;B.;P above MC where MC = MR.;C.;P = FC.;5.;In a large city, a good, real-world example for perfect competition would be;A.;lawyers;B.;gas stations;C.;Time Warner Cable;D.;clothing stores;6.;A firm under monopolistic competition will earn;A.;positive economic profit because it has some monopoly power;B.;zero economic profit because it sets P = MC;C.;zero economic profit because its P = ATC;D.;positive economic profit because it sets MC = MR

 

Paper#55324 | Written in 18-Jul-2015

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