-Suppose That, Along a Linear Demand Curve, the Elasticity of Demand

question 12

Multiple Choice

-Suppose that, along a linear demand curve, the elasticity of demand is equal to 1 when the price is $4 and the quantity is 100 units. Then the

• A) marginal revenue is positive at 100 units.
• B) marginal revenue is negative at 100 units.
• C) total revenue is at its maximum when 100 units are produced.
• D) Both answers A and B are correct.
• E) Both answers A and C are correct.

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Definitions:

DJIA

The Dow Jones Industrial Average, a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.

Stock Index Futures

Futures contracts where the underlying asset is a stock index, allowing investors to speculate on the future value of the index.

Transactions Costs

Expenses incurred when buying or selling securities, which can include brokerage fees, commissions, and other charges.

Leverage

Utilizing borrowed funds to amplify the possible returns on an investment.