Given the Demand Function in Log-Linear Form: Q = 120

question 36

Multiple Choice

Given the demand function in log-linear form: Q = 120 - 1.5P + 12ADV where Q = quantity,P = price,and ADV = advertising expenditures,what is the price elasticity?

• A)1.5, inelastic
• B)-1.5, elastic
• C)120, elastic
• D)12, elastic

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Definitions:

Marginal Benefit

The enhanced pleasure or utility that comes from consuming an extra unit of a product or service.

Marginal Cost

The cost incurred by producing one additional unit of a product or service, crucial for decision-making in production levels.

Optimal Amount

The ideal quantity of a resource or good that achieves the best outcome or utility.

Positive Externalities

Benefits that result from a commercial activity or action but affect uninvolved third parties who did not choose to be involved in the transaction.