Suppose the Market Demand Curve Has an Elasticity of -

question 66

Multiple Choice

Suppose the market demand curve has an elasticity of - 4. If the monopolist's average cost is a horizontal straight line, then the profit is:

• A)half the total revenue.
• B)one quarter of total revenue.
• C)not related to the total revenue.
• D)equal to the total revenue.

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Definitions:

Involuntary Conversion

An event where property is destroyed, stolen, condemned, or disposed of under the threat of condemnation, and the owner receives other property or compensation in replacement.

Recognized Gain

The portion of gain considered for tax purposes when an asset is sold or disposed of, which may differ from the actual profit realized.

Basis

The initial value of an asset for tax purposes, used to determine gain or loss on sale or disposition.

Rental Property

Real estate property that is owned by an individual or entity and rented out to tenants in exchange for monthly rental payments.