A General Linear Demand Function Has the Form to Follow $q = k p + b$

question 21

Multiple Choice

A general linear demand function has the form to follow. $q = k p + b$ (k and b constants, with $k \neq 0$ )

Obtain a formula for the elasticity of the demand at a unit price p.

• A) \(E = - \frac { p } { k + b }\)
• B) \(E = b + k p\)
• C) \(E = - \frac { k p } { k p + b }\)
• D) \(E = \frac { k p } { b }\)
• E) \(E = - \frac { p } { p + b }\)

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Definitions:

Product-Related

Pertaining to attributes, development, or improvements directly associated with physical goods.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as materials and labor used in the production process.

Total Costs

The sum of all costs incurred by a business in producing goods or services, including both fixed and variable costs.

Units

A measure of quantity used to quantify the amount of production output, inventory, or sales.