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Suppose a Demand Function Yields an Equilibrium Price of $5

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Essay

Suppose a demand function yields an equilibrium price of $5.00 and an equilibrium quantity of 50 000 individual units.The equilibrium quantity could also be expressed in units of 1000, yielding an equilibrium of $5.00 and 50 units.How would expressing the quantity in units of 1000 affect the value of the slope and the elasticity?


Definitions:

Residual Income

A measure of net income that remains after subtracting a charge for the capital cost involved in generating that income.

Weighted Average Cost of Capital

A financial metric that calculates a firm's cost of capital, weighted by the proportion of equity and debt financing.

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