If Price Is $12 When the Price Elasticity of Demand

question 32

Multiple Choice

If price is $12 when the price elasticity of demand is -1,then marginal revenue must be:

• A) $24.
• B) $18.
• C) $12.
• D) $6.
• E) $0.

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Definitions:

Miller-Orr Model

A financial model used for managing cash balances and optimizing the levels of cash holding based on specified upper and lower limits.

Cash Balance Target

A cash balance target is a strategy companies use to maintain an optimal level of cash reserves for operations and unexpected expenses, aiming to balance liquidity with profitability.

Weekly Interest Rate

The interest rate applied to loans, savings, or investments calculated on a weekly basis.

Optimal Initial Cash Balance

Optimal initial cash balance is the ideal amount of cash a business should hold at the start of a period to meet operational needs and minimize costs, considering factors like transaction costs and opportunity costs.