Assume the Demand Function for Good X Can Be Written

question 33

Multiple Choice

Assume the demand function for good X can be written as Qd = 80 - 3Px - 6Py + 10I,where Px = the price of X,Py is the price of Y and I is consumer income.If the price of Y decreases by 5 dollars,what would the reduction in Px have to be in order to keep the quantity demanded of X unchanged by the change in the price of Y?

• A)decreased by 10 dollars
• B)decreased by 5 dollars
• C)decreased by 2.5 dollars
• D)decreased by 1 dollar

Comprehend the short-run and long-run impacts on profits and firm behavior in competitive industries following changes in market demand.

Understand the mechanics of mean reversion in economic profits and how it affects long-term industry equilibrium.

Master the concept of elasticity of demand and how it reflects on pricing strategies and consumer behavior.

Recognize the unique position of monopoly firms in the market, their profit-making capabilities, and the factors contributing to their long-run profit sustainability.

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Definitions:

$1

Represents one unit of currency, particularly in the context of the United States, though it can also apply to other countries' currencies that are named "dollar."

Supply Curve

A graph showing the relationship between the price of a good and the quantity of the good that producers are willing to supply at that price.

Gasoline

A refined petroleum product used as fuel in internal combustion engines.

Market Size

The total potential sales volume or number of consumers available to a product or service within a given market.