The Demand Function for Small Business Computers in the United

question 55

Multiple Choice

The demand function for small business computers in the United States is given by x = 200 - 10p, where x is annual sales measured in thousands of computers and p is the price of a computer measured in thousands of dollars. Japanese firms supply a big share of these computers. They measure prices in yen where 150 yen equal 1 dollar. The price of 1 computer is $10,000. Let E_u be the price elasticity of demand at this price as calculated by US firms who measure in dollars, and let E_j be the price elasticity of demand at the same $10,000 price but measured in yen by the Japanese firms. Which of the following are the values of E_u and E_j, respectively?

• A) -1, 2150
• B) -1, 21
• C) -2, 22
• D) -2, 2300
• E) -2, 20.0133

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