In Problem 6, If There Are No Fixed Costs and Marginal

question 17

Multiple Choice

In Problem 6, if there are no fixed costs and marginal cost is constant at $8, the price elasticity of demand at the profit-maximizing level of output is closest to

• A) -1.17.
• B) -4.70.
• C) -0.85.
• D) -2.35.
• E) -0.43.

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Definitions:

Estimated Regression Line

A line calculated from regression analysis that represents the relationship between independent and dependent variables.

Sales

The exchange of a commodity for money; the action of selling something.

Regression Function

A mathematical equation that describes the relationship between one or more independent variables and a dependent variable.

Estimated Regression Line

The line that best fits a set of data points in linear regression, representing the expected value of the dependent variable for any given value of the independent variable.