Suppose That When the Price of a Good Is $15

question 31

Multiple Choice

Suppose that when the price of a good is $15, the quantity demanded is 40 units, and when the price falls to $6, the quantity increases to 60 units. The price elasticity of demand near a price of $6 and a quantity of 60 can be calculated as:

• A) -5/6
• B) -2
• C) -2/9
• D) -9/2

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Definitions:

Total Revenue

The total amount of money received by a company for goods or services sold, before any expenses are subtracted.

Marginal Cost

The additional cost incurred from the production of one additional unit of a good or service.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a good or service.

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.