If the Demand Function for a Particular Good Is Q

question 6

Multiple Choice

If the demand function for a particular good is Q = 20 − 8P,then the price elasticity of demand (in absolute value) at a price of $1 is:

• A) 8.
• B) 2.
• C) 2/3.
• D) 1/8.

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Definitions:

Private-Value Auction

An auction in which the value of the item being bid on is subjective and differs for each bidder, based on their private evaluation.

Dutch Auction

A market structure where the price of an item is lowered until it meets a bid, opposite of the traditional auction format where prices ascend.

Second-Highest Willingness

The concept of determining the price or value of an item based on the highest bid that did not win in an auction or competitive bidding process.

Winner's Curse

A phenomenon in auctions, suggesting that the winning bidder tends to overpay due to incomplete information or overly optimistic value assessments.