Assume That a Market Demand Curve Is Constructed from One

question 5

Multiple Choice

Assume that a market demand curve is constructed from one hundred identical individual demand curves.Assume also that at a price of $4,the elasticity of individual demand is 0.6.Then the elasticity of the market demand curve derived from these individual demand curves must be:

• A)0.6.
• B)any value more than 0.6.
• C)any value less than 0.6.
• D)60.

---

Definitions:

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Normally Distributed Returns

A pattern in the investment world where the returns of a financial instrument are symmetrically distributed around the mean.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion in a set of data points.

Risk-free Asset

An investment that is assumed to have no risk of financial loss, typically represented by government bonds.