Suppose That the Price Elasticity of Demand for Airline Flights

question 14

Multiple Choice

Suppose that the price elasticity of demand for airline flights between two cities is constant and equal to -1.5.If 4 airlines with equal costs are in Cournot equilibrium for this industry, then the ratio of price to marginal cost in the industry is

• A)8/7.
• B)9/8.
• C)7/6.
• D)3/2.
• E)None of the above.

Understand the use of AND and OR criteria in refining query selections.

Understand the characteristics and types of bonds.

Comprehend the impact of inflation on bond pricing and returns.

Grasp the concepts of bond pricing, yield, and rate of return.

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Definitions:

Disposable Income

The total amount of money available for an individual or household to spend or save after taxes have been deducted.

Consumption

The use of goods and services by households, constituting one of the major components of GDP.

APC

Average Propensity to Consume, which is the fraction of income that is consumed rather than saved.

MPS

The marginal propensity to save refers to the portion of each additional dollar of income that is set aside for savings instead of being spent.