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The demand and supply functions of a firm are given as follows:
Qd = 10 - 3P
Qs = 2 + P
a)Determine the equilibrium price and quantity.
b)Derive the price elasticity of demand assuming that the price level falls 10% below the equilibrium price.
Profit Maximization
A rephrased definition: The strategy or aim of a firm to achieve the highest profit possible, usually by adjusting outputs, prices, or production costs.
Market Price
The current price at which an asset or service can be bought or sold in the open market.
Long Run
A period in economics where all inputs or factors of production can be varied, with no fixed factors, allowing for full adjustment to changes.
Economic Profit
The divergence between overall financial returns and comprehensive expenses, integrating both apparent and implied costs.
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