The Demand for Good X Has Been Estimated by Q_x^d

question 70

Multiple Choice

The demand for good X has been estimated by Q_x^d = 6 − 2P_x + 5P_y.Suppose that good X sells at $3 per unit and good Y sells for $2 per unit.Calculate the own price elasticity.

• A) −0.3
• B) −0.4
• C) −0.5
• D) −0.6

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Definitions:

Subjective Approaches

Methods based on personal opinions, interpretations, points of view, or judgments rather than on objective or external data.

WACC

Weighted Average Cost of Capital, a calculation that reflects the average rate that a company is expected to pay its security holders to finance its assets.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, assigning weights accordingly.

Cost of Capital

The expected returns an investor requires to make an investment worthwhile, often used as a benchmark to evaluate the viability of investment projects.