Suppose the equilibrium price in the market is $60 and the marginal revenue associated with the linear (inverse) demand function is $20. Then we know that the own price elasticity of demand is:
A. 2.
B. ?2.
C. ?1.5.
D. It cannot be determined from the information contained in the question.
Answer: C
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Supply shocks after 1985
A) forced the Fed to follow restrictive monetary policy and caused a negative output ratio. B) forced the Fed to follow restrictive monetary policy and caused a positive output ratio. C) allowed the Fed to follow accommodative monetary policy and caused a negative output ratio. D) allowed the Fed to follow accommodative monetary policy and push the output ratio toward zero.
When a temporary shock in the economy involves a restriction in supply ________
A) we refer to it as a negative supply shock B) a rise in commodity prices typically follows C) a reduction in output typically ensues D) all of the above E) none of the above