A pharmaceutical company unexpectedly announces that it just developed an important new drug. This news should
a. raise the price of the corporation's stock; if it does not the stock is overvalued.
b. raise the price of the corporation's stock; if it does not the stock is undervalued.
c. reduce the price of the corporation's stock; if it does not the stock is overvalued.
d. reduce the price of the corporation's stock; if it does not the stock is undervalued.
b
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In order to fit linear supply and demand curves to data, we need to find the parameters, a, b, c, and d, of the corresponding functions.
A.One procedure for finding those values uses the known values of: the price elasticity of demand and supply and the income elasticity of demand. B. the price and quantity of equilibrium and the elasticities of supply and demand. C. any two known values of price and quantity and income elasticity of demand. D. the demand equation and income elasticity of demand.
Refer to Figure 4-3. What area represents consumer surplus at the equilibrium price of P1?
A) A + B + C + D + E B) A + B + C C) D + E D) A