<u>Answer:</u>
b. The appearance of a substitute for DVDs with increase the elasticity coefficient for DVDs.
<u>Explanation:</u>
"Price elasticity of demand" refers to the proportion of a product's percentage change in demand quantity in relation to the percentage change in the good's price. Rates are fixed in a market economy by commodity supply and demand factors.
Markets consist of producers and consumers. Our analysis of buyers' behaviour is focused on demand curves; supply curves reflect sellers' behaviour. The lesser the good's price, the greater the quantity consumers want to buy, as per the “law of demand”.
If a new technology substitutes the DVD, which leads to decrease in their demand. This further leads to the increase in price. Assuming the elasticity is 3.0, a price increase of 10 percent will lower the demand quantity by 30 percent (30 percent/10 percent or 3.0). Thus, the DVD’s elasticity coefficient will increase.
Answer:
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Answer:
Net Income $
Income before income taxes 3,860
Income tax expense <u>1,544</u>
Net income <u> 2,316</u>
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Explanation:
Net income is calculated as income before income taxes minus income tax expense.
<u>Solution and Explanation:</u>
(a). Firm in perfect competition produces at minimum efficient scale, MEC where average cost AC is minimum. The price is determined by the market supply and demand.
(b) Note that q1 is at the minimum of AC while Q* is to the left of q1. Similarly, P1 is equal to MC while P* is higher than MC. This shows that firms in perfect competition produce more and charge less than the firms in monopolistically competitive market.
(c) All firms in monopolistically competitive market as well as perfectly competitive market earn zero economic profit in the long run. This is because there is a free entry and exit
(d) Demand is steeper for firms in monopolistically competitive market so that demand is elastic. Demand is horizontal for any quantity which means it is perfectly elastic for a firm in competitive market.
