consider a market with the inverse demand function P(Q) = 10 - Q where Q denotes the total quantity and P the price. The market is served by two firms, so that Q=q1+q2. The cost function of firm 1 is given by C1(q1) = 4q1 and the cost function of firm 2 is given by C2(92) = q2.92 The statement:The inverse price elasticity of demand is given by 1/n = 1- (10/Q) The statement is false.WHY?Explain briefly.

consider a market with the inverse demand function P(Q) = 10 - Q where Q denotes the total quantity and P the price. The market is served by two firms, so that Q=q1+q2. The cost function of firm 1 is given by C1(q1) = 4q1 and the cost function of firm 2 is given by C2(92) = q2.92 The statement:The inverse price elasticity of demand is given by 1/n = 1- (10/Q) The statement is false.WHY?Explain briefly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Revenue and Costs ($) TC P61 Given TFC = $40.00 Q1 = 30.00 Q2 = 40.00 TR P6 P5 Q3 = 50.00 Q4 = 80.00 Q5 = 86.00 P4. P1 = $40.00 P2 = $50.00 P3 = $60.0o P4 = $150.00 P5 = $200.00 P6 = $210.00 P61 = $320.00 P3 P2 P1 Q1 Q2 Q4 Q5 Q3 Exhibit TR-TC Output (Q) Refer to Exhibit TR-TC for a typical competitive firm. At an output level of Q5, the firm's losses is about O $100.00 O $90.00 O $110.00 O $120.00