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The Teenager Company makes and sells skateboards at an average price of $70 each. During the past year, they sold 4,000 of these skateboards. The company believes that the price elasticity for this product is about -2.5. Which of the following would be the best option for the company?
Raise the price and plan to increase the quantity supplied
Lower the price and plan to increase the quantity supplied
Raise the price and plan to decrease the quantity supplied
Lower the price and plan to decrease the quantity supplied
A regulator plans to impose a specific tax on a previously unregulated monopolist. Before imposing the tax, they want to know what the change in quantity produced will be from such a tax. The proposed specific tax is τ = 10 and the following are the ..
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In 2011, Britney taught music and earned $20,000. She also earned $4,000 by renting out her basement. On January 1, 2012, she quit teaching, stopped renting out her basement, and began to use it as the office for her new website design business. Duri..
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Illustrate what is the minimum price neccessary for this firm to produce any output in the short run.
The constant price elasticity of demand for cigarettes has been estimated to be -0.5. To reduce smoking by 50%, approximately how much tax needs to be added to a $1 pack?
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