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The residents of the town Ectenia all love economics, and the mayor proposes building an economics museum. The museum has a fixed cost of $2,000,000 and no variable costs. There are 100,000 town residents, and each has the same demand for museum visits: QD=12−P, where P is the price of admission. What kind of market would describe the museum?

Respuesta :

maryasay

Answer: A monopoly with a perfectly elastic demand

Explanation:

The formula for quantity demanded [tex]Q_{d}[/tex] = a-bp

where a = point where the demand curve starts on the vertical axis,

           b = gradient of the curve

           p = price

The quantity demanded for museum visits [tex]Q_{d}[/tex] =  12-P

This indicates that the gradient of the curve is 1. A change in the the price of a museum visit will result in an equal change in the demand for museum visits.

That means that when there is a 10% rise in price, demand will fall by 10%.

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