Question 1

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

Accepted Answer

A)  own price elasticity. 
B)  income elasticity. 
C)  log-linear elasticity. 
D)  cross-price elasticity. 
A)  own price elasticity. 
B)  income elasticity. 
C)  log-linear elasticity. 
D)  cross-price elasticity.

Question 2

The income elasticity of demand for your firm's product is estimated to be 0.75.A recent report in The Wall Street Journal says that national income is expected to decline by 3 percent this year.
a.What should you do with your stock of inventories?
b.What do you expect to happen to your sales?
c.How would you answer parts a and b if you expected a 5 percent increase in income instead of a decrease?

Accepted Answer

a. @#LAT-DLM& or @#LAT-DLM& .The manager should reduce the s

Question 3

Assume that the price elasticity of demand is −2 for a certain firm's product.If the firm raises price,the firm's managers can expect total revenue to:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or remain constant, depending upon the size of the price increase. 
A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or remain constant, depending upon the size of the price increase.

Question 4

Suppose that at the equilibrium price and quantity,the marginal revenue is −$15 and the price elasticity of demand for a linear demand function is −0.75.Then we know that the equilibrium price is:

Accepted Answer

A)  −$5. 
B)  $45. 
C)  −$45. 
D)  $5. 
A)  −$5. 
B)  $45. 
C)  −$45. 
D)  $5.

Question 5

When marginal revenue is zero,demand will be:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  There is not sufficient information to classify the elasticity of demand. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  There is not sufficient information to classify the elasticity of demand.

Question 6

The manager can be 95 percent confident that the true value of the underlying parameters in a regression is not zero if the absolute value of the t-statistic is:

Accepted Answer

A)  less than 1. 
B)  less than 2. 
C)  greater than 1. 
D)  greater than 2. 
A)  less than 1. 
B)  less than 2. 
C)  greater than 1. 
D)  greater than 2.

Question 7

The elasticity of demand for gasoline has been estimated to be −2.0,and the standard error is 0.25.The t-statistic for the estimated elasticity of demand for gasoline is:

Accepted Answer

A)  −8, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
B)  −0.5, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
C)  8, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
D)  0.5, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
A)  −8, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
B)  −0.5, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
C)  8, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
D)  0.5, indicating a statistically significant elasticity estimate at the 95 percent confidence level.

Question 8

The management of Local Cinema has estimated the monthly demand for tickets to be ln Q = 22,328 − 0.41 ln P + 0.5 ln M − 0.33 ln A + 100 ln PDVD,where Q = quantity of tickets demanded,P = price per ticket,M = income,A = advertising outlay,and PDVD = price of a DVD rental.It is known that P = $5.50,M = $9,000,A = $900,and Pvcr = $3.00.Based on the information given,which of the following statements is false?

Accepted Answer

A)  Advertising decreases the demand for movie tickets. 
B)  Movies are normal goods. 
C)  Movies are complements for DVD rentals. 
D)  The advertising elasticity of demand for movie tickets is −0.33. 
A)  Advertising decreases the demand for movie tickets. 
B)  Movies are normal goods. 
C)  Movies are complements for DVD rentals. 
D)  The advertising elasticity of demand for movie tickets is −0.33.

Question 9

Suppose the demand for sunscreen (X)has been estimated to be ln Qx = 5 - 1.7 ln Px + 3 ln S - 3 ln Ay,where S denotes the average hours of sunshine per day and Ay represents the level of advertising for good Y.
a.What would be the impact on demand of a 5 percent increase in the daily amount of sunshine?
b.What would be the impact of a 10 percent reduction in the amount of advertising toward good Y?
c.What might be good Y in this example?

Accepted Answer

a.A 5 percent increase in the daily amou

Question 10

If the income elasticity for lobster is 0.4,a 40 percent increase in income will lead to a:

Accepted Answer

A)  10 percent drop in demand for lobster. 
B)  16 percent increase in demand for lobster. 
C)  20 percent increase in demand for lobster. 
D)  4 percent increase in demand for lobster. 
A)  10 percent drop in demand for lobster. 
B)  16 percent increase in demand for lobster. 
C)  20 percent increase in demand for lobster. 
D)  4 percent increase in demand for lobster.

Question 11

Suppose the demand function is Q xd = 100 − 8Px + 6Py - M.If Px = $4,Py = $2,and M = $10,what is the cross-price elasticity of good x with respect to the price of good y?

Accepted Answer

A)  0.17 
B)  0.38 
C)  0.21 
D)  0.04 
A)  0.17 
B)  0.38 
C)  0.21 
D)  0.04

Question 12

If the price of pork chops falls from $8 to $6,and this leads to an increase in demand for apple sauce from 100 to 140 jars,what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

Accepted Answer

A)  −1.17 
B)  2.71 
C)  0.42 
D)  −0.86 
A)  −1.17 
B)  2.71 
C)  0.42 
D)  −0.86

Question 13

The demand for Cinnamon Toast Crunch brand cereal is:

Accepted Answer

A)  equally elastic to the demand for cereal in general. 
B)  less elastic than the demand for cereal in general. 
C)  more elastic than the demand for cereal in general. 
D)  None of the preceding statements is correct. 
A)  equally elastic to the demand for cereal in general. 
B)  less elastic than the demand for cereal in general. 
C)  more elastic than the demand for cereal in general. 
D)  None of the preceding statements is correct.

Question 14

If quantity demanded for sneakers falls by 6 percent when price increases 20 percent,we know that the absolute value of the own price elasticity of sneakers is:

Accepted Answer

A)  0.3. 
B)  0.7. 
C)  2.3. 
D)  3.3. 
A)  0.3. 
B)  0.7. 
C)  2.3. 
D)  3.3.

Question 15

Since most consumers spend very little on salt,a small increase in the price of salt will:

Accepted Answer

A)  reduce quantity demanded by a large amount. 
B)  not reduce quantity demanded by very much. 
C)  not change quantity demanded. 
D)  increase quantity demanded by a small amount. 
A)  reduce quantity demanded by a large amount. 
B)  not reduce quantity demanded by very much. 
C)  not change quantity demanded. 
D)  increase quantity demanded by a small amount.

Question 16

Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H.Then good x is:

Accepted Answer

A)  a normal good. 
B)  an inferior good. 
C)  a complement for good y. 
D)  perfectly inelastic. 
A)  a normal good. 
B)  an inferior good. 
C)  a complement for good y. 
D)  perfectly inelastic.

Question 17

Suppose the own price elasticity of demand for good X is −0.25,and the quantity of good X increases by 5 percent.What would you expect to happen to the total expenditures on good X?

Accepted Answer

A)  Increase 
B)  Decrease 
C)  Remain unchanged 
D)  Neither increase, decrease nor remain unchanged 
A)  Increase 
B)  Decrease 
C)  Remain unchanged 
D)  Neither increase, decrease nor remain unchanged

Question 18

The demand for video recorders has been estimated to be Qv = 134 − 1.07Pf + 46Pm −2.1Pv − 5I,where Qv is the quantity of video recorders,Pf denotes the price of video recorder film,Pm is the price of attending a movie,Pv is the price of video recorders,and I is income.Based on the estimated demand equation we can conclude:

Accepted Answer

A)  video recorders are inferior goods. 
B)  video recorder film is a substitute for video recorders. 
C)  the demand for video recorders is inelastic. 
D)  the demand for video recorders is neither inferior nor inelastic, and video recorder film is not a substitute for video recorders. 
A)  video recorders are inferior goods. 
B)  video recorder film is a substitute for video recorders. 
C)  the demand for video recorders is inelastic. 
D)  the demand for video recorders is neither inferior nor inelastic, and video recorder film is not a substitute for video recorders.

Question 19

If the cross-price elasticity between goods X and Y is zero,we know the goods are:

Accepted Answer

A)  independent. 
B)  complements. 
C)  inelastic. 
D)  substitutes. 
A)  independent. 
B)  complements. 
C)  inelastic. 
D)  substitutes.

Question 20

Suppose the demand for a product is Qxd = 12 − 3 ln Px. Then demand for product x is:

Accepted Answer

A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  It cannot be determined without more information. 
A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  It cannot be determined without more information.

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

Assume that the price elasticity of demand is −2 for a certain firm's product.If the firm raises price,the firm's managers can expect total revenue to:

Suppose that at the equilibrium price and quantity,the marginal revenue is −$15 and the price elasticity of demand for a linear demand function is −0.75.Then we know that the equilibrium price is:

When marginal revenue is zero,demand will be:

The manager can be 95 percent confident that the true value of the underlying parameters in a regression is not zero if the absolute value of the t-statistic is:

The elasticity of demand for gasoline has been estimated to be −2.0,and the standard error is 0.25.The t-statistic for the estimated elasticity of demand for gasoline is:

If the income elasticity for lobster is 0.4,a 40 percent increase in income will lead to a:

Suppose the demand function is Q _x^d = 100 − 8P_x + 6P_y - M.If P_x = $4,P_y = $2,and M = $10,what is the cross-price elasticity of good x with respect to the price of good y?

If the price of pork chops falls from $8 to $6,and this leads to an increase in demand for apple sauce from 100 to 140 jars,what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

The demand for Cinnamon Toast Crunch brand cereal is:

If quantity demanded for sneakers falls by 6 percent when price increases 20 percent,we know that the absolute value of the own price elasticity of sneakers is:

Since most consumers spend very little on salt,a small increase in the price of salt will:

Suppose the demand function is given by Q_x^d = 8P_x^0.5 P_y^0.25 M^0.12 H.Then good x is:

Suppose the own price elasticity of demand for good X is −0.25,and the quantity of good X increases by 5 percent.What would you expect to happen to the total expenditures on good X?

If the cross-price elasticity between goods X and Y is zero,we know the goods are:

Suppose the demand for a product is Q_x^d = 12 − 3 ln P_x. Then demand for product x is:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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Exam 3: Quantitative Demand Analysis

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

Assume that the price elasticity of demand is −2 for a certain firm's product.If the firm raises price,the firm's managers can expect total revenue to:

Suppose that at the equilibrium price and quantity,the marginal revenue is −$15 and the price elasticity of demand for a linear demand function is −0.75.Then we know that the equilibrium price is:

When marginal revenue is zero,demand will be:

The manager can be 95 percent confident that the true value of the underlying parameters in a regression is not zero if the absolute value of the t-statistic is:

The elasticity of demand for gasoline has been estimated to be −2.0,and the standard error is 0.25.The t-statistic for the estimated elasticity of demand for gasoline is:

If the income elasticity for lobster is 0.4,a 40 percent increase in income will lead to a:

Suppose the demand function is Q xd = 100 − 8Px + 6Py - M.If Px = $4,Py = $2,and M = $10,what is the cross-price elasticity of good x with respect to the price of good y?

If the price of pork chops falls from $8 to $6,and this leads to an increase in demand for apple sauce from 100 to 140 jars,what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

The demand for Cinnamon Toast Crunch brand cereal is:

If quantity demanded for sneakers falls by 6 percent when price increases 20 percent,we know that the absolute value of the own price elasticity of sneakers is:

Since most consumers spend very little on salt,a small increase in the price of salt will:

Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H.Then good x is:

Suppose the own price elasticity of demand for good X is −0.25,and the quantity of good X increases by 5 percent.What would you expect to happen to the total expenditures on good X?

If the cross-price elasticity between goods X and Y is zero,we know the goods are:

Suppose the demand for a product is Qxd = 12 − 3 ln Px. Then demand for product x is:

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Suppose the demand function is Q _x^d = 100 − 8P_x + 6P_y - M.If P_x = $4,P_y = $2,and M = $10,what is the cross-price elasticity of good x with respect to the price of good y?

Suppose the demand function is given by Q_x^d = 8P_x^0.5 P_y^0.25 M^0.12 H.Then good x is:

Suppose the demand for a product is Q_x^d = 12 − 3 ln P_x. Then demand for product x is: