Exam 2: Demand Theory

The demand for fax machines has been estimated to be Q = 1,000 - P + 40L,where P is the price of the machines and L is the average cost of a 10-minute midday call from Los Angeles to New York.At a fax machine price of $400 and a phone call cost of $10,the cross-price elasticity of demand for fax machines with respect to the price of phone service is:

The demand for fashion watches is Q = 9 - 0.7P + 2I.Assume that per capita income I is $13.When the price of fashion watches is P = $30,the price elasticity of demand is:

Information on the quantities that would be purchased at different prices,holding all other factors constant,in a given time period from a group of firms is shown in a:

The formula for the point price elasticity can be written as:

Marginal revenue can be defined as the:

As we move down a linear demand curve,demand becomes:

The demand for office chairs in thousands is Q = 80 - P².At a price of $4,the price elasticity of demand is:

El Niño wind patterns affected the weather across the United States during the winter of 1997-1998.Suppose the demand for home heating oil in Connecticut is given by Q = 20 - 2P_hho + 0.5P_ng - TEMP,where Q is the quantity of home heating oil demanded,P_hho is the price of home heating oil per unit,P_ng is the price of natural gas per unit,and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature.If the current price of home heating oil is $1.20,the current price of natural gas is $2.00,and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years,the price elasticity of demand for home heating oil is:

El Niño wind patterns affected the weather across the United States during the winter of 1997-1998.Suppose the demand for home heating oil in Connecticut is given by Q = 20 - 2P_hho + 0.5P_ng - TEMP,where Q is the quantity of home heating oil demanded,P_hho is the price of home heating oil per unit,P_ng is the price of natural gas per unit,and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature.If the current price of home heating oil is $1.20,the current price of natural gas is $2.00,and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years,if the sellers of home heating oil are profit maximizers,they should:

Total revenue can be defined as:

The demand for personal computers has been estimated to be Q = 500,000 - 700P + 200I - 500S.Assume that per capita income I is $13,000 and the average price of software S is $400.When the price of personal computers is P = $3,000,the price elasticity of demand is:

If price is $12 when the price elasticity of demand is -1,then marginal revenue must be:

Suppose that the demand curve for compact disks is given by P = 600 - Q and that the supply curve is given by P = 0.5Q,where Q is the quantity of compact disks and P is their price.What is the price elasticity of demand at the equilibrium price and quantity?

The demand for space heaters is Q = 250 - P + 2COOL,where COOL is the absolute value of the difference between the average overnight low temperature and 40°F.Assume that the average overnight low is 0°F.When the price of space heaters is P = $30,the price elasticity of demand is:

The demand for answering machines is Q = 1,000 - 150P + 25I.Assume that per capita disposable income I is $200.When the price of answering machines is P = $10,the price elasticity of demand is:

A manufacturer of infant clothes has found that the demand for its product is given by Q = 100P ^{± 1.25}A^0.5,where P is price and A is advertising expenditures.The price elasticity of demand for these infant clothes is:

The formula for the arc price elasticity can be written (where $\Delta$ Q denotes the change in Q)as:

The demand curve's usual slope implies that consumers:

El Niño wind patterns affected the weather across the United States during the winter of 1997-1998.Suppose the demand for home heating oil in Connecticut is given by Q = 20 - 2P_hho + 0.5P_ng - TEMP,where Q is the quantity of home heating oil demanded,P_hho is the price of home heating oil per unit,P_ng is the price of natural gas per unit,and TEMP is the absolute difference between the average winter temperature over the past 10 years and the current average winter temperature.If the current price of home heating oil is $1.20,the current price of natural gas is $2.00,and the average winter temperature this year is 40 degrees compared to 28 degrees over the past 10 years,the TEMP variable tells us that:

The demand for space heaters is Q = 250 - P + 2COOL,where COOL is the absolute value of the difference between the average overnight low temperature and 40°F.Assume that the average overnight low this month is 40°F.When the price of space heaters is P = $50,the price elasticity of demand is: