Question 1

If demand is perfectly inelastic, then

Accepted Answer

A) the own price elasticity of demand is infinite in absolute value. 
B) a small increase in price will lead to a situation where none of the good is purchased. 
C) the demand curve is vertical. 
D) neither will the demand curve be vertical, the own-price elasticity of demand be infinite in absolute value nor a small price increase lead to none of the good being purchased. 
A) the own price elasticity of demand is infinite in absolute value. 
B) a small increase in price will lead to a situation where none of the good is purchased. 
C) the demand curve is vertical. 
D) neither will the demand curve be vertical, the own-price elasticity of demand be infinite in absolute value nor a small price increase lead to none of the good being purchased. C

Question 2

If apples have an own-price elasticity of -1.2 we know the demand is:

Accepted Answer

A) unitary. 
B) indeterminate. 
C) elastic. 
D) inelastic. 
A) unitary. 
B) indeterminate. 
C) elastic. 
D) inelastic. C

Question 3

The demand for good X has been estimated to be lnQxd = 0 - 2.5 lnPX + 4 lnPY + lnM.The advertising elasticity of good X is

Accepted Answer

A) 4.0. 
B) 1.0. 
C) 0.0. 
D) -2.5. 
A) 4.0. 
B) 1.0. 
C) 0.0. 
D) -2.5. C

Question 4

As we move up along a linear demand curve, the price elasticity of demand becomes more

Accepted Answer

A) Elastic. 
B) Inelastic. 
C) Log-linear. 
D) Variable. 
A) Elastic. 
B) Inelastic. 
C) Log-linear. 
D) Variable.

Question 5

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 6

The demand function in the above table is QXd = 100 - 2PX.Based on this information, when PX = $30, quantity demand, QXd, (point B) is

Accepted Answer

A) 100. 
B) 80. 
C) 60. 
D) 40. 
A) 100. 
B) 80. 
C) 60. 
D) 40.

Question 7

When a demand curve is linear,

Accepted Answer

A) the elasticity is the same as the slope of the demand curve. 
B) demand is elastic at high prices. 
C) demand is unitary elastic at low prices. 
D) the elasticity is constant at all prices. 
A) the elasticity is the same as the slope of the demand curve. 
B) demand is elastic at high prices. 
C) demand is unitary elastic at low prices. 
D) the elasticity is constant at all prices.

Question 8

Suppose the income elasticity for transportation is 1.8.Which of the following is an incorrect statement?

Accepted Answer

A) Transportation is a normal good. 
B) Expenditures on transportation grow more rapidly than income grows. 
C) Expenditures on transportation will fall less rapidly than income falls. 
D) Whenever the income increases by 1%, the expenditure on transportation increases by 1.8%. 
A) Transportation is a normal good. 
B) Expenditures on transportation grow more rapidly than income grows. 
C) Expenditures on transportation will fall less rapidly than income falls. 
D) Whenever the income increases by 1%, the expenditure on transportation increases by 1.8%.

Question 9

Which of the following provides a measure of the overall fit of a regression?

Accepted Answer

A) t-statistic. 
B) F-statistic. 
C) p-value. 
D) the t-statistic and the p-value. 
A) t-statistic. 
B) F-statistic. 
C) p-value. 
D) the t-statistic and the p-value.

Question 10

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

Accepted Answer

A) elastic. 
B) unitary. 
C) falling. 
D) inelastic. 
A) elastic. 
B) unitary. 
C) falling. 
D) inelastic.

Question 11

The statistical analysis of economic phenomenon is defined as:

Accepted Answer

A) econometrics. 
B) variance. 
C) confidence intervals. 
D) standard deviation. 
A) econometrics. 
B) variance. 
C) confidence intervals. 
D) standard deviation.

Question 12

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

Question 13

Suppose you are the manager of a home-building company and the government is considering eliminating the tax deductibility of mortgage interest payments.A typical consumer's marginal tax rate is 25 percent, and the elasticity of demand for new homes is -1.5.Your boss wants to know the impact of the proposed government policy on your business.What do you tell him?

Accepted Answer

Use the elasticity formula to

Question 14

Determine the standard error of the estimated slope coefficient for the price of roses (point F) and whether that estimate slope coefficient is statistically significant at the 5 percent level.

Accepted Answer

A) 9.42 and statistically significant since the t statistic is greater than 2 in absolute value. 
B) 9.42 and statistically insignificant since the t statistic is less than 2 in absolute value. 
C) 4.74 and statistically insignificant since the p-value is less than 5 percent. 
D) 4.74 and statistically significant since the p-value is less than 5 percent. 
A) 9.42 and statistically significant since the t statistic is greater than 2 in absolute value. 
B) 9.42 and statistically insignificant since the t statistic is less than 2 in absolute value. 
C) 4.74 and statistically insignificant since the p-value is less than 5 percent. 
D) 4.74 and statistically significant since the p-value is less than 5 percent.

Question 15

The demand function for VCRs has been estimated to be

Accepted Answer

@#IMG-DLM& , where @#IMG-DLM& is the quantity of VCRs, @#IMG-DLM& is t

Question 16

Assume that the price elasticity of demand is -0.75 for a certain firm's product.If the firm lowers 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 decrease. 
A) decrease 
B) increase 
C) remain constant 
D) either increase or remain constant depending upon the size of the price decrease.

Question 17

The demand for company X's product is given by

Accepted Answer

@#IMG-DLM& .Suppose good X sells for $3.00 per uni

Question 18

As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is:

Accepted Answer

A) zero. 
B) less than one. 
C) greater than or equal to one. 
D) greater than or equal to two. 
A) zero. 
B) less than one. 
C) greater than or equal to one. 
D) greater than or equal to two.

Question 19

When the price of sugar was "low", consumers in the United States spent a total of $3 billion annually on its consumption.When the price doubled, consumer expenditures actually increased to $4 billion annually.This indicates that

Accepted Answer

A) the demand for sugar is elastic. 
B) the demand curve for sugar is upward sloping. 
C) sugar is a Giffen good. 
D) none of the statements associated with this question are correct. 
A) the demand for sugar is elastic. 
B) the demand curve for sugar is upward sloping. 
C) sugar is a Giffen good. 
D) none of the statements associated with this question are correct.

Question 20

The elasticity that measures the responsiveness of consumer demand to changes in income is the:

Accepted Answer

A) income elasticity. 
B) own-price elasticity. 
C) cross-price elasticity. 
D) neither the income elasticity, own-price elasticity nor the cross-price elasticity. 
A) income elasticity. 
B) own-price elasticity. 
C) cross-price elasticity. 
D) neither the income elasticity, own-price elasticity nor the cross-price elasticity.

If demand is perfectly inelastic, then

If apples have an own-price elasticity of -1.2 we know the demand is:

The demand for good X has been estimated to be lnQ_x^d = 0 - 2.5 lnP_X + 4 lnP_Y + lnM.The advertising elasticity of good X is

As we move up along a linear demand curve, the price elasticity of demand becomes more

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

The demand function in the above table is Q_X^d = 100 - 2P_X.Based on this information, when P_X = $30, quantity demand, Q_X^d, (point B) is

When a demand curve is linear,

Suppose the income elasticity for transportation is 1.8.Which of the following is an incorrect statement?

Which of the following provides a measure of the overall fit of a regression?

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

The statistical analysis of economic phenomenon is defined as:

Determine the standard error of the estimated slope coefficient for the price of roses (point F) and whether that estimate slope coefficient is statistically significant at the 5 percent level.

The demand function for VCRs has been estimated to be

Assume that the price elasticity of demand is -0.75 for a certain firm's product.If the firm lowers price, the firm's managers can expect total revenue to

The demand for company X's product is given by

As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is:

When the price of sugar was "low", consumers in the United States spent a total of $3 billion annually on its consumption.When the price doubled, consumer expenditures actually increased to $4 billion annually.This indicates that

The elasticity that measures the responsiveness of consumer demand to changes in income is the:

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

Exam 3: Quantitative Demand Analysis

If demand is perfectly inelastic, then

If apples have an own-price elasticity of -1.2 we know the demand is:

The demand for good X has been estimated to be lnQxd = 0 - 2.5 lnPX + 4 lnPY + lnM.The advertising elasticity of good X is

As we move up along a linear demand curve, the price elasticity of demand becomes more

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

The demand function in the above table is QXd = 100 - 2PX.Based on this information, when PX = $30, quantity demand, QXd, (point B) is

When a demand curve is linear,

Suppose the income elasticity for transportation is 1.8.Which of the following is an incorrect statement?

Which of the following provides a measure of the overall fit of a regression?

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

The statistical analysis of economic phenomenon is defined as:

Determine the standard error of the estimated slope coefficient for the price of roses (point F) and whether that estimate slope coefficient is statistically significant at the 5 percent level.

The demand function for VCRs has been estimated to be

Assume that the price elasticity of demand is -0.75 for a certain firm's product.If the firm lowers price, the firm's managers can expect total revenue to

The demand for company X's product is given by

As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is:

When the price of sugar was "low", consumers in the United States spent a total of $3 billion annually on its consumption.When the price doubled, consumer expenditures actually increased to $4 billion annually.This indicates that

The elasticity that measures the responsiveness of consumer demand to changes in income is the:

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

The demand for good X has been estimated to be lnQ_x^d = 0 - 2.5 lnP_X + 4 lnP_Y + lnM.The advertising elasticity of good X is

The demand function in the above table is Q_X^d = 100 - 2P_X.Based on this information, when P_X = $30, quantity demand, Q_X^d, (point B) is