Exam 3: Quantitative Demand Analysis

A firm derives revenue from two sources: goods X and Y.Annual revenues from good X and Y are $10,000 and $20,000,respectively.If the price elasticity of demand for good X is −4.0 and the cross-price elasticity of demand between Y and X is 2.0,then a 2 percent decrease in the price of X will:

The own price elasticity of demand for apples is −1.2.If the price of apples falls by 5 percent,what will happen to the quantity of apples demanded?

You work for an unemployment agency that distributes unemployment checks to unemployed workers in your state.Your boss recently learned that the president proposed a 21 percent increase in the minimum wage,and she wants you to provide her with an estimate of the number of additional workers who will file for unemployment compensation claims next year if the bill passes.Based on library research at a nearby university,you learn that about 200,000 workers in your state earn at or below the current minimum wage.Further library research turns up a study that reports the own price elasticity of demand for minimum wage earners to be −0.30.Based on your findings,how many additional workers do you think will file unemployment claims in your state?

If there are few close substitutes for a good,demand tends to be relatively:

A firm derives revenue from two sources: goods X and Y.Annual revenues from good X and Y are $10,000 and $20,000,respectively.If the price elasticity of demand for good X is −2.0 and the cross-price elasticity of demand between Y and X is 1.5,then a 4 percent increase in the price of X will:

Each week Bill buys exactly 10 hot dogs regardless of their price.Bill's own price elasticity of demand for hot dogs IN ABSOLUTE VALUE is:

Suppose Q _x^d = 10,000 − 2 P_x + 3 P_y − 4.5M,where P_x = $100,P_y = $50,and M = $2,000.Then good X has a demand which is:

Which of the following statements is INCORRECT?

The own price elasticity of demand for apples is −1.5.If the price of apples falls by 6 percent,what will happen to the quantity of apples demanded?

The statistical analysis of economic phenomena is defined as:

Suppose a regression with 51 observations returns a regression sum of squares of 56,000 and a total sum of squares of 250,000.The associated residual sum of squares is:

The elasticity of variable G with respect to variable S is defined as:

The demand for good X is estimated to be Q_x^d = 10,000 − 4P_X + 5P_Y + 2M + A_X, where P_X is the price of X,P_Y is the price of good Y,M is income,and A_X is the amount of advertising on X.Suppose the present price of good X is $50,P_Y = $100,M = $25,000,and A_X = 1,000 units.Based on this information,goods X and Y are:

The demand for good X is estimated to be Q_x^d = 10,000 − 4P_X + 5P_Y + 2M + A_X, where P_X is the price of X,P_Y is the price of good Y,M is income,and A_X is the amount of advertising on X.Suppose the present price of good X is $50,P_Y = $100,M = $25,000,and A_X = 1,000 units.Based on this information,the cross-price elasticity between goods X and Y is:

A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C − 0.036 ln r,where M denotes real money balances,C is an index of consumer confidence,and r is the interest rate paid on bank deposits.Based on this study,a 5 percent increase in interest rates will cause the demand for money to:

If the short-term own price elasticity for transportation is estimated to be −0.6,then long-term own price elasticity is expected to be:

If the cross-price elasticity between goods A and B is negative,we know the goods are:

The demand function in the accompanying table is Q_X^d = 100 ? 2P_X.Based on this information,when Q_X = 80,the price,P_X (point A),is: Good X Quantity of GoodX Own Price Elasticity Total Revenue 5 100 0.00 0 A 90 -0.11 450 15 80 -0.25 800 20 70 -0.43 1050 25 60 -0.67 1200 30 50 1250 35 -1.50 1200 40 30 -2.33 1050 45 20 -4.00 50 10 -9.00 450 50 0 -\infty 0

When marginal revenue is zero,total revenue:

The demand for video recorders has been estimated to be linear and given by the demand relation Q_v = 145 − 3.2P_v + 7M − 0.95P_f − 39P_m,where Q_v is the quantity of video recorders,P_f denotes the price of video recorder film,P_m is the price of attending a movie,P_v is the price of video recorders,and M is income.Based on the estimated demand equation we can conclude: