Question 1

Demand tends to be:

Accepted Answer

A)  more elastic in the short term than in the long term. 
B)  more inelastic in the short term than in the long term. 
C)  equally elastic in the short term and in the long term. 
D)  None of the preceding statements is correct. 
A)  more elastic in the short term than in the long term. 
B)  more inelastic in the short term than in the long term. 
C)  equally elastic in the short term and in the long term. 
D)  None of the preceding statements is correct.

Question 2

The demand for good X is estimated to be Qxd = 10,000 − 4PX + 5PY + 2M + AX where PX is the price of X,PY is the price of good Y,M is income,and AX is the amount of advertising on X.Suppose the present price of good X is $50,PY = $100,M = $25,000,and AX = 1,000 units.What is the quantity demanded of good X?

Accepted Answer

A)  61,500 
B)  61,300 
C)  61,300 − 4PX 
D)  61,500 − 4PX 
A)  61,500 
B)  61,300 
C)  61,300 − 4PX 
D)  61,500 − 4PX

Question 3

The greater the standard error of an estimated coefficient:

Accepted Answer

A)  the greater the t-value of the estimated coefficient. 
B)  the lower the t-value of the estimated coefficient. 
C)  the greater the R-square. 
D)  the greater the adjusted R-square. 
A)  the greater the t-value of the estimated coefficient. 
B)  the lower the t-value of the estimated coefficient. 
C)  the greater the R-square. 
D)  the greater the adjusted R-square.

Question 4

The residual sum of squares and degrees of freedom due to the regression are:
RY

$\begin{array}{l}
\hline \text { gression Statistics }\
\begin{array}{lr}
\hline\text { R } & 0.971 \
\text { e} & \mathbf{A} \
\text { R-Square }& \mathbf{B} \
\text { Error } &30.462\
\text { ions } & 51\
\hline
\end{array}\end{array}$

$\begin{array}{rrrrrr}
\hline&\text { df } &  {\text { SS }} & {\text { MS }} & \boldsymbol{F} & {\text { Signiticance  F}} \
\hline\text { on }& \text { C } & 747851.57 & 373925.79 & 402.98 & 9.89 \mathrm{E}-31 \
&48 & \text { D } & 927.91 & & \
&50 & 792391.11 & & & \
\hline
\end{array}$

$\begin{array}{lrrrrrr}
\hline &\text { Coefficients } & \begin{array}{c}
\text { Standard } \
\text { Error }
\end{array} &{\text { t Stat }} & \text { P-value } & \text { Lower 95\% } & \text { Upper 95\% } \
\hline &\mathbf{E} & 62.13 & 26.79 & 1.60 \mathrm{E}-30 & 1539.66 & 1789.51 \
\text { Roses }&-6.68 & \mathbf{F} & -1.41 & 1.64 \mathrm{E}-01 & -16.16 & 2.81 \
\text { le Income }&9.73 & 0.34 & \mathbf{G} & 1.23 \mathrm{E}-31 & 9.04 & 10.42\
\hline
\end{array}$

Accepted Answer

A)  44,539.54 and 2, respectively. 
B)  747,851.57, and 98, respectively. 
C)  1,540,242.68 and 48, respectively. 
D)  There is not sufficient information to answer this question. 
A)  44,539.54 and 2, respectively. 
B)  747,851.57, and 98, respectively. 
C)  1,540,242.68 and 48, respectively. 
D)  There is not sufficient information to answer this question.

Question 5

Several years ago the National Association of Broadcasters imposed restrictions on the amount of nonprogram material (commercials)that could be aired during children's television shows,effectively reducing the quantity of advertising allowed during children's viewing hours by 33 percent.Within four months,the price of a minute of advertising on network television increased by roughly 14 percent.What impact do you think this had on the revenues of the networks?

Accepted Answer

The own price elasticity of demand for a

Question 6

The demand function in the accompanying table is QXd = 100 ? 2PX.Based on this information,when PX = $30,quantity demand,QXd (point B),is:
$\begin{array}{cccc}
\begin{array}{c}
\text { Good X } \
\left(\mathbf{P}_{\mathbf{x})}\right.
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { of GoodX } \
\left(\mathbf{Q}_{\mathbf{X}}\right)
\end{array} & \begin{array}{c}
\text { Own } \
\text { Price } \
\text { Elasticity }
\end{array} & \begin{array}{c}
\text { Total } \
\text { Revenue }
\end{array} \
5 & 100 & 0.00 & 0 \
\text { A } & 90 & -0.11 & 450 \
15 & 80 & -0.25 & 800 \
20 & 70 & -0.43 & 1050 \
25 & 60 & -0.67 & 1200 \
30 & 50 & \mathbf{C} & 1250 \
35 & \mathbf{B} & -1.50 & 1200 \
40 & 30 & -2.33 & 1050 \
45 & 20 & -4.00 & \mathbf{D} \
50 & 10 & -9.00 & 450 \
50 & 0 & -\infty & 0
\end{array}$

Accepted Answer

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

Question 7

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 we know that the interest elasticity is:

Accepted Answer

A)  unitary. 
B)  zero. 
C)  very elastic. 
D)  very inelastic. 
A)  unitary. 
B)  zero. 
C)  very elastic. 
D)  very inelastic.

Question 8

Use the regression output to compute the R-square and adjusted R-square (points A and B,respectively). RY

$\begin{array}{l}
\hline \text { gression Statistics }\
\begin{array}{lr}
\hline\text { R } & 0.971 \
\text { e} & \mathbf{A} \
\text { R-Square }& \mathbf{B} \
\text { Error } &30.462\
\text { ions } & 51\
\hline
\end{array}\end{array}$

$\begin{array}{rrrrrr}
\hline&\text { df } &  {\text { SS }} & {\text { MS }} & \boldsymbol{F} & {\text { Signiticance  F}} \
\hline\text { on }& \text { C } & 747851.57 & 373925.79 & 402.98 & 9.89 \mathrm{E}-31 \
&48 & \text { D } & 927.91 & & \
&50 & 792391.11 & & & \
\hline
\end{array}$

$\begin{array}{lrrrrrr}
\hline &\text { Coefficients } & \begin{array}{c}
\text { Standard } \
\text { Error }
\end{array} &{\text { t Stat }} & \text { P-value } & \text { Lower 95\% } & \text { Upper 95\% } \
\hline &\mathbf{E} & 62.13 & 26.79 & 1.60 \mathrm{E}-30 & 1539.66 & 1789.51 \
\text { Roses }&-6.68 & \mathbf{F} & -1.41 & 1.64 \mathrm{E}-01 & -16.16 & 2.81 \
\text { le Income }&9.73 & 0.34 & \mathbf{G} & 1.23 \mathrm{E}-31 & 9.04 & 10.42\
\hline
\end{array}$

Accepted Answer

A)  0.056 and 0.017 
B)  0.944 and 0.942 
C)  0.944 and ?0.428 
D)  0.06 and 0.02 
A)  0.056 and 0.017 
B)  0.944 and 0.942 
C)  0.944 and ?0.428 
D)  0.06 and 0.02

Question 9

A price elasticity of zero corresponds to a demand curve that is:

Accepted Answer

A)  horizontal. 
B)  downward sloping with a slope always equal to 1. 
C)  vertical. 
D)  either vertical or horizontal. 
A)  horizontal. 
B)  downward sloping with a slope always equal to 1. 
C)  vertical. 
D)  either vertical or horizontal.

Question 10

The demand for good X is estimated to be Qxd = 10,000 − 4PX + 5PY + 2M + AX, where PX is the price of X,PY is the price of good Y,M is income,and AX is the amount of advertising on X.Suppose the present price of good X is $50,PY = $100,M = $25,000,and AX = 1,000 units.What is the own price elasticity of demand for good X?

Accepted Answer

A)  −0.003 
B)  −0.03 
C)  −0.3 
D)  −3 
A)  −0.003 
B)  −0.03 
C)  −0.3 
D)  −3

Question 11

The demand for which of the following commodities is likely to be most price inelastic?

Accepted Answer

A)  Food 
B)  Hamburgers 
C)  Big Macs 
D)  Sandwiches 
A)  Food 
B)  Hamburgers 
C)  Big Macs 
D)  Sandwiches

Question 12

If the own price elasticity of demand is infinite in absolute value,then:

Accepted Answer

A)  demand is perfectly inelastic. 
B)  the demand curve is horizontal. 
C)  consumers do not respond at all to changes in price. 
D)  demand is neither perfectly inelastic nor is the demand curve horizontal. 
A)  demand is perfectly inelastic. 
B)  the demand curve is horizontal. 
C)  consumers do not respond at all to changes in price. 
D)  demand is neither perfectly inelastic nor is the demand curve horizontal.

Question 13

When the price of butter was "low," consumers spent $5 billion annually on its consumption.When the price doubled,consumer expenditures increased to $7 billion.Recently you read that this means that the demand curve for butter is upward sloping.Do you agree?

Accepted Answer

By definition, @#LAT-DLM& Subs

Question 14

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

Accepted Answer

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

Question 15

Suppose the equilibrium price in the market is $24 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.5.Then we know that:

Accepted Answer

A)  demand is inelastic. 
B)  marginal revenue is $8. 
C)  marginal revenue is $20. 
D)  demand is unit elastic. 
A)  demand is inelastic. 
B)  marginal revenue is $8. 
C)  marginal revenue is $20. 
D)  demand is unit elastic.

Question 16

Suppose the demand for good x is ln Qxd = 21 − 0.8 ln Px − 1.6 ln Py + 6.2 ln M + 0.4 ln Ax.Then we know that the own price elasticity for good x is:

Accepted Answer

A)  unitary. 
B)  elastic. 
C)  inelastic. 
D)  It cannot be calculated from the existing information. 
A)  unitary. 
B)  elastic. 
C)  inelastic. 
D)  It cannot be calculated from the existing information.

Question 17

When the own price elasticity of good X is −3.5,then total revenue can be increased by:

Accepted Answer

A)  increasing the price. 
B)  decreasing the quantity supplied. 
C)  decreasing the price. 
D)  neither increasing the price, decreasing the price, nor decreasing the quantity supplied. 
A)  increasing the price. 
B)  decreasing the quantity supplied. 
C)  decreasing the price. 
D)  neither increasing the price, decreasing the price, nor decreasing the quantity supplied.

Question 18

The demand for good X has been estimated to be ln Qxd = 100 − 2.5 ln PX + 4 ln PY + ln M.The cross-price elasticity of demand between goods X and Y is:

Accepted Answer

A)  −2.5. 
B)  4.0. 
C)  −2.5 percent. 
D)  4.0 percent. 
A)  −2.5. 
B)  4.0. 
C)  −2.5 percent. 
D)  4.0 percent.

Question 19

Suppose the own price elasticity of demand for good X is −0.5,and the price of good X increases by 10 percent.We would expect the quantity demanded of good X to:

Accepted Answer

A)  increase by 5 percent. 
B)  increase by 20 percent. 
C)  decrease by 5 percent. 
D)  decrease by 20 percent. 
A)  increase by 5 percent. 
B)  increase by 20 percent. 
C)  decrease by 5 percent. 
D)  decrease by 20 percent.

Question 20

Suppose Q xd = 10,000 − 2 Px + 3 Py − 4.5M,where Px = $100,Py = $50,and M = $2,000.What is the own price elasticity of demand?

Accepted Answer

A)  −2.34 
B)  −0.78 
C)  −0.21 
D)  −1.21 
A)  −2.34 
B)  −0.78 
C)  −0.21 
D)  −1.21

Demand tends to be:

The greater the standard error of an estimated coefficient:

A price elasticity of zero corresponds to a demand curve that is:

The demand for which of the following commodities is likely to be most price inelastic?

If the own price elasticity of demand is infinite in absolute value,then:

When the price of butter was "low," consumers spent $5 billion annually on its consumption.When the price doubled,consumer expenditures increased to $7 billion.Recently you read that this means that the demand curve for butter is upward sloping.Do you agree?

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

Suppose the equilibrium price in the market is $24 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.5.Then we know that:

Suppose the demand for good x is ln Q_x^d = 21 − 0.8 ln P_x − 1.6 ln P_y + 6.2 ln M + 0.4 ln A_x.Then we know that the own price elasticity for good x is:

When the own price elasticity of good X is −3.5,then total revenue can be increased by:

The demand for good X has been estimated to be ln Q_x^d = 100 − 2.5 ln P_X + 4 ln P_Y + ln M.The cross-price elasticity of demand between goods X and Y is:

Suppose the own price elasticity of demand for good X is −0.5,and the price of good X increases by 10 percent.We would expect the quantity demanded of good X to:

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.What is the own price elasticity of demand?

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

Demand tends to be:

The greater the standard error of an estimated coefficient:

A price elasticity of zero corresponds to a demand curve that is:

The demand for which of the following commodities is likely to be most price inelastic?

If the own price elasticity of demand is infinite in absolute value,then:

When the price of butter was "low," consumers spent $5 billion annually on its consumption.When the price doubled,consumer expenditures increased to $7 billion.Recently you read that this means that the demand curve for butter is upward sloping.Do you agree?

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

Suppose the equilibrium price in the market is $24 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.5.Then we know that:

Suppose the demand for good x is ln Qxd = 21 − 0.8 ln Px − 1.6 ln Py + 6.2 ln M + 0.4 ln Ax.Then we know that the own price elasticity for good x is:

When the own price elasticity of good X is −3.5,then total revenue can be increased by:

The demand for good X has been estimated to be ln Qxd = 100 − 2.5 ln PX + 4 ln PY + ln M.The cross-price elasticity of demand between goods X and Y is:

Suppose the own price elasticity of demand for good X is −0.5,and the price of good X increases by 10 percent.We would expect the quantity demanded of good X to:

Suppose Q xd = 10,000 − 2 Px + 3 Py − 4.5M,where Px = $100,Py = $50,and M = $2,000.What is the own price elasticity of demand?

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 for good x is ln Q_x^d = 21 − 0.8 ln P_x − 1.6 ln P_y + 6.2 ln M + 0.4 ln A_x.Then we know that the own price elasticity for good x is:

The demand for good X has been estimated to be ln Q_x^d = 100 − 2.5 ln P_X + 4 ln P_Y + ln M.The cross-price elasticity of demand between goods X and Y 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.What is the own price elasticity of demand?