Question 1

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 2

When the price of sugar was "low," U.S.consumers spent a total of $3 billion annually on sugar consumption.When the price doubled,consumer expenditures remained at $3 billion annually.This data indicates that:

Accepted Answer

A)  the demand for sugar is inelastic. 
B)  the demand curve for sugar is upward sloping. 
C)  the quantity demanded of sugar increased. 
D)  None of the preceding statements is correct. 
A)  the demand for sugar is inelastic. 
B)  the demand curve for sugar is upward sloping. 
C)  the quantity demanded of sugar increased. 
D)  None of the preceding statements is correct.

Question 3

Your firm's research department has estimated the elasticity of demand for toys to be −0.7.As the manager of a local chain of toy stores,determine the impact of an 8 percent increase in toy prices on your total revenues.

Accepted Answer

Since the elasticity of demand

Question 4

Suppose the equilibrium price in the market is $10 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.25.Then we know that:

Accepted Answer

A)  demand is inelastic. 
B)  marginal revenue is $2. 
C)  marginal revenue is $50. 
D)  demand is unit elastic. 
A)  demand is inelastic. 
B)  marginal revenue is $2. 
C)  marginal revenue is $50. 
D)  demand is unit elastic.

Question 5

If the demand function for a particular good is Q = 50 − 4P,then demand at a price of $10 is:

Accepted Answer

A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  Elasticity cannot be determined. 
A)  elastic. 
B)  unit elastic. 
C)  inelastic. 
D)  Elasticity cannot be determined.

Question 6

The cross-price elasticity of demand between goods X and Y is −3.5.If the price of X decreases by 7 percent,the quantity demanded of Y will:

Accepted Answer

A)  decrease by 24.5 percent. 
B)  decrease by 2.45 percent. 
C)  increase by 24.5 percent. 
D)  increase by 2.45 percent. 
A)  decrease by 24.5 percent. 
B)  decrease by 2.45 percent. 
C)  increase by 24.5 percent. 
D)  increase by 2.45 percent.

Question 7

When a demand curve is linear:

Accepted Answer

A)  demand is elastic at low prices. 
B)  demand is inelastic at low prices. 
C)  demand is unitary elastic at low prices. 
D)  the elasticity is constant at all prices. 
A)  demand is elastic at low prices. 
B)  demand is inelastic at low prices. 
C)  demand is unitary elastic at low prices. 
D)  the elasticity is constant at all prices.

Question 8

If the cross-price elasticity between ketchup and hamburgers is −1.2,a 4 percent increase in the price of ketchup will lead to a 4.8 percent:

Accepted Answer

A)  drop in quantity demanded of ketchup. 
B)  drop in quantity demanded of hamburgers. 
C)  increase in quantity demanded of ketchup. 
D)  increase in quantity demanded of hamburgers. 
A)  drop in quantity demanded of ketchup. 
B)  drop in quantity demanded of hamburgers. 
C)  increase in quantity demanded of ketchup. 
D)  increase in quantity demanded of hamburgers.

Question 9

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 1. 
D)  greater than or equal to 2. 
A)  zero. 
B)  less than one. 
C)  greater than or equal to 1. 
D)  greater than or equal to 2.

Question 10

Your firm's research department has estimated the income elasticity of demand for Art Deco lawn furniture to be −0.85.You have just learned that due to an upturn in the economy,consumer incomes are expected to rise by 5 percent next year.How will this event affect your ordering decision for PVC pipe,which is the main component in your furniture?

Accepted Answer

Using the formula for the inco

Question 11

Suppose the equilibrium price in the market is $60 and the marginal revenue associated with the linear (inverse)demand function is $20.Then we know that the own price elasticity of demand is:

Accepted Answer

A)  −2. 
B)  2. 
C)  −1.5. 
D)  It cannot be determined from the information contained in the question. 
A)  −2. 
B)  2. 
C)  −1.5. 
D)  It cannot be determined from the information contained in the question.

Question 12

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.

Question 13

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

Accepted Answer

A)  inferior goods. 
B)  complements. 
C)  inelastic. 
D)  substitutes. 
A)  inferior goods. 
B)  complements. 
C)  inelastic. 
D)  substitutes.

Question 14

A price elasticity of infinity 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 15

We would expect the demand for jeans to be:

Accepted Answer

A)  more elastic than the demand for clothing. 
B)  less elastic than the demand for clothing. 
C)  the same as the demand for clothing. 
D)  neither more elastic, less elastic, nor the same elasticity as that of the demand for clothing. 
A)  more elastic than the demand for clothing. 
B)  less elastic than the demand for clothing. 
C)  the same as the demand for clothing. 
D)  neither more elastic, less elastic, nor the same elasticity as that of the demand for clothing.

Question 16

When marginal revenue is positive for a linear (inverse)demand function,decreases in output will cause total revenues to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  There is not sufficient information to answer the question. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  There is not sufficient information to answer the question.

Question 17

The demand for Wanderlust Travel Services (X)is estimated to be Qx = 22,000 - 2.5Px + 4Py - 1M + 1.5Ax,where Ax represents the amount of advertising spent on X and the other variables have their usual interpretations.Suppose the price of good X is $450,good Y sells for $40,the company utilizes 3,000 units of advertising,and consumer income is $20,000.
a.Calculate the own price elasticity of demand at these values of prices,income,and advertising.
b.Is demand elastic,inelastic,or unitary elastic?
c.How will your answers to parts a and b change if the price of Y increases to $50?

Accepted Answer

a.Q_x = 22,000 − 2.5 (450)+ 4(40)− 1(20,00

Question 18

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

Accepted Answer

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

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 preceding statements is 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 preceding statements is correct.

Question 20

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)  None of the preceding statements is correct. 
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)  None of the preceding statements is correct.

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

When the price of sugar was "low," U.S.consumers spent a total of $3 billion annually on sugar consumption.When the price doubled,consumer expenditures remained at $3 billion annually.This data indicates that:

Your firm's research department has estimated the elasticity of demand for toys to be −0.7.As the manager of a local chain of toy stores,determine the impact of an 8 percent increase in toy prices on your total revenues.

Suppose the equilibrium price in the market is $10 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.25.Then we know that:

If the demand function for a particular good is Q = 50 − 4P,then demand at a price of $10 is:

The cross-price elasticity of demand between goods X and Y is −3.5.If the price of X decreases by 7 percent,the quantity demanded of Y will:

When a demand curve is linear:

If the cross-price elasticity between ketchup and hamburgers is −1.2,a 4 percent increase in the price of ketchup will lead to a 4.8 percent:

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

Suppose the equilibrium price in the market is $60 and the marginal revenue associated with the linear (inverse)demand function is $20.Then we know that the own price elasticity of demand is:

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

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

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

We would expect the demand for jeans to be:

When marginal revenue is positive for a linear (inverse)demand function,decreases in output will cause total revenues to:

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

If demand is perfectly inelastic,then:

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

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

When the price of sugar was "low," U.S.consumers spent a total of $3 billion annually on sugar consumption.When the price doubled,consumer expenditures remained at $3 billion annually.This data indicates that:

Your firm's research department has estimated the elasticity of demand for toys to be −0.7.As the manager of a local chain of toy stores,determine the impact of an 8 percent increase in toy prices on your total revenues.

Suppose the equilibrium price in the market is $10 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.25.Then we know that:

If the demand function for a particular good is Q = 50 − 4P,then demand at a price of $10 is:

The cross-price elasticity of demand between goods X and Y is −3.5.If the price of X decreases by 7 percent,the quantity demanded of Y will:

When a demand curve is linear:

If the cross-price elasticity between ketchup and hamburgers is −1.2,a 4 percent increase in the price of ketchup will lead to a 4.8 percent:

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

Suppose the equilibrium price in the market is $60 and the marginal revenue associated with the linear (inverse)demand function is $20.Then we know that the own price elasticity of demand is:

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

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

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

We would expect the demand for jeans to be:

When marginal revenue is positive for a linear (inverse)demand function,decreases in output will cause total revenues to:

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

If demand is perfectly inelastic,then:

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