Question 1

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 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 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 3

As a general rule of thumb, a manager can be 95 percent confident that the true value of the underlying parameter in the regression is not zero, when the absolute value of the t-statistic is:

Accepted Answer

A)  greater than zero. 
B)  greater than or equal to 1. 
C)  greater than or equal to 2. 
D)  None of the statements is correct. 
A)  greater than zero. 
B)  greater than or equal to 1. 
C)  greater than or equal to 2. 
D)  None of the statements is correct.

Question 4

If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

Accepted Answer

A)  -1.17 
B)  2.71 
C)  0.42 
D)  -0.86 
A)  -1.17 
B)  2.71 
C)  0.42 
D)  -0.86

Question 5

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

Accepted Answer

A)  own price elasticity. 
B)  income elasticity. 
C)  log-linear elasticity. 
D)  cross-price elasticity. 
A)  own price elasticity. 
B)  income elasticity. 
C)  log-linear elasticity. 
D)  cross-price elasticity.

Question 6

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 7

If the price of ground beef falls from $7 to $4, and this leads to an increase in demand for beans from 80 to 120 cans, what is the cross-price elasticity of beans and ground beef at a ground beef price of $4?

Accepted Answer

A)  -0.87 
B)  1.21 
C)  0.52 
D)  -0.44 
A)  -0.87 
B)  1.21 
C)  0.52 
D)  -0.44

Question 8

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 9

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 10

Which of the following is a correct statement about the own price elasticity of demand?

Accepted Answer

A)  Demand tends to be more inelastic in the short term than in the long term. 
B)  Demand tends to be more elastic as more substitutes are available. 
C)  Demand tends to be more inelastic for goods that comprise a smaller share of a consumer's budget. 
D)  All of the statements are correct. 
A)  Demand tends to be more inelastic in the short term than in the long term. 
B)  Demand tends to be more elastic as more substitutes are available. 
C)  Demand tends to be more inelastic for goods that comprise a smaller share of a consumer's budget. 
D)  All of the statements are correct.

Question 11

Which of the following is used to determine the statistical significance of a regression coefficient?

Accepted Answer

A)  t-statistic 
B)  F-statistic 
C)  R-square 
D)  Adjusted R-square 
A)  t-statistic 
B)  F-statistic 
C)  R-square 
D)  Adjusted R-square

Question 12

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. Based on this information, the income elasticity of good X is:

Accepted Answer

A)  0.008. 
B)  0.082. 
C)  0.82. 
D)  8.2. 
A)  0.008. 
B)  0.082. 
C)  0.82. 
D)  8.2.

Question 13

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 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 statements is correct.

Question 14

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 15

Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H. Then the cross-price elasticity between goods x and y is:

Accepted Answer

A)  4.00. 
B)  0.25. 
C)  0.50. 
D)  8.33. 
A)  4.00. 
B)  0.25. 
C)  0.50. 
D)  8.33.

Question 16

The demand for good X has been estimated by Qxd = 12 - 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

Accepted Answer

A)  -0.2 
B)  -0.3 
C)  -0.5 
D)  -0.6 
A)  -0.2 
B)  -0.3 
C)  -0.5 
D)  -0.6

Question 17

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 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 statements is correct.

Question 18

A consumer spends all of her income on only one good. What is the income elasticity of demand for this good? What is the own price elasticity of demand for this good?

Accepted Answer

Since PQ = M, we can solve for

Question 19

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 20

The demand function in Table 3-1 is QXd = 100 - 2PX. Based on this information, when QX = 80, the price, PX (point A), is:

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $20.

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

As a general rule of thumb, a manager can be 95 percent confident that the true value of the underlying parameter in the regression is not zero, when the absolute value of the t-statistic is:

If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

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

If the price of ground beef falls from $7 to $4, and this leads to an increase in demand for beans from 80 to 120 cans, what is the cross-price elasticity of beans and ground beef at a ground beef price of $4?

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:

We would expect the demand for jeans to be:

Which of the following is a correct statement about the own price elasticity of demand?

Which of the following is used to determine the statistical significance of a regression coefficient?

Demand tends to be:

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:

Suppose the demand function is given by Q_x^d = 8P_x^0.5 P_y^0.25 M^0.12 H. Then the cross-price elasticity between goods x and y is:

The demand for good X has been estimated by Q_x^d = 12 - 3P_x + 4P_y. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

If demand is perfectly inelastic, then:

A consumer spends all of her income on only one good. What is the income elasticity of demand for this good? What is the own price elasticity of demand for this good?

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:

The demand function in Table 3-1 is Q_X^d = 100 - 2P_X. Based on this information, when Q_X = 80, the price, P_X (point A), is:

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

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Exam 3: Quantitative Demand Analysis

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

As a general rule of thumb, a manager can be 95 percent confident that the true value of the underlying parameter in the regression is not zero, when the absolute value of the t-statistic is:

If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6?

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

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

If the price of ground beef falls from $7 to $4, and this leads to an increase in demand for beans from 80 to 120 cans, what is the cross-price elasticity of beans and ground beef at a ground beef price of $4?

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:

We would expect the demand for jeans to be:

Which of the following is a correct statement about the own price elasticity of demand?

Which of the following is used to determine the statistical significance of a regression coefficient?

Demand tends to be:

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:

Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H. Then the cross-price elasticity between goods x and y is:

The demand for good X has been estimated by Qxd = 12 - 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

If demand is perfectly inelastic, then:

A consumer spends all of her income on only one good. What is the income elasticity of demand for this good? What is the own price elasticity of demand for this good?

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:

The demand function in Table 3-1 is QXd = 100 - 2PX. Based on this information, when QX = 80, the price, PX (point A), is:

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:

Suppose the demand function is given by Q_x^d = 8P_x^0.5 P_y^0.25 M^0.12 H. Then the cross-price elasticity between goods x and y is:

The demand for good X has been estimated by Q_x^d = 12 - 3P_x + 4P_y. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

The demand function in Table 3-1 is Q_X^d = 100 - 2P_X. Based on this information, when Q_X = 80, the price, P_X (point A), is: