Question 1

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7?

Accepted Answer

A)  0.57 
B)  1.75 
C)  0.02 
D)  1.24 
A)  0.57 
B)  1.75 
C)  0.02 
D)  1.24

Question 2

The demand for good X has been estimated by Qxd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.

Accepted Answer

A)  -0.3 
B)  -0.4 
C)  -0.5 
D)  -0.6 
A)  -0.3 
B)  -0.4 
C)  -0.5 
D)  -0.6

Question 3

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

The price is no longer reduced by 25 per

Question 4

If the cross-price elasticity between goods A and B is negative, 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 5

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits. Explain why this would be expected.

Accepted Answer

The demand for surgical procedures is ge

Question 6

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 7

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 8

The demand for Cinnamon Toast Crunch brand cereal is:

Accepted Answer

A)  equally elastic to the demand for cereal in general. 
B)  less elastic than the demand for cereal in general. 
C)  more elastic than the demand for cereal in general. 
D)  None of the statements is correct. 
A)  equally elastic to the demand for cereal in general. 
B)  less elastic than the demand for cereal in general. 
C)  more elastic than the demand for cereal in general. 
D)  None of the statements is correct.

Question 9

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 10

Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises 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 increase. 
A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or remain constant, depending upon the size of the price increase.

Question 11

Suppose the own price elasticity of demand for good X is -0.25, and the quantity of good X increases by 5 percent. What would you expect to happen to the total expenditures on good X?

Accepted Answer

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

Question 12

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 13

Demand is more inelastic in the short term because consumers:

Accepted Answer

A)  are impatient. 
B)  have no time to find available substitutes. 
C)  are present-oriented. 
D)  None of the statements is correct. 
A)  are impatient. 
B)  have no time to find available substitutes. 
C)  are present-oriented. 
D)  None of the statements is correct.

Question 14

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 15

The elasticity of demand for gasoline has been estimated to be -2.0, and the standard error is 0.25. The t-statistic for the estimated elasticity of demand for gasoline is:

Accepted Answer

A)  -8, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
B)  -0.5, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
C)  8, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
D)  0.5, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
A)  -8, indicating a statistically significant elasticity estimate at the 95 percent confidence level. 
B)  -0.5, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
C)  8, indicating a statistically insignificant elasticity estimate at the 95 percent confidence level. 
D)  0.5, indicating a statistically significant elasticity estimate at the 95 percent confidence level.

Question 16

Which of the following factors would NOT affect the own price elasticity of a good?

Accepted Answer

A)  Time 
B)  Price of an input 
C)  Available substitutes 
D)  Expenditure share 
A)  Time 
B)  Price of an input 
C)  Available substitutes 
D)  Expenditure share

Question 17

Suppose the demand for a product is Qxd = 12 - 3 ln Px. Then demand for product x is:

Accepted Answer

A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  It cannot be determined without more information. 
A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  It cannot be determined without more information.

Question 18

If the demand for a product is Qxd = 10 - ln Px, then product x is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  Cannot be determined without more information. 
A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  Cannot be determined without more information.

Question 19

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?

Accepted Answer

A)  It will increase 4 percent. 
B)  It will increase 9 percent. 
C)  It will fall 4 percent. 
D)  It will fall 6 percent. 
A)  It will increase 4 percent. 
B)  It will increase 9 percent. 
C)  It will fall 4 percent. 
D)  It will fall 6 percent.

Question 20

The demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. 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.

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7?

The demand for good X has been estimated by Q_x^d = 6 - 2P_x + 5P_y. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.

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

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits. Explain why this would be expected.

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

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

The demand for Cinnamon Toast Crunch brand cereal is:

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

Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:

Suppose the own price elasticity of demand for good X is -0.25, and the quantity of good X increases by 5 percent. What would you expect to happen to the total expenditures on good X?

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

Demand is more inelastic in the short term because consumers:

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:

The elasticity of demand for gasoline has been estimated to be -2.0, and the standard error is 0.25. The t-statistic for the estimated elasticity of demand for gasoline is:

Which of the following factors would NOT affect the own price elasticity of a good?

Suppose the demand for a product is Q_x^d = 12 - 3 ln P_x. Then demand for product x is:

If the demand for a product is Q_x^d = 10 - ln P_x, then product x is:

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 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 advertising elasticity of good X 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

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7?

The demand for good X has been estimated by Qxd = 6 - 2Px + 5Py. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.

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

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits. Explain why this would be expected.

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

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

The demand for Cinnamon Toast Crunch brand cereal is:

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

Assume that the price elasticity of demand is -2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:

Suppose the own price elasticity of demand for good X is -0.25, and the quantity of good X increases by 5 percent. What would you expect to happen to the total expenditures on good X?

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

Demand is more inelastic in the short term because consumers:

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:

The elasticity of demand for gasoline has been estimated to be -2.0, and the standard error is 0.25. The t-statistic for the estimated elasticity of demand for gasoline is:

Which of the following factors would NOT affect the own price elasticity of a good?

Suppose the demand for a product is Qxd = 12 - 3 ln Px. Then demand for product x is:

If the demand for a product is Qxd = 10 - ln Px, then product x is:

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 demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. The advertising elasticity of good X 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

The demand for good X has been estimated by Q_x^d = 6 - 2P_x + 5P_y. Suppose that good X sells at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.

Suppose the demand for a product is Q_x^d = 12 - 3 ln P_x. Then demand for product x is:

If the demand for a product is Q_x^d = 10 - ln P_x, then product 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 advertising elasticity of good X is: