Exam 3: Demand Analysis

Identify the reasons why the quantity demanded of a product increases as the price of that product decreases.

A linear demand for lake front cabins on a nearby lake is estimated to be: Q_D = 900,000 - 2P.What is the point price elasticity for lake front cabins at a price of P = $300,000? [HINT: E_p = (∂Q/∂P)(P/Q)]

Which of the following demand factors are under the control of management?

When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded,the net result being a constant total consumer expenditure.

An increase in the quantity demanded could be caused by:

Those goods having a calculated income elasticity that is negative are called:

A price elasticity (E_D)of −1.50 indicates that for a ____ increase in price,quantity demanded will ____ by ____.

Factors affecting the price elasticity of demand include all of these EXCEPT:

The Future Flight Corporation manufactures a variety of Frisbees selling for $2.98 each.Sales have averaged 10,000 units per month during the last year.Recently Future Flight's closest competitor,Soaring Free Company,cut its prices on similar Frisbees from $3.49 to $2.59.Future Flight noticed that its sales declined to 8,000 units per month after the price cut. (a) What is the arc cross elasticity of demand between Future Flight's and So aring Free's Frisbees? (b)If Future Flight knows the arc price elasticity of demand for its Frisbees is $- 2.2$ , what price would they have to charge in order to obtain the same level of sales as before Soaring Free's price cut?

The manager of the Sell-Rite drug store accidentally mismarked a shipment of 20-pound bags of charcoal at $4.38 instead of the regular price of $5.18.At the end of a week,the store's inventory of 200 bags of charcoal was completely sold out.The store normally sells an average of 150 bags per week. (a) What is the store's arc elasticity of demand for charcoal? (b) Give an economic interpretation of the numerical value obtained in part (a)

The factor(s)which cause(s)a movement along the demand curve include(s):

Which of the following best represents management's objective(s)in utilizing demand analysis?

If demand were inelastic,then we should immediately:

The British Automobile Company is introducing a brand new model called the "London Special." Using the latest forecasting techniques,BAC economists have developed the following demand function for the "London Special": Q_D = 1,200,000 ? 40P What is the point price elasticity of demand at prices of (a)$8,000 and (b)$10,000?

Marginal revenue (MR)is ____ when total revenue is maximized.

Suppose we estimate that the demand elasticity for fine leather jackets is -.7 at their current prices.Then we know that:

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded,except:

Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because

When demand elasticity is ____ in absolute value (or ____),an increase in price will result in a(n)____ in total revenues.

Songwriters and composers press music companies to lower the price for music downloads because