question
Does a firm's market performance depend on only factors under a manager's control?
answer
No
question
The individual frim cannot affect:
answer
market interest rates, exchange rates, business cycles, unemployment, rate of inflation.
question
The individual frim can affect:
answer
organizational structure, pricing, design, packaging, strategy, R&D, etc.
question
Elasticity measures
answer
the percent change in the value of a dependent variable given a percent change in the value of an explanatory variable.
question
Based on historical data, is it possible for a firm to estimate the demand equation?
answer
Yes
question
To overcome slop measurement problems
answer
economists substitute the slope with price elasticity of demand.
question
The price elasticity of demand measures
answer
the percentage change in the quantity demanded given a percent change in its price.
question
Suppose that the price elasticity of demand for a product is -2. How will the quantity demanded change if price is reduce by 5%.
answer
10% increase.
question
Does the price elasticity demanded have several advantages over slope?
answer
Yes
question
According to the law of demand, there is an inverse relationship betwen
answer
a percent change in price and a percent change in quantity demanded.
question
Price elasticity is between
answer
zero and infinity.
question
Demand is said to be price elastic when
answer
the percent change in quantity demanded is greater then the percent change in price.
question
Demand is said to be price inelastic when
answer
the percent change in quantity demanded is smaller then the percent change in price.
question
The demand curve for most products is
answer
downward sloping
question
Consumers tend to be less price sensitive in the
answer
in the sort run then in the long run.
question
The income elasticity of demand is the measure of consumer
answer
sensitivity to changes in money income.
question
The demand for a necessity is relatively
answer
insensitive to income changes
question
What function do all businesses perform?
answer
Transforming inputs into outputs for sale in the market.
question
Capital refers to
answer
the means of production such a equipment, facilities, etc.
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