question
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: A.decrease.B. increase.C. remain constant.D. either increase or remain constant, depending upon the size of the price increase.
answer
A.decrease.
question
A price elasticity of zero corresponds to a demand curve that is: A. horizontal.B. downward sloping with a slope always equal to 1.C.vertical.D. either vertical or horizontal.
answer
vertical
question
As we move down along a linear demand curve, the price elasticity of demand becomes more: A. elastic.B.inelastic.C. log-linear.D. variable.
answer
inelastic
question
If the demand for a product is Qxd = 10 - ln Px, then product x is: A. elastic.B. inelastic.C.unitary elastic.D. Cannot be determined without more information.
answer
unitary elastic
question
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.
A. -0.2
B. -0.3
C. -0.5
D.-0.6
A. -0.2
B. -0.3
C. -0.5
D.-0.6
answer
-0.6
question
The own price elasticity of demand for apples is -1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?
A. It will increase 5 percent
.B. It will fall 4.3 percent.
C. It will increase 4.2 percent.
D.It will increase 6 percent.
A. It will increase 5 percent
.B. It will fall 4.3 percent.
C. It will increase 4.2 percent.
D.It will increase 6 percent.
answer
It will increase 6%
question
If apples have an own price elasticity of -1.2 we know the demand is:
A. unitary.
B. indeterminate.
C.elastic.
D. inelastic.
A. unitary.
B. indeterminate.
C.elastic.
D. inelastic.
answer
elastic
question
If quantity demanded for sneakers falls by 10 percent when price increases 25 percent, we know that the absolute value of the own price elasticity of sneakers is:
A. 2.5.
B.0.4.
C. 2.0.
D. 0.27.
A. 2.5.
B.0.4.
C. 2.0.
D. 0.27.
answer
0.4
question
The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:
A. elastic.B. unitary.C. falling.D.inelastic.
A. elastic.B. unitary.C. falling.D.inelastic.
answer
inelastic
question
If the absolute value of the own price elasticity of steak is 0.4, a decrease in price will lead to:
A.a reduction in total revenue.B.
an increase in total revenue.C
. no change in total revenue.D.
None of the statements is correct.
A.a reduction in total revenue.B.
an increase in total revenue.C
. no change in total revenue.D.
None of the statements is correct.
answer
a reduction in total revenue
question
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?
A. 0.57 B.1.75 C. 0.02 D. 1.24
A. 0.57 B.1.75 C. 0.02 D. 1.24
answer
1.75
question
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: A. zero.B. one.C.infinite.D. unknown.
answer
infinite
question
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: A. zero.B. one.C.infinite.D. unknown.
answer
infinite
question
The demand curve for a good is horizontal when it is: A. a perfectly inelastic good.B. a unitary elastic good.C.a perfectly elastic good.D. an inferior good.
answer
a perfectly elastic good
question
Suppose Qxd = 10,000 - 2 Px + 3 Py - 4.5M, where Px = $100, Py = $50, and M = $2,000. What is the own price elasticity of demand? A. -2.34B. -0.78C.-0.21D. -1.21
answer
-0.21
question
Suppose Qxd = 10,000 - 2 Px + 3 Py - 4.5M, where Px = $100, Py = $50, and M = $2,000. How much of good X is consumed? A. 100 unitsB. 500 unitsC. 1,100 unitsD.950 units
answer
950 units
question
Topic: Obtaining Elasticities From Demand Functions17.Which of the following factors would NOT affect the own price elasticity of a good? A. TimeB.Price of an inputC. Available substitutesD. Expenditure share
answer
price of an input
question
Suppose Qxd = 10,000 - 2 Px + 3 Py - 4.5M, where Px = $100, Py = $50, and M = $2,000. Then good X has a demand which is: A. elastic.B.inelastic.C. unitary.D. neither elastic, inelastic, nor unitary elastic.
answer
inelastic
question
We would expect the demand for jeans to be: 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.
answer
more elastic than the demand for clothing
question
Demand is more inelastic in the short term because consumers: A. are impatient.B.have no time to find available substitutes.C. are present-oriented.D. None of the statements is correct
answer
have no time to find available substitutes
question
We would expect the own price elasticity of demand for food to be: A.less elastic than the demand for cereal.B. more elastic than the demand for cereal.C. the same as that for soap.D. perfectly inelastic.
answer
less elastic than the demand for cereal
question
The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the: A. own price elasticity.B. income elasticity.C. log-linear elasticity.D.cross-price elasticity.
answer
cross price elasticity
question
If the cross-price elasticity between goods A and B is negative, we know the goods are: A. inferior goods.B.complements.C. inelastic.D. substitutes.
answer
complements
question
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: 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.
answer
drop in quantity demanded of hamburgers
question
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? A. -1.17B. 2.71C. 0.42D.-0.86
answer
-0.86
question
Suppose the demand function is Qxd = 100 - 8Px + 6Py - M. If Px = $4, Py = $2, and M = $10, what is the cross-price elasticity of good x with respect to the price of good y? A.0.17B. 0.38C. 0.21D. 0.04
answer
0.17
question
The elasticity that measures the responsiveness of consumer demand to changes in income is the: A.income elasticity.B. own price elasticity.C. cross-price elasticity.D. neither the income elasticity, the own price elasticity, nor the cross-price elasticity.
answer
income elasticity
question
An income elasticity less than zero tells us that the good is: A. a normal good.B. a Giffen good.C.an inferior good.D. an inelastic good.
answer
an inferior good
question
If the income elasticity for lobster is 0.4, a 40 percent increase in income will lead to a: A. 10 percent drop in demand for lobster.B.16 percent increase in demand for lobster.C. 20 percent increase in demand for lobster.D. 4 percent increase in demand for lobster.
answer
16% increase in demand of lobster
question
You are the manager of a supermarket, and you know that the income elasticity of peanut butter is exactly -0.7. Due to the economic recession, you expect incomes to drop by 15 percent next year. How should you adjust your purchase of peanut butter? A.Buy 10.5 percent more peanut butter.B. Buy 2.14 percent more peanut butter.C. Buy 6.2 percent less peanut butter.D. Buy 9.8 percent less peanut butter.
answer
buy 10.5 percent more peanut butter
question
Suppose demand is given by Qxd = 50 - 4Px + 6Py + Ax, where Px = $4, Py = $2, and Ax = $50. What is the advertising elasticity of demand for good x? A. 1.12B. 0.38C. 1.92D.0.52
answer
0.52
question
Suppose demand is given by Qxd = 50 - 4Px + 6Py + Ax, where Px = $4, Py = $2, and Ax = $50. What is the quantity demanded of good x? A.96B. 50C. 46D. 72
answer
96
question
You are the manager of a popular shoe company. You know that the advertising elasticity of demand for your product is 0.15. How much will you have to increase advertising in order to increase demand by 10 percent? A. 0.02 percentB. 38.6 percentC.66.7 percentD. 4.3 percent
answer
66.7%
question
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 goods x and y are: A. substitutes.B.complements.C. normal goods.D. inferior goods.
answer
complements
question
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 good x is: A. an inferior good.B. an elastic good.C.a normal good.D. a Giffen good.
answer
a normal good
question
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: A. unitary.B. elastic.C.inelastic.D. It cannot be calculated from the existing information.
answer
inelastic
question
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: A. 4.00.B.0.25.C. 0.50.D. 8.33.
answer
0.25
question
Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H. Then good x is: A.a normal good.B. an inferior good.C. a complement for good y.D. perfectly inelastic.
answer
a normal good
question
Suppose the demand function is given by Qxd = 8Px0.5 Py0.25 M0.12 H. Then the demand for good x is: A.inelastic.B. unitary.C. elastic.D. perfectly elastic.
answer
inelastic
question
The statistical analysis of economic phenomena is defined as: A.econometrics.B. variance.C. confidence intervals.D. standard deviation.
answer
econometrics
question
The demand for video recorders has been estimated to be Qv = 134 - 1.07Pf + 46Pm - 2.1Pv - 5I, where Qv is the quantity of video recorders, Pf denotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and I is income. Based on the estimated demand equation we can conclude: A.video recorders are inferior goods.B. video recorder film is a substitute for video recorders.C. the demand for video recorders is inelastic.D. the demand for video recorders is neither inferior nor inelastic, and video recorder film is not a substitute for video recorders.
answer
video recorders are inferior goods
question
Which of the following is used to determine the statistical significance of a regression coefficient? A.t-statisticB. F-statisticC. R-squareD. Adjusted R-square
answer
t-statistic
question
Which of the following provides a measure of the overall fit of a regression? A. t-statisticB. F-statisticC. R-squareD.The F-statistic and R-square
answer
the f statistic and r-square
question
Which of the following can be used to quantify the overall statistical significance of a regression? A. t-statisticB.F-statisticC. R-squareD. The F-statistic and R-square
answer
f statistic
question
Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data? A. t-statisticB. R-squareC.Adjusted R-squareD. Neither the t-statistic, the R-square, nor the adjusted R-square
answer
adjusted r sqauare
question
As a rule of thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is: A. zero.B. less than one.C. greater than or equal to 1.D.greater than or equal to 2.
answer
greater than or equal to 2
question
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C - 0.036 ln r, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study we know that the interest elasticity is: A. unitary.B. zero.C. very elastic.D.very inelastic.
answer
very inelastic
question
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C - 0.036 ln r, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5 percent increase in interest rates will cause the demand for money to: A. drop by 1.8 percent.B. increase by 1.8 percent.C.drop by 0.18 percent.D. increase by 0.18 percent.
answer
drop by 0.18 %
question
The elasticity of variable G with respect to variable S is defined as: A.the percentage change in variable G that results from a given percentage change in variable S.B. the percentage change in variable G that results from a given change in variable S.C. the change in variable G that results from a given percentage change in variable S.D. the change in variable G that results from a given change in variable S.
answer
A. the percentage change in variable g that results from a given percentage change in variable S
question
If the absolute value of the own price elasticity of demand is greater than 1, then demand is said to be: A.elastic.B. inelastic.C. unitary elastic.D. neither elastic, inelastic, nor unitary elastic
answer
A. elastic
question
Suppose the own price elasticity of demand for good X is -0.5, and the price of good X increases by 10 percent. We would expect the quantity demanded of good X to: A. increase by 5 percent.B. increase by 20 percent.C.decrease by 5 percent.D. decrease by 20 percent.
answer
decrease by 5%
question
Suppose the own price elasticity of demand for good X is -0.5, and the price of good X increases by 10 percent. What would you expect to happen to the total expenditures on good X? A.IncreaseB. DecreaseC. Remain unchangedD. Neither increase, decrease, nor remain unchanged
answer
increase
question
If the own price elasticity of demand is infinite in absolute value, then: A. demand is perfectly inelastic.B.the demand curve is horizontal.C. consumers do not respond at all to changes in price.D. demand is neither perfectly inelastic nor is the demand curve horizontal.
answer
the demand curve is horizontal
question
If demand is perfectly inelastic, then: 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.
answer
the demand curve is vertical
question
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 demand curve for good X? A. 61,500B. 61,300C. 61,300 - 4PXD.61,500 - 4PX
answer
61,500-4Px
question
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 quantity demanded of good X? A. 61,500B.61,300C. 61,300 - 4PXD. 61,500 - 4PX
answer
61,300
question
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? A.-0.003B. -0.03C. -0.3D. -3
answer
-0.003
question
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, we know that the demand for good X is: A. elastic.B.inelastic.C. unitary elastic.D. neither elastic, inelastic, nor unitary elastic.
answer
inelastic
question
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 cross-price elasticity between goods X and Y is: A.0.008.B. -0.08.C. -0.8.D. -8.
answer
0.008
question
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, goods X and Y are: A.substitutes.B. complements.C. normal goods.D. inferior goods.
answer
substitutes
question
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: A. 0.008.B. 0.082.C.0.82.D. 8.2.
answer
0.82
question
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, good X is: A. an inferior good.B.a normal good.C. a Giffen good.D. a regular good
answer
a normal good
question
When a demand curve is linear, A. the elasticity is the same as the slope of the demand curve.B.demand is elastic at high prices.C. demand is unitary elastic at low prices.D. the elasticity is constant at all prices.
answer
demand is elastic at high prices
question
Which of the following is NOT an important factor that affects the magnitude of the own price elasticity of a good? A. Available substitutesB.Supply of the goodC. TimeD. Expenditure share
answer
supply of the good
question
If there are few close substitutes for a good, demand tends to be relatively: A. elastic.B.inelastic.C. unitary elastic.D. neither elastic, inelastic, nor unitary elastic.
answer
inelastic
question
The demand for food (a broad group) is more: A. elastic than the demand for beef (specific commodity).B.inelastic than the demand for beef (specific commodity).C. sensitive to price changes than the demand for beef.D. responsive to price changes than the demand for beef.
answer
inelastic than the demand for beef (specific commodity)
question
The demand for women's clothing is, in general: A.more elastic than the demand for clothing.B. less elastic than the demand for clothing.C. equally elastic to the demand for clothing.D. neither more elastic, less elastic, nor equally elastic to the demand for clothing.
answer
more elastic than the demand for clothing
question
Demand tends to be: 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.
answer
more inelastic in the short term than in the long term.
question
If the short-term own price elasticity for transportation is estimated to be -0.6, then long-term own price elasticity is expected to be: A. -0.6.B. greater than -0.6.C.less than -0.6.D. neither greater than, less than, nor equal to -0.6
answer
less than -0.6
question
Since most consumers spend very little on salt, a small increase in the price of salt will: A. reduce quantity demanded by a large amount.B.not reduce quantity demanded by very much.C. not change quantity demanded.D. increase quantity demanded by a small amount.
answer
not reduce the quantity demanded by very much
question
Suppose the income elasticity for transportation is 1.8. Which of the following is an INCORRECT statement? A. Transportation is a normal good.B. Expenditures on transportation grow more rapidly than income grows.C.Expenditures on transportation will fall less rapidly than income falls.D. Whenever the income increases by 1 percent, the expenditure on transportation increases by 1.8 percent.
answer
C.Expenditures on transportation will fall less rapidly than income falls
question
Non-fed ground beef is an inferior good. In economic booms, grocery managers should: A. increase their orders of non-fed ground beef.B.reduce their orders of non-fed ground beef.C. not change their orders of non-fed ground beef.D. neither increase, reduce, nor maintain their current orders for non-fed ground beef.
answer
reduce their orders of non-fed ground beef.
question
The demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. The own price elasticity of good X is: A.-2.5.B. 4.0.C. -2.5 percent.D. 4.0 percent.
answer
-0.25
question
The demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. The cross-price elasticity of demand between goods X and Y is: A. -2.5.B.4.0.C. -2.5 percent.D. 4.0 percent.
answer
4.0
question
The demand for good X has been estimated to be ln Qxd = 100 - 2.5 ln PX + 4 ln PY + ln M. The income elasticity of good X is: A. 4.0.B.1.0.C. 2.0.D. -2.5.
answer
1.0
question
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: A. 4.0.B. 1.0.C.0.0.D. -2.5.
answer
0.0
question
The greater the standard error of an estimated coefficient: A. the greater the t-value of the estimated coefficient.B.the lower the t-value of the estimated coefficient.C. the greater the R-square.D. the greater the adjusted R-square.
answer
the lower the t-value of the estimated coefficient
question
For a given set of data and a regression equation, the greater the R-square: A. the greater the t-value.B. the lower the t-value.C.the greater the adjusted R-square.D. the lower the adjusted R-square.
answer
the greater the adjusted R-square.
question
The lower the standard error: A. the less confident the manager can be that the parameter estimates reflect the true values.B.the more confident the manager can be that the parameter estimates reflect the true values.C. the more precisely the parameter estimates the true values.D. the less precisely the parameter estimates the true values.
answer
the more confident the manager can be that the parameter estimates reflect the true values.
question
The manager can be 95 percent confident that the true value of the underlying parameters in a regression is not zero if the absolute value of the t-statistic is: A. less than 1.B. less than 2.C. greater than 1.D.greater than 2.
answer
greater than 2
question
When the own price elasticity of good X is -3.5, then total revenue can be increased by: A. increasing the price.B. decreasing the quantity supplied.C.decreasing the price.D. neither increasing the price, decreasing the price, nor decreasing the quantity supplied.
answer
decreasing the price
question
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 increased to $5 billion annually. This data indicates that: A.the demand for sugar is inelastic.B. the demand curve for sugar is upward sloping.C. the quantity demanded of sugar increased.D. the demand curve for sugar is upward sloping and the quantity demanded of sugar increased.
answer
the demand of sugar is inelastic
question
Which of the following statements is INCORRECT? A. If a firm decreases the price of its product, its total revenue must decrease.B. The own price elasticity of demand is constant at all points along a linear demand curve.C. As the price of X falls and we move down an individual's demand curve for X, the money income of the individual also changes.D.None of the statements is correct.
answer
none of the statements is correct
question
The demand for which of the following commodities is likely to be most inelastic? A. Soft drinksB.BeveragesC. Cola drinksD. Pepsi ColaAACSB: Reflective Thinking
answer
beverages
question
Each week Bill buys exactly 7 bottles of cola regardless of its price. Bill's own price elasticity of demand for cola IN ABSOLUTE VALUE is: A. greater than 1.B. less than 1.C. 1.D.zero.
answer
zero
question
The price elasticity of demand is -2.0 for a certain firm's product. If the firm raises price, the firm manager can expect total revenue to: A.decrease.B. increase.C. remain constant.D. either increase or remain constant, depending upon the size of the price increase.
answer
decrease
question
The management of Local Cinema has estimated the monthly demand for tickets to be ln Q = 22,328 - 0.41 ln P + 0.5 ln M - 0.33 ln A + 100 ln PDVD, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and PDVD = price of a DVD rental. It is known that P = $5.50, M = $9,000, A = $900, and PDVD = $3.00. Determine the own price elasticity of demand for movie tickets. A. -0.29B. -0.32C. -0.39D.-0.41
answer
-0.41
question
The management of Local Cinema has estimated the monthly demand for tickets to be ln Q = 22,328 - 0.41 ln P + 0.5 ln M - 0.33 ln A + 100 ln PDVD, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and PDVD = price of a DVD rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Based on the information given, which of the following statements is false? A. Advertising decreases the demand for movie tickets.B. Movies are normal goods.C.Movies are complements for DVD rentals.D. The advertising elasticity of demand for movie tickets is -0.33.
answer
movies are complements for dvd rentals
question
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: 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 statements is correct.
answer
none of the statements is correct.
question
The demand for good X is given by ln Qxd = 120 - 0.9 ln Px + 1.5 ln Py - 0.7 ln M. Which of the following statements is correct? A.X has constant income elasticity.B. An economic downturn will decrease demand for X.C. A 15 percent increase in income would increase demand for X by 10.5 percent.D. X has a constant income elasticity, and an economic downturn will decrease the demand for X.
answer
x has constant income elasticity
question
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: A. decrease by 24.5 percent.B. decrease by 2.45 percent.C.increase by 24.5 percent.D. increase by 2.45 percent.
answer
increase by 24.5 percent
question
The short-run response of quantity demanded to a change in price is usually: A. the same as the long-run response.B.less than the long-run response.C. greater than the long-run response.D. None of the statements is correct.
answer
less than the long run response
question
The cross-price elasticity of demand for books and magazines is -2.0. If the price of magazines decreases by 10 percent, the quantity demanded of books will: A. fall by 2.0 percent.B. rise by 2.0 percent.C. fall by 20 percent.D.rise by 20 percent.
answer
rise by 20%
question
If the demand function for a particular good is Q = 25 - 10P, then the price elasticity of demand (in absolute value) at a price of $1 is: A. 8.B. 2.C.2/3.D. 1/8.
answer
2/3
question
The demand for video recorders has been estimated to be linear and given by the demand relation Qv = 145 - 3.2Pv + 7M - 0.95Pf - 39Pm, where Qv is the quantity of video recorders, Pfdenotes the price of video recorder film, Pm is the price of attending a movie, Pv is the price of video recorders, and M is income. Based on the estimated demand equation we can conclude: A. video recorders are normal goods.B. the demand for video recorders is inelastic.C. video recorders are normal goods and the demand for video recorders is inelastic.D.video recorders are normal goods and video recorder film is a complement for video recorders.
answer
the video recorders are normal goods and the video recorder film is a complement for video recorders
question
The elasticity of demand for gasoline has been estimated to be 2.0, and the standard error is 1.0. The upper and lower bounds on the 95 percent confidence interval for the elasticity of demand for gasoline are: A. 3 and 2.B. 2 and 1.C. 3 and 1.D.None of the statements is correct.
answer
none of the statements is correct
question
The cross-price elasticity of demand for textbooks and copies of old exams is -3.5. If the price of copies of old exams increases by 10 percent, the quantity demanded of textbooks will: A. fall by 3.5 percent.B. rise by 3.5 percent.C.fall by 35 percent.D. rise by 35 percent.
answer
fall by 35%
question
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: 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 statements is correct.
answer
non of the statements is correct
question
The demand for which of the following commodities is likely to be most price inelastic? A.FoodB. HamburgersC. Big MacsD. Sandwiches
answer
food
question
If the demand function for a particular good is Q = 20 - 8P, then the price elasticity of demand (in absolute value) at a price of $1 is: A. 8.B. 2.C.2/3.D. 1/8.
answer
2/3
question
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: A.decrease.B. increase.C. remain constant.D. either increase or remain constant, depending upon the size of the price decrease.
answer
decrease
question
Suppose the demand for a product is Qxd = 12 - 3 ln Px. Then demand for product x is: A. inelastic.B. unitary elastic.C.elastic.D. It cannot be determined without more information.
answer
elastic
question
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. A. -0.3B. -0.4C. -0.5D.-0.6
answer
-0.6
question
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? A. It will increase 4 percent.B.It will increase 9 percent.C. It will fall 4 percent.D. It will fall 6 percent.
answer
it will increase by 9%
question
If quantity demanded for sneakers falls by 6 percent when price increases 20 percent, we know that the absolute value of the own price elasticity of sneakers is: A.0.3.B. 0.7.C. 2.3.D. 3.3.
answer
0.3
question
f the cross-price elasticity between ketchup and hamburgers is -2.5, a 2 percent increase in the price of ketchup will lead to a: A. 5 percent drop in quantity demanded of ketchup.B.5 percent drop in quantity demanded of hamburgers.C. 5 percent increase in quantity demanded of ketchup.D. 5 percent increase in quantity demanded of hamburgers.
answer
5% drop in quantity demanded of hamburgers
question
If the income elasticity for lobster is 0.6, a 25 percent increase in income will lead to a: A. 6 percent drop in demand for lobster.B. 2.4 percent increase in demand for lobster.C.15 percent increase in demand for lobster.D. 42 percent increase in demand for lobster.
answer
15% increase in demand for lobster
question
You are the manager of a popular hat company. You know that the advertising elasticity of demand for your product is 0.25. How much will you have to increase advertising in order to increase demand by 5 percent? A. 0.05 percentB.20 percentC. 25 percentD. 1.25 percent
answer
20%
question
The statistical analysis of economic phenomena is defined as: A. standard error.B. confidence intervals.C. the t-statistic. D.econometrics
answer
econometrics
question
Which of the following provides a measure of the overall fit of a regression? A. t-statisticB.F-statisticC. P-valueD. The t-statistic and the P-value
answer
f statistic
question
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: 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.
answer
greater than or equal to 2
question
If the own price elasticity of demand is infinite in absolute value, then: A.demand is perfectly elastic.B. the demand curve is vertical.C. consumers do not respond at all to changes in price.D. the demand curve is vertical and consumers do not respond at all to changes in price.
answer
demand is perfectly elastic
question
When a demand curve is linear: 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.
answer
demand is inelastic at low prices
question
Lemonade, a good with many close substitutes, should have an own price elasticity that is: A. unitary.B.relatively elastic.C. relatively inelastic.D. perfectly inelastic.
answer
relatively elastic
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