Managerial Econ CH3
Demand is more inelastic in the short term because consumers:
have no time to find available substitutes
Suppose the 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?
increase
The short-run response of quantity demanded to a change in price is usually:
less than the long run response
If the demand for a product is Qxd = 10 - ln Px, then product x is:
unitary elastic
A price elasticity of zero corresponds to a demand curve that is:
vertical
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
0.17
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.
more inelastic in the short term than in the long term.
If the absolute value of the price elasticity of demand is greater than 1, then demand is said to be:
A. elastic
An income elasticity less than zero tells us that the good is:
an inferior good
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.
compliments
The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:
cross price elasticity
When the price elasticity of good X is -3.5, then total revenue can be increased by:
decreasing the price
When a demand curve is linear,
demand is elastic at high prices
Which of the following statements is INCORRECT?
none of the statements are correct
Which of the following factors would NOT affect the price elasticity of a good?
price of an input
Which of the following is NOT an important factor that affects the magnitude of the price elasticity of a good?
supply of the good
The demand curve for a good is horizontal when it is:
a perfectly elastic good
If the absolute value of the price elasticity of steak is 0.4, a decrease in price will lead to:
a reduction in total revenue
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:
decrease
Suppose the 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:
decrease by 5%
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:
decrease.
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:
drop in quantity demanded of hamburgers
The statistical analysis of economic phenomena is defined as:
econometrics
If apples have a price elasticity of -1.2 we know the demand is: .
elastic
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.
greater than or equal to 2
The elasticity that measures the responsiveness of consumer demand to changes in income is the:
income elasticity
As we move down along a linear demand curve, the price elasticity of demand becomes more:
inelastic
If there are few close substitutes for a good, demand tends to be relatively:
inelastic
The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: A. elastic.B. unitary.C. falling.D.inelastic.
inelastic
Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: A. zero.B. one.C.infinite.D. unknown.
infinite
Demand is perfectly elastic when the absolute value of the price elasticity of demand is:
infinite
If the own price elasticity of demand is infinite in absolute value, then:
the demand curve is horizontal
If demand is perfectly inelastic, then:
the demand curve is vertical
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:
the demand of sugar is inelastic
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.
zero