Econ Final
If the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price of ketchup will lead to a:
4.8% drop in quantity demanded of hamburgers.
As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is:
greater than or equal to two.
If the price of good X becomes lower, then the level of consumer surplus becomes
higher
Competitive market equilibrium
is determined by the intersection of the market demand and supply curves.
The demand for Cinnamon Toast Crunch brand cereal is
more elastic than the demand for cereal in general.
Demand tends to be
more inelastic in the short-term than in the long-term.
The elasticity of variable G with respect to variable S is defined as
the percentage change in variable G that results from a given percentage change in variable S.
An excise tax shifts the supply curve
up by the amount of the tax.
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?
1.75 (change in qty/change in price) *price
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. The equilibrium price is:
$19
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. The equilibrium quantity is:
62
Suppose Q xd = 10,000 - 2 Px + 3 Py - 4.5M , where Px = $100, Py = $50, and M = $2,000. How much of good X is consumed?
950 units.
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px = $4, Py = $2, and Ax = $50.What is the quantity demanded of good x?
96.
In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in
A shortage of 30 units.
Which of the following statements is incorrect?
As the population rises, the market demand curve shifts to the right. - correct As a greater fraction of the population becomes elderly, the demand for medical services will tend to increase. - correct The changes in the composition of the population affect the demand for a product. - correct none of the above. - incorrect
The demand function
Mathematical relationship where quantity demanded is a function of price
The demand function
Qdx = f(Px, Py, M, H) recognizes that the quantity of a good consumed depends on its price and demand shifters.
The demand for good X is given by lnQ xd = 120 - 0.9 lnPx + 1.5 lnPy - 0.7 lnM. Which of the following statements is correct?
X has constant income elasticity.
Good Y is a complement to good X if an increase in the price of good Y leads to
a decrease in the demand for good X.
A decrease in income will not lead to:
a movement along the demand curve.
The demand function
a representation of how quantity demanded depends on prices, income, and preferences
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good Y is
a substitute for good X.
Suppose the demand for X is given by Q xd = 100 - 2PX + 4PY + 10M + 2A, where PX represents the price of good X, PY is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good X is
a substitute for good Y and a normal good.
Producer surplus is measured as the area
above the supply curve and below the market price
Persuasive advertising influences demand by:
altering the underlying tastes of consumers.
Suppose the demand for good X is given by Qdx= 10 + ax Px + ay Py + aM M. If aM is negative, then good x is:
an inferior good.
Which of the following is not a supply shifter?
average income level
Suppose the own-price elasticity of demand for good X is -0.5, and that the price of good X increases by 10%. We would expect the quantity demanded of good X to
decrease by 5%
When a demand curve is linear,
demand is elastic at high prices.
If the own price elasticity of demand is infinite in absolute value, then
demand is perfectly elastic.
The demand function recognizes that the quantity of a good consumed depends on:
demand shifters and price
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
fall by 35 percent.
Informative advertising influences demand by:
providing information about the availability of a product.
If supply increases, then
quantity demanded will increase
If supply increases, then
quantity remains constant if demand is totally inelastic
The demand function
relates the quantity of a product to its price
Graphically, a decrease in advertising will cause the demand curve to:
shift leftward.
Graphically, an increase in the number of vegetarians will cause the demand curve for Tofu (a meat substitute) to
shift rightward.
If supply increases, then
the equilibrium price goes down.