Chapter 3 Managerial Eco

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

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.

If apples have an own price elasticity of −1.2 we know the demand is:

elastic.

We would expect the demand for jeans to be:

more elastic than the demand for clothing.

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:

the demand for sugar is elastic.

Suppose the demand function is given by Qxd = 8Px-0.5 Py0.25 M0.12 H. Then the cross-price elasticity between goods x and y is:

0.25.

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?

0.52

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:

0.82.

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?

61,300

Which of the following provides a measure of the overall fit of a regression?

F-statistic

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?

It will increase 9 percent.

The demand for women's clothing is, in general:

More elastic than the demand for clothing

The demand curve for a good is horizontal when it is:

a unitary elastic good.

The short-run response of quantity demanded to a change in price is usually:

less than the long-run response.

The lower the standard error:

the more precisely the parameter estimates the true values.

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.

When marginal revenue is zero, demand will be:

unit elastic.

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 (arc) cross price-elasticity of apple sauce and pork chops?

−1.17.

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:

−2.5 percent.