Question 1

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:

Accepted Answer

A)   -2.5.
B)   4.0.
C)   -2.5 percent.
D)   4.0 percent.

Question 2

The demand for food (a broad group)  is more:

Accepted Answer

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.

Question 3

Suppose the demand function is given by Qxd = 10Px0.9 Py0.5 M0.22 H. Then the cross-price elasticity between goods x and y is:

Accepted Answer

A)   0.9.
B)   0.5.
C)   0.22.
D)   -0.5.

Question 4

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?

Accepted Answer

A)   61,500
B)   61,300
C)   61,300 - 4PX
D)   61,500 - 4PX

Question 5

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?

Accepted Answer

A)   61,500
B)   61,300
C)   61,300 - 4PX
D)   61,500 - 4PX

Question 6

When marginal revenue is zero, demand will be:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   There is not sufficient information to classify the elasticity of demand. C

Question 7

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

Accepted Answer

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.

Question 8

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:

Accepted Answer

A)   substitutes.
B)   complements.
C)   normal goods.
D)   inferior goods.

Question 9

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?

Accepted Answer

A)   1.12
B)   0.38
C)   1.92
D)   0.52

Question 10

If the own price elasticity of demand is infinite in absolute value, then:

Accepted Answer

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.

Question 11

Since most consumers spend very little on salt, a small increase in the price of salt will:

Accepted Answer

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. B

Question 12

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

Accepted Answer

A)   t-statistic
B)   R-square
C)   Adjusted R-square
D)   Neither the t-statistic, the R-square, nor the adjusted R-square

Question 13

When a demand curve is linear,

Accepted Answer

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.

Question 14

Suppose the demand for sunscreen (X) has been estimated to be ln Qx = 5 - 1.7 ln Px + 3 ln S - 3 ln Ay, where S denotes the average hours of sunshine per day and Ay represents the level of advertising for good Y.
a. What would be the impact on demand of a 5 percent increase in the daily amount of sunshine?
b. What would be the impact of a 10 percent reduction in the amount of advertising toward good Y?
c. What might be good Y in this example?

Accepted Answer

a. A 5 percent increase in the daily amount of sunshine leads to a 15 percent increase in the demand for sunscreen (X).
b. A 10 percent reduction in the amount of advertising toward good Y results in a 30 percent increase in demand for X.
c. Beach umbrellas.

Question 15

The income elasticity of demand for your firm's product is estimated to be 0.75. A recent report in The Wall Street Journal says that national income is expected to decline by 3 percent this year.
a. What should you do with your stock of inventories?
b. What do you expect to happen to your sales?
c. How would you answer parts a and b if you expected a 5 percent increase in income instead of a decrease?

Accepted Answer

a.

or

The manager should reduce the st...

Question 16

The lower the standard error:

Accepted Answer

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.

Question 17

Which of the following is NOT an important factor that affects the magnitude of the own price elasticity of a good?

Accepted Answer

A)   Available substitutes
B)   Supply of the good
C)   Time
D)   Expenditure share

Question 18

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

Accepted Answer

A)   zero.
B)   one.
C)   infinite.
D)   unknown.

Question 19

Suppose the monthly demand for soda by a consumer is given by  .
a. If the price of soda is $1 per can, how many sodas will the consumer purchase in a typical month?
b. What is the elasticity of demand for soda?

Accepted Answer

a. Sodas purchased by a consum...

Question 20

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:

Accepted Answer

A)   substitutes.
B)   complements.
C)   normal goods.
D)   inferior goods.

Exam 3: Quantitative Demand Analysis

The demand for good X has been estimated to be ln Q_x^d = 100 - 2.5 ln P_X + 4 ln P_Y + ln M. The cross-price elasticity of demand between goods X and Y is:

Correct Answer
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The demand for food (a broad group) is more:

Correct Answer
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Suppose the demand function is given by Q_x^d = 10P_x^0.9 P_y^0.5 M^0.22 H. Then the cross-price elasticity between goods x and y is:

Correct Answer
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Correct Answer
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Correct Answer
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When marginal revenue is zero, demand will be:

Correct Answer
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C

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

Correct Answer
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Correct Answer
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Suppose demand is given by Q_x^d = 50 - 4P_x + 6P_y + A_x, where P_x = $4, P_y = $2, and A_x = $50. What is the advertising elasticity of demand for good x?

Correct Answer
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If the own price elasticity of demand is infinite in absolute value, then:

Correct Answer
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Since most consumers spend very little on salt, a small increase in the price of salt will:

Correct Answer
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B

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

Correct Answer
verified

When a demand curve is linear,

Correct Answer
verified

Correct Answer
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a. A 5 percent increase in the daily amount of sunshine leads to a 15 percent increase in the demand for sunscreen (X). b. A 10 percent reduction in the amount of advertising toward good Y results in a 30 percent increase in demand for X. c. Beach umbrellas.

Correct Answer
verified
a. or The manager should reduce the st...
View Answer

The lower the standard error:

Correct Answer
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Which of the following is NOT an important factor that affects the magnitude of the own price elasticity of a good?

Correct Answer
verified

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

Correct Answer
verified

Suppose the monthly demand for soda by a consumer is given by . a. If the price of soda is $1 per can, how many sodas will the consumer purchase in a typical month? b. What is the elasticity of demand for soda?

Correct Answer
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a. Sodas purchased by a consum...
View Answer

Suppose the demand for good x is ln Q_x^d = 21 - 0.8 ln P_x - 1.6 ln P_y + 6.2 ln M + 0.4 ln A_x. Then we know goods x and y are:

Correct Answer
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Exam 3: Quantitative Demand Analysis

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:

Correct AnswerverifiedShow Answer

The demand for food (a broad group) is more:

Correct AnswerverifiedShow Answer

Suppose the demand function is given by Qxd = 10Px0.9 Py0.5 M0.22 H. Then the cross-price elasticity between goods x and y is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When marginal revenue is zero, demand will be:

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

If the own price elasticity of demand is infinite in absolute value, then:

Correct AnswerverifiedShow Answer

Since most consumers spend very little on salt, a small increase in the price of salt will:

Correct AnswerverifiedB

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

Correct AnswerverifiedShow Answer

When a demand curve is linear,

Correct AnswerverifiedShow Answer

Correct Answerverifieda. A 5 percent increase in the daily amount of sunshine leads to a 15 percent increase in the demand for sunscreen (X). b. A 10 percent reduction in the amount of advertising toward good Y results in a 30 percent increase in demand for X. c. Beach umbrellas.

Correct Answerverifieda. or The manager should reduce the st...View AnswerShow Answer

The lower the standard error:

Correct AnswerverifiedShow Answer

Which of the following is NOT an important factor that affects the magnitude of the own price elasticity of a good?

Correct AnswerverifiedShow Answer

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

Correct AnswerverifiedShow Answer

Suppose the monthly demand for soda by a consumer is given by . a. If the price of soda is $1 per can, how many sodas will the consumer purchase in a typical month? b. What is the elasticity of demand for soda?

Correct Answerverifieda. Sodas purchased by a consum...View AnswerShow Answer

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:

Correct AnswerverifiedShow Answer

The demand for good X has been estimated to be ln Q_x^d = 100 - 2.5 ln P_X + 4 ln P_Y + ln M. The cross-price elasticity of demand between goods X and Y is:

Correct Answer
verified

Correct Answer
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Suppose the demand function is given by Q_x^d = 10P_x^0.9 P_y^0.5 M^0.22 H. Then the cross-price elasticity between goods x and y is:

Correct Answer
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Correct Answer
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C

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Correct Answer
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Suppose demand is given by Q_x^d = 50 - 4P_x + 6P_y + A_x, where P_x = $4, P_y = $2, and A_x = $50. What is the advertising elasticity of demand for good x?

Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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a. A 5 percent increase in the daily amount of sunshine leads to a 15 percent increase in the demand for sunscreen (X). b. A 10 percent reduction in the amount of advertising toward good Y results in a 30 percent increase in demand for X. c. Beach umbrellas.

Correct Answer
verified
a. or The manager should reduce the st...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
a. Sodas purchased by a consum...
View Answer

Suppose the demand for good x is ln Q_x^d = 21 - 0.8 ln P_x - 1.6 ln P_y + 6.2 ln M + 0.4 ln A_x. Then we know goods x and y are:

Correct Answer
verified