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Suppose the demand for good X is lnQX d = 21 – 0.8 lnPX – 1.6 lnPY + 6.2 lnM + 0.4 lnAX. Then we know good x is:
Correct answer(s):
- A normal good
Suppose the demand for good X is lnQX d = 21 – 0.8 lnPX – 1.6 lnPY + 6.2 lnM + 0.4 lnAX. Then we know goods x and y are:
Correct answer(s):
- Complements
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%?
Correct answer(s):
- 66.7%
Suppose demand is given by QX d = 50 – 4PX + 6PY + AX , where PX = $4, PY = $2, and AX = $50. What is the quantity demanded of good X?
Correct answer(s):
- 96
Suppose demand is given by QX d = 50 – 4PX + 6PY + AX, where PX = $4, PY = $2, and AX = $50. What is the advertising elasticity of demand for good X?
Correct answer(s):
- 0.52
You are the manager of a supermarket and know that the income elasticity of peanut butter is exactly -0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your purchase of peanut butter?
Correct answer(s):
- Buy 10.5% more peanut butter
If the income elasticity for lobster is 0.4, a 40% increase in income will lead to a:
Correct answer(s):
- 16% increase in demand for lobster
An income elasticity less than zero tells us that the good is:
Correct answer(s):
- An inferior good
The elasticity that measures the responsiveness of consumer demand to changes in income is the:
Correct answer(s):
- Income elasticity
Suppose the demand function is QX d = 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?
Correct answer(s):
- 0.17
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?
Correct answer(s):
- -0.86
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% ____?
Correct answer(s):
- Drop in quantity demanded of hamburgers
If the cross-price elasticity between good A & B is negative, we know the goods are:
Correct answer(s):
- Complements
The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:
Correct answer(s):
- Cross-price elasticity
We would expect the own price elasticity of demand for food to be:
Correct answer(s):
- Less elastic than the demand for cereal
Demand is more inelastic in the short-term because consumers:
Correct answer(s):
- Have no time to find available substitutes
We would expect the demand for jeans to be:
Correct answer(s):
- More elastic than the demand for clothing
Lemonade, a good with many close substitutes, should have an own-price elasticity that is:
Correct answer(s):
- Relatively elastic
Which of the following factors would not affect the own-price elasticity of a good?
Correct answer(s):
- Price of an input
Suppose QX d = 10,000 – 2 PX + 3 PY – 4.5M , where PX = $100, PY = $50, and M = $2,000. How much of good X is consumed?
Correct answer(s):
- 950 units