The demand for good X is given by lnQX d = 120 – 0.9 lnPX + 1.5 lnPY – 0.7 lnM. Which of the following statements is correct?

  • X has constant income elasticity

When the price of sugar was “low”, consumers in the U.S. spent a total of $3 billion annually on sugar consumption. When the price doubled, consumer expenditures remained at $3 billion annually. This data indicates that:

  • None of the statements associated with this question are correct

The management of Local Cinema has estimated the monthly demand for tickets to be lnQ = 22,328 – 0.41 lnP + 0.5 lnM – 0.33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Based on the information given, which of the following statements is false?

  • Movies are complements for VCR tapes

The management of Local Cinema has estimated the monthly demand for tickets to be lnQ = 22,328 – 0.41 lnP + 0.5 lnM – 0.33 lnA + 100 lnPvcr, where Q = quantity of tickets demanded, P = price per ticket, M = income, A = advertising outlay, and Pvcr = price of a VCR tape rental. It is known that P = $5.50, M = $9,000, A = $900, and Pvcr = $3.00. Determine the own-price elasticity of demand for movie tickets

  • -0.41

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

 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:

  • Zero

When the price of sugar was “low”, consumers in the U.S. 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 for sugar is inelastic

The manager can be 95% confident that the true value of the underlying parameters in a regression is not zero if the absolute value of t-statistic is

  • Greater than 2

The lower the standard error,

  • The more confident the manager can be that the parameter estimates reflect the true values
 The demand for good X has been estimated to be lnQXd = 0 – 2.5 lnPX + 4 lnPY + lnM . The advertising elasticity of good X is
  • 0.0
The demand for good X has been estimated to be lnQXd = 100 – 2.5 lnPX + 4 lnPY + lnM. The income elasticity of good X is
  • 1.0
 The demand for good X has been estimated to be lnQXd = 100 – 2.5 lnPX + 4 lnPY + lnM.The cross price elasticity of demand between goods X and Y is
  • 4.0
 The demand for good X has been estimated to be lnQXd = 100 – 2.5 lnPX + 4 lnPY + lnM.The own price elasticity of good X is
  • -2.5

Non-fed ground beef is an inferior good. In economic booms, grocery managers should

  • Reduce their orders of non-fed ground beef

 Suppose the income elasticity for transportation is 1.8. Which of the following is anincorrect statement?

  • Expenditures on transportation will fall less rapidly than income falls