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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
Correct answer(s):
- 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:
Correct answer(s):
- Zero
The demand for which of the following commodities is likely to be more inelastic?
Correct answer(s):
- Beverages
Which of the following statements is incorrect?
Correct answer(s):
- None of the statements associated with this question are correct
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:
Correct answer(s):
- The demand for sugar is inelastic
When the own price elasticity of good X is -3.5 then total revenue can be increased by
Correct answer(s):
- Decreasing the price
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
Correct answer(s):
- Greater than 2
The lower the standard error,
Correct answer(s):
- The more confident the manager can be that the parameter estimates reflect the true values
For a given set of data and regression equation, the greater the R-square
Correct answer(s):
- The greater adjusted R-square
The greater the standard error of an estimated coefficient:
Correct answer(s):
- The lower the t-value of the estimated coefficient
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
Correct answer(s):
- 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
Correct answer(s):
- 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
Correct answer(s):
- 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
Correct answer(s):
- -2.5
Non-fed ground beef is an inferior good. In economic booms, grocery managers should
Correct answer(s):
- Reduce their orders of non-fed ground beef
Suppose the income elasticity for transportation is 1.8. Which of the following is anincorrect statement?
Correct answer(s):
- Expenditures on transportation will fall less rapidly than income falls
Since most consumers spend very little on salt, a small increase in the price of salt will
Correct answer(s):
- Not reduce quantity demanded by very much
If the short-term own price elasticity for transportation is estimated to be -0.6, then long-term own price elasticity is expected to be
Correct answer(s):
- Less than -0.6
Demand tends to be
Correct answer(s):
- More inelastic in the short-term than in the long-term
The demand for food (a broad group) is more
Correct answer(s):
- Inelastic than the demand for beef (specific commodity)