If quantity demanded for sneakers falls by 6% when price increases 20% we know that the absolute value of the own-price elasticity of sneakers is
Correct answer(s):
- 0.3
Topic
Quantitative Demand Analysis
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Quizzes in Quantitative Demand Analysis
The own-price elasticity of demand for apples is -1.5. If the price of apples falls by 6%, what will happen to the quantity of apples demanded?
Correct answer(s):
- It will increase 9%
The demand for good X has been estimated by QX d = 6 – 2PX + 5PY. Suppose that good X sells at $3 per unit and good Y sels flor $2 per unit. Calculate the own price elasticity.
Correct answer(s):
- -0.6
Suppose the demand for a product is QX d = 12 – 3 lnPX then product X is
Correct answer(s):
- Elastic
Assume that the price elasticity of demand is -0.75 for a certain firm’s product. If the firm lowers price, the firm’s managers can expect total revenue to
Correct answer(s):
- Decrease
If the demand function for a particular good is Q = 20 – 8P, then the price elasticity of demand (in absolute value) at a price of $1 is
Correct answer(s):
- 2/3
The demand for which of the following commodities is likely to be more price inelastic?
Correct answer(s):
- Food
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
Correct answer(s):
- None of the statements associated with this question are correct
The cross-price elasticity of demand for textbooks and copies of old exams is -3.5. If the price of copies of old exams increase by 10 percent, the quantity demanded of textbooks will
Correct answer(s):
- Fall by 35 percent
The elasticity of demand for gasoline has been estimated to be 2.0, and the standard error is 1.0. The upper and lower bounds on the 95 percent confidence interval for the elasticity of demand for gasoline are
Correct answer(s):
- None of the statements associated with this question are correct
The demand for video recorders has been estimated to linear and given by the demand relation QV = 145 – 3.2PV + 7M – 0.95PF – 39PM, where QV is the quantity of video recorders, Pf denotes the price of video recorder film, PM is the price of attending a movie, PV is the price of video recorders, and M is income. Based on the estimated demand equation we can conclude:
Correct answer(s):
- Video recorders are normal goods and video recorder film is a complement for video recorders
If the demand function for a particular good is Q = 25 – 10P, then the price elasticity of demand (in absolute value) at a price of $1 is
Correct answer(s):
- 2/3
The cross-price advertising of demand for books and magazines is -2.0. If the price of magazines decreases by 10 percent, the quantity demanded of books will
Correct answer(s):
- Rise by 20 percent
The short run response of quantity demanded to a change in price is usually:
Correct answer(s):
- Less than the long run response
The cross price elasticity of demand between goods X and Y is -3.5. If the price of X decreases by 7%, the quantity demanded of Y will:
Correct answer(s):
- Increase by 24.5%
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?
Correct answer(s):
- 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:
Correct answer(s):
- 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?
Correct answer(s):
- 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
Correct answer(s):
- -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
Correct answer(s):
- Decrease