Question 1

Which of the following would tend to make demand INELASTIC?

Accepted Answer

A)   the amount of time analyzed is quite long
B)   there are lots of substitutes available
C)   the product is highly durable
D)   the proportion of the budget spent on the item is very small
E)   no one really wants the product at allF) B) and D)
G) B) and C)

Question 2

Goods having a negative calculated income elasticity are...

Accepted Answer

A)   superior goods
B)   producers' goods
C)   nondurable goods
D)   inferior goods
E)   none of the aboveF) A) and C)
G) A) and B)

Question 3

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:

Accepted Answer

A)   complements
B)   substitutes
C)   inelastic as compared to each other
D)   both b and c
E)   a,b,and cF) A) and B)
G) A) and C)

Question 4

Hanna Corporation markets a compact microwave oven.In 2010 they sold 23,000 units at $375 each.Per capita disposable income in 2010 was $6,750.Hanna economists have determined that the arc price elasticity for this microwave oven is ?1.2. (a) In 2011 Hanna is planning to lower the price of the microwave oven to $\$ 325$. Forecast sales volume for 2011 assuming that all other things remain equal.
However, in checking with government economists, Hanna finds that per capita disposable income is expected to rise to $\$ 7,000$ in 2011 . In the past the company has observed an arc
(b) income elasticity of $+ 2.5$ for microwave ovens. Forecast 2011 sales given that the price is reduces to $\$ 325$ and that per capita disposable income increases to $\$ 7,000$. Assume that the price and income effects are independent and additive.

Accepted Answer

(a)
as the base in...

Question 5

Demand is given by QD = 620 - 10·P and supply is given by QS = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

Accepted Answer

A)   The price will be $30 and the quantity will be 132 units.
B)   The price will be $11 and the quantity will be 122 units.
C)   The price will be $40 and the quantity will be 220 units.
D)   The price will be $35 and the quantity will be 137 units
E)   The price will be $10 and the quantity will be 420 units.F) A) and E)
G) A) and D)

Question 6

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is:

Accepted Answer

A)   highly price elastic
B)   price inelastic
C)   unitarily elastic
D)   an inferior good
E)   none of the aboveF) C) and D)
G) D) and E)

Question 7

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income,____ will increase by ____.

Accepted Answer

A)   one percent; quantity supplied; two units
B)   one unit; quantity supplied; two units
C)   one percent; quantity demanded; two percent
D)   one unit; quantity demanded; two units
E)   ten percent; quantity supplied; two percentF) D) and E)
G) A) and B)

Question 8

Durable goods are:

Accepted Answer

A)   consumers' goods
B)   raw materials combined to produce consumer goods
C)   those that must be replaced after each use
D)   those that may be stored and repaired
E)   none of the aboveF) D) and E)
G) A) and E)

Exam 3: Demand Analysis

Goods having a negative calculated income elasticity are...

Correct Answer
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Correct Answer
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(a)
as the base in...
View Answer

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:

Correct Answer
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Durable goods are:

Correct Answer
verified

An income elasticity (E_y) of 2.0 indicates that for a increase in income, will increase by .

Correct Answer
verified

Demand is given by Q_D = 620 - 10·P and supply is given by Q_S = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

Correct Answer
verified

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is:

Correct Answer
verified

Which of the following would tend to make demand INELASTIC?

Correct Answer
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Exam 3: Demand Analysis

Goods having a negative calculated income elasticity are...

Correct AnswerverifiedShow Answer

Correct Answerverified(a) as the base in...View AnswerShow Answer

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:

Correct AnswerverifiedShow Answer

Durable goods are:

Correct AnswerverifiedShow Answer

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income,____ will increase by ____.

Correct AnswerverifiedShow Answer

Demand is given by QD = 620 - 10·P and supply is given by QS = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

Correct AnswerverifiedShow Answer

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is:

Correct AnswerverifiedShow Answer

Which of the following would tend to make demand INELASTIC?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
(a)
as the base in...
View Answer

Correct Answer
verified

Correct Answer
verified

An income elasticity (E_y) of 2.0 indicates that for a increase in income, will increase by .

Correct Answer
verified

Demand is given by Q_D = 620 - 10·P and supply is given by Q_S = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified