Managerial Economics & Business Strategy Michael Baye 9th Edition- Test Bank

Managerial Economics & Business Strategy Michael Baye 9th Edition- Test Bank Managerial Economics & Business Strategy Michael Baye 9th Edition- Test BankAssume that the price elasticity of demand is −2 for a certain firm’s product. If the firm raises price, the firm’s managers can expect total revenue to:A price elasticity of zero corresponds to a demand curve that is: A. horizontal. B. downward sloping with a slope always equal to 1. C.vertical. D. either vertical or horizontal.As we move down along a linear demand curve, the price elasticity of demand becomes more: A. elastic. B.inelastic. C. log-linear. D. variable.If the demand for a product is Q x d = 10 − lnPx, then product x is: A. elastic. B. inelastic. C.unitary elastic. D. Cannot be determined without more information.The demand for good X has been estimated by Q x d = 12 − 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.The own price elasticity of demand for apples is −1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded? A. It will increase 5 percent. B. It will fall 4.3 percent. C. It will increase 4.2 percent. D.It will increase 6 percentIf apples have an ownprice elasticity of −1.2 we know the demand is: A. unitary. B. indeterminate. C.elastic. D. inelasticIf quantity demanded for sneakers falls by 10 percent when price increases 25 percent, we know that the absolute value of the own price elasticity of sneakers is: A. 2.5. B.0.4. C. 2.0. D. 0.27The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is: A. elastic. B. unitary. C. falling. D.inelastic.If the absolute value of the own price elasticity of steak is 0.4, a decrease in price will lead to: A. a reduction in total revenue. B. an increase in total revenue. C. no change in total revenue. D. None of the preceding statements is correct.If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the absolute value of the own price elasticity at a price of $7? A. 0.57 B.1.75 C. 0.02 D. 1.24Demand is perfectly elastic when the absolute value of the own price elasticity of demand is: A. zero. B. one. C.infinite. D. unknownThe demand curve for a good is horizontal when it is: A. a perfectly inelastic good. B. a unitary elastic good. C.a perfectly elastic good. D. an inferior good.Suppose Q x d = 10,000 − 2 Px + 3 Py− 4.5M, where Px = $100, Py = $50, and M = $2,000. What is the own price elasticity of demand? A. −2.34 B. −0.78 C.−0.21 D. −1.21Suppose Q x d = 10,000 − 2 Px + 3 Py− 4.5M, where Px = $100, Py = $50, and M = $2,000. Then good X has a demand which is: A. elastic. B.inelastic. C. unitary. D. neither elastic, inelastic, nor unitary elastic.Suppose Q x 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? A. 100 units B. 500 units C. 1,100 units D.950 unitsWhich of the following factors would NOT affect the own price elasticity of a good? A. Time B.Price of an input C. Available substitutes D. Expenditure shareLemonade, a good with many close substitutes, should have an own price elasticity that is: A. unitary. B.relatively elastic. C. relatively inelastic. D. perfectly inelastic.We would expect the demand for jeans to be: A.more elastic than the demand for clothing. B. less elastic than the demand for clothing. C. the same as the demand for clothing. D. neither more elastic, less elastic, nor the same elasticity as that of the demand for clothing.Demand is more inelastic in the shortterm because consumers: A. are impatient. B.have no time to find available substitutes. C. are present-oriented. D. None of the preceding statements is correct.We would expect the own price elasticity of demand for food to be: A.less elastic than the demand for cereal. B. more elastic than the demand for cereal. C. the same as that for soap. D. perfectly inelastic.The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the: A. own price elasticity. B. income elasticity. C. log-linear elasticity. D.cross-price elasticityIf the cross-price elasticity between goods A and B is negative, we know the goods are: A. inferior goods. B.complements. C. inelastic. D. substitutes.If the cross-price elasticity between ketchup and hamburgers is −1.2, a 4 percent increase in the price of ketchup will lead to a 4.8 percent: A. drop in quantity demanded of ketchup. B.drop in quantity demanded of hamburgers. C. increase in quantity demanded of ketchup. D. increase in quantity demanded of hamburgers.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-priceelasticity of apple sauce and pork chops at a pork chop price of $6? A. −1.17 B. 2.71 C. 0.42 D.−0.86Suppose the demand function is Q x 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? A.0.17 B. 0.38 C. 0.21 D. 0.04The elasticity that measures the responsiveness of consumer demand to changes in income is the: A.income elasticity. B. own price elasticity. C. cross-price elasticity. D. neither the income elasticity, the own price elasticity, nor the cross-price elasticity.An income elasticity less than zero tells us that the good is: A. a normal good. B. a Giffen good. C.an inferior good. D. an inelastic gooda: A. 10 percent drop in demand for lobster. B.16 percent increase in demand for lobster. C. 20 percent increase in demand for lobster. D. 4 percent increase in demand for lobster.