MBA 701 Exam 2 Questions and Answers Already Passed Latest Update 2025-2026
Price elasticity of demand = % change in Qty demanded / % change in price
X = 12% / -4% = -3 - Answers If the price decrease by 4%. As a result, the quantity demanded
increases by 12%. The price elasticity of demand is
If demand for a good is inelastic (the price elasticity of demand is less than 1), an increase in
price increases total revenue. - Answers What is the relationship between elasticity and revenue?
Equal to 1 - Answers At a 7% reduction in the price of a product has zero effect on the dollar
amount of consumer expenditure on the product. The price elasticity of demand is:
buyer responsiveness to price changes. - Answers What does the price elasticity of demand
coefficient measure
An elastic demand or elastic supply is one in which the elasticity is greater than one, indicating a
high responsiveness to changes in price. An inelastic demand or inelastic supply is one in which
elasticity is less than one, indicating low responsiveness to price changes. - Answers What is
the characteristic of the demand for a commodity that is elastic or inelastic or unit elastic?
- Answers What is unit elastic? When the price of a good goes up and demand is unit elastic,
what would happen to the total revenue?
Short run: period of time in which the quantity of at least one input is fixed and the quantities of
the other inputs can be varied
Long Run: period of time in which the quantities of all inputs can be varied - Answers What is the
basic difference between the short run and the long run
Marginal product is the increase in total product as a result of adding one more unit of input -
Answers What is the relationship between the total product and marginal product
-- Average total cost = total cost / quantity
-- Average fixed cost = total fixed cost / quantity
-- Average variable cost = total variable cost / quantity - Answers What is the relationship
between the total cost concept and average cost concepts? For instance, if you know TC and
quantity, how do you calculate average total cost?
Total fixed cost - Answers What is the vertical distance between Total cost and Total Variable
cost
-- Marginal cost: Additional cost incurred by producing one additional unit of output
Price elasticity of demand = % change in Qty demanded / % change in price
X = 12% / -4% = -3 - Answers If the price decrease by 4%. As a result, the quantity demanded
increases by 12%. The price elasticity of demand is
If demand for a good is inelastic (the price elasticity of demand is less than 1), an increase in
price increases total revenue. - Answers What is the relationship between elasticity and revenue?
Equal to 1 - Answers At a 7% reduction in the price of a product has zero effect on the dollar
amount of consumer expenditure on the product. The price elasticity of demand is:
buyer responsiveness to price changes. - Answers What does the price elasticity of demand
coefficient measure
An elastic demand or elastic supply is one in which the elasticity is greater than one, indicating a
high responsiveness to changes in price. An inelastic demand or inelastic supply is one in which
elasticity is less than one, indicating low responsiveness to price changes. - Answers What is
the characteristic of the demand for a commodity that is elastic or inelastic or unit elastic?
- Answers What is unit elastic? When the price of a good goes up and demand is unit elastic,
what would happen to the total revenue?
Short run: period of time in which the quantity of at least one input is fixed and the quantities of
the other inputs can be varied
Long Run: period of time in which the quantities of all inputs can be varied - Answers What is the
basic difference between the short run and the long run
Marginal product is the increase in total product as a result of adding one more unit of input -
Answers What is the relationship between the total product and marginal product
-- Average total cost = total cost / quantity
-- Average fixed cost = total fixed cost / quantity
-- Average variable cost = total variable cost / quantity - Answers What is the relationship
between the total cost concept and average cost concepts? For instance, if you know TC and
quantity, how do you calculate average total cost?
Total fixed cost - Answers What is the vertical distance between Total cost and Total Variable
cost
-- Marginal cost: Additional cost incurred by producing one additional unit of output
