MBA 651 Final || 100% Correct.
An ad valorem tax shifts the supply curve
down by the amount of the tax.
up by the amount of the tax.
by rotating it counter-clockwise.
by rotating it clockwise. correct answers by rotating it counter-clockwise.
If firms expect prices to be higher in the future and the product is not perishable, then
the current supply curve shifts to the left.
the current supply curve shifts to the right.
producers produce more output to hold back for the future.
none of the above. correct answers the current supply curve shifts to the left.
Jane pays the market price of $69 for a new pair of running shoes, even though she would be
happy to pay a maximum of $100 for the same pair of shoes. This is an example of the concept
of
producer surplus.
price ceilings.
full economic prices.
consumer surplus. correct answers consumer surplus.
In a competitive market, the market demand is Qd = 70 - 3P and the market supply is Qs = 6P. A
price ceiling of $4 will result in
A shortage of 24 units.
A shortage of 34 units.
A surplus of 58 units.
A surplus of 34 units. correct answers A shortage of 34 units.
Suppose the demand for good X is given by Qdx= 10 -2 Px + Py + M. The price of good X is $1,
the price of good Y is $10, and income is $100. Given these prices and income, how much of
good X will be purchased?
115.
515.
1,000.
None of the above. correct answers None of the above.
Suppose the demand for good X is given by Qdx= 20 - 4Px + 2Py + M. The price of good X is
$5, the price of good Y is $15, and income is $150. Given these prices and income, how much of
good X will be purchased?
160
180
220
None of the above. correct answers 180
Suppose that supply increases and demand decreases. What effect will this have on price and
quantity?
price will increase and quantity may rise or fall.
,price will decrease and quantity will increase.
price will decrease and quantity will decrease.
none of the above. correct answers none of the above.
Suppose the demand for good X is given by Qdx= 10 + ax Px + ay Py + aM M. If aM is
negative, then good x is:
a normal good.
an inferior good.
a complement.
a substitute. correct answers an inferior good.
Suppose X and Y are complements and demand for X is Q xd = a0 + aXPX + aYPY + aMM +
aHH. Then we know
aH > 0.
aX > 0.
aY < 0.
aM < 0. correct answers aY < 0.
Suppose good X is a normal good. Then a decrease in income would lead to
an outward shift of the demand curve.
an inward shift of the demand curve.
no shift of the demand curve.
a movement along the demand curve. correct answers an inward shift of the demand curve.
A decrease in income will not lead to:
a movement along the demand curve.
a leftward shift of the demand curve.
a rightward shift of the demand curve.
all of the above. correct answers a movement along the demand curve.
The demand for good X has been estimated by Q xd = 6 - 2Px + 5Py. Suppose that good X sells
at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.
-0.3.
-0.4.
-0.5.
-0.6. correct answers -0.6.
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
decrease
increase
remain constant
either increase or remain constant depending upon the size of the price decrease. correct answers
decrease
The demand for Cinnamon Toast Crunch brand cereal is
equally elastic to the demand for cereal in general.
less elastic than the demand for cereal in general.
,more elastic than the demand for cereal in general.
none of the above. correct answers more elastic than the demand for cereal in general.
If quantity demanded for sneakers falls by 10% when price increases 25% we know that the
absolute value of the own-price elasticity of sneakers is:
2.5.
0.4.
2.
0.27. correct answers 0.4.
When a demand curve is linear,
demand is elastic at low prices.
demand is inelastic at low prices.
demand is unitary elastic at low prices.
the elasticity is constant at all prices. correct answers demand is inelastic at low prices.
You are the manager of a popular shoe company. You know that the advertising elasticity of
demand for your product is .15. How much will you have to increase advertising in order to
increase demand by 10%?
.02%.
38.6%.
66.7%.
4.3%. correct answers 66.7%.
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is
the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on
X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units.
Based on this information, good X is
an inferior good.
a normal good.
a Giffen good.
a regular good. correct answers a normal good.
The management of Local Cinema has estimated the monthly demand for tickets to belnQ =
22,328 - .41 lnP + 0.5 lnM - .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.
-.29.
-.32.
-.39.
-.41.
none of the above. correct answers -.41.
The lower the standard error,
the less confident the manager can be that the parameter estimates reflect the true values.
the more confident the manager can be that the parameter estimates reflect the true values.
the more precisely the parameter estimates the true values.
, the less precisely the parameter estimates the true values. correct answers the more confident the
manager can be that the parameter estimates reflect the true values.
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:
decrease by 24.5%.
decrease by 2.45%.
increase by 24.5%.
increase by 2.45%.
remain unchanged. correct answers increase by 24.5%.
Suppose the demand for good x is lnQ xd = 21 - .8 lnPx - 1.6 lnPy + 6.2 lnM + .4 lnAx . Then
we know goods x and y are:
substitutes.
complements.
normal goods.
inferior goods. correct answers complements.
An increase in the price of good X will have what effect on the budget line on a normal X-Y
graph?
parallel outward shift of the line.
increase the vertical intercept.
decrease the horizontal intercept.
parallel inward shift of the line. correct answers decrease the horizontal intercept.
A firm manager with vertical indifference curves (output on the horizontal axis, profit on the
vertical axis) views
only profits to be "goods".
only output to be "goods".
both profits and outputs to be goods.
none of the above. correct answers only output to be "goods".
Suppose earnings are given by E = $60 + $7(24 - L), where E is earnings and L is the hours of
leisure. What is the price to the worker of consuming an additional hour of leisure?
$24.
$7.
$12.
$10. correct answers $7.
The absolute value of the slope of the indifference curve is called the:
marginal revenue.
average rate of substitution.
marginal rate of substitution.
marginal cost. correct answers marginal rate of substitution.
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he
can use 24 hours per day. What is the maximum total earnings the worker can earn in a day?
$492.
An ad valorem tax shifts the supply curve
down by the amount of the tax.
up by the amount of the tax.
by rotating it counter-clockwise.
by rotating it clockwise. correct answers by rotating it counter-clockwise.
If firms expect prices to be higher in the future and the product is not perishable, then
the current supply curve shifts to the left.
the current supply curve shifts to the right.
producers produce more output to hold back for the future.
none of the above. correct answers the current supply curve shifts to the left.
Jane pays the market price of $69 for a new pair of running shoes, even though she would be
happy to pay a maximum of $100 for the same pair of shoes. This is an example of the concept
of
producer surplus.
price ceilings.
full economic prices.
consumer surplus. correct answers consumer surplus.
In a competitive market, the market demand is Qd = 70 - 3P and the market supply is Qs = 6P. A
price ceiling of $4 will result in
A shortage of 24 units.
A shortage of 34 units.
A surplus of 58 units.
A surplus of 34 units. correct answers A shortage of 34 units.
Suppose the demand for good X is given by Qdx= 10 -2 Px + Py + M. The price of good X is $1,
the price of good Y is $10, and income is $100. Given these prices and income, how much of
good X will be purchased?
115.
515.
1,000.
None of the above. correct answers None of the above.
Suppose the demand for good X is given by Qdx= 20 - 4Px + 2Py + M. The price of good X is
$5, the price of good Y is $15, and income is $150. Given these prices and income, how much of
good X will be purchased?
160
180
220
None of the above. correct answers 180
Suppose that supply increases and demand decreases. What effect will this have on price and
quantity?
price will increase and quantity may rise or fall.
,price will decrease and quantity will increase.
price will decrease and quantity will decrease.
none of the above. correct answers none of the above.
Suppose the demand for good X is given by Qdx= 10 + ax Px + ay Py + aM M. If aM is
negative, then good x is:
a normal good.
an inferior good.
a complement.
a substitute. correct answers an inferior good.
Suppose X and Y are complements and demand for X is Q xd = a0 + aXPX + aYPY + aMM +
aHH. Then we know
aH > 0.
aX > 0.
aY < 0.
aM < 0. correct answers aY < 0.
Suppose good X is a normal good. Then a decrease in income would lead to
an outward shift of the demand curve.
an inward shift of the demand curve.
no shift of the demand curve.
a movement along the demand curve. correct answers an inward shift of the demand curve.
A decrease in income will not lead to:
a movement along the demand curve.
a leftward shift of the demand curve.
a rightward shift of the demand curve.
all of the above. correct answers a movement along the demand curve.
The demand for good X has been estimated by Q xd = 6 - 2Px + 5Py. Suppose that good X sells
at $3 per unit and good Y sells for $2 per unit. Calculate the own price elasticity.
-0.3.
-0.4.
-0.5.
-0.6. correct answers -0.6.
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
decrease
increase
remain constant
either increase or remain constant depending upon the size of the price decrease. correct answers
decrease
The demand for Cinnamon Toast Crunch brand cereal is
equally elastic to the demand for cereal in general.
less elastic than the demand for cereal in general.
,more elastic than the demand for cereal in general.
none of the above. correct answers more elastic than the demand for cereal in general.
If quantity demanded for sneakers falls by 10% when price increases 25% we know that the
absolute value of the own-price elasticity of sneakers is:
2.5.
0.4.
2.
0.27. correct answers 0.4.
When a demand curve is linear,
demand is elastic at low prices.
demand is inelastic at low prices.
demand is unitary elastic at low prices.
the elasticity is constant at all prices. correct answers demand is inelastic at low prices.
You are the manager of a popular shoe company. You know that the advertising elasticity of
demand for your product is .15. How much will you have to increase advertising in order to
increase demand by 10%?
.02%.
38.6%.
66.7%.
4.3%. correct answers 66.7%.
The demand for good X is estimated to be Q xd = 10,000 - 4PX + 5PY + 2M + AX, where PX is
the price of X, PY is the price of good Y, M is income and AX is the amount of advertising on
X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units.
Based on this information, good X is
an inferior good.
a normal good.
a Giffen good.
a regular good. correct answers a normal good.
The management of Local Cinema has estimated the monthly demand for tickets to belnQ =
22,328 - .41 lnP + 0.5 lnM - .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.
-.29.
-.32.
-.39.
-.41.
none of the above. correct answers -.41.
The lower the standard error,
the less confident the manager can be that the parameter estimates reflect the true values.
the more confident the manager can be that the parameter estimates reflect the true values.
the more precisely the parameter estimates the true values.
, the less precisely the parameter estimates the true values. correct answers the more confident the
manager can be that the parameter estimates reflect the true values.
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:
decrease by 24.5%.
decrease by 2.45%.
increase by 24.5%.
increase by 2.45%.
remain unchanged. correct answers increase by 24.5%.
Suppose the demand for good x is lnQ xd = 21 - .8 lnPx - 1.6 lnPy + 6.2 lnM + .4 lnAx . Then
we know goods x and y are:
substitutes.
complements.
normal goods.
inferior goods. correct answers complements.
An increase in the price of good X will have what effect on the budget line on a normal X-Y
graph?
parallel outward shift of the line.
increase the vertical intercept.
decrease the horizontal intercept.
parallel inward shift of the line. correct answers decrease the horizontal intercept.
A firm manager with vertical indifference curves (output on the horizontal axis, profit on the
vertical axis) views
only profits to be "goods".
only output to be "goods".
both profits and outputs to be goods.
none of the above. correct answers only output to be "goods".
Suppose earnings are given by E = $60 + $7(24 - L), where E is earnings and L is the hours of
leisure. What is the price to the worker of consuming an additional hour of leisure?
$24.
$7.
$12.
$10. correct answers $7.
The absolute value of the slope of the indifference curve is called the:
marginal revenue.
average rate of substitution.
marginal rate of substitution.
marginal cost. correct answers marginal rate of substitution.
Suppose a worker is offered a wage of $8 per hour, plus a fixed payment of $100 per day, and he
can use 24 hours per day. What is the maximum total earnings the worker can earn in a day?
$492.
