MBA 621 Final Exam Questions & Answers
Verified 100% Correct
An ad valorem tax causes supply curve to: - ✔✔become steeper.
Other things held constant, the greater the price of a good - ✔✔the lower the
consumer surplus.
Persuasive advertising influences demand by: - ✔✔altering the underlying tastes
of consumers.
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If the
government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit, the
total cost to the government will be: - ✔✔$1,650.
Which of the following can explain an increase in the demand for housing in
retirement communities? - ✔✔an increase in the population of the elderly.
When government imposes a price floor above the market price, the result will be that -
✔✔surpluses occur.
The demand for food (a broad group) is more - ✔✔inelastic than the demand for
beef (specific commodity).
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
,When the own price elasticity of good X is -3.5 then total revenue can be increased by -
✔✔decreasing the price.
If the cross-price elasticity between ketchup and hamburgers is -2.5, a 2% increase in the price
of ketchup will lead to a - ✔✔5% drop in demanded of hamburgers.
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: - ✔✔0.4.
When a demand curve is linear, - ✔✔demand is inelastic at low prices.
The demand for good X has been estimated by Q xd =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. - ✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The
cross price elasticity of demand between goods X and Y is - ✔✔4.
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. - ✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The
own price elasticity of good X is - ✔✔-2.5.
We would expect the own price elasticity of demand for food to be: - ✔✔less elastic than
the demand for cereal.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what
will happen to the quantity of apples demanded? - ✔✔It will increase 6%.
,The demand for video recorders has been estimated to linear and given by the demand
relation Qv = 145 - 3.2Pv + 7M - .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:
- ✔✔a and b. (video recorders are normal goods. AND
video recorder film is a complement for video recorders.)
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px= $4, Py = $2, and Ax = $50.
What is the advertising elasticity of demand for good x? - ✔✔0.52.
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, the cross price elasticity between goods X and Y is - ✔✔0.008.
Demand is more inelastic in the short-term because consumers: - ✔✔have no time to
find available substitutes.
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: - ✔✔None of the above.
If the own price elasticity of demand is infinite in absolute value, then - ✔✔demand
is perfectly elastic.
If the income elasticity for lobster is .4, a 40% increase in income will lead to a: -
✔✔16% increase in demand for lobster.
The demand curve for a good is horizontal when it is: - ✔✔a perfectly elastic good.
, As a rule-of-thumb, a parameter estimate is statistically different from zero when the
absolute value of the t-statistic is: - ✔✔greater than or equal to two.
We would expect the demand for jeans to be: - ✔✔more elastic than the demand
for clothing.
The demand for Cinnamon Toast Crunch brand cereal is - ✔✔more elastic than the
demand for cereal in general.
If the income elasticity for lobster is .6, a 25% increase in income will lead to a - ✔✔15%
increase in demand for lobster.
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, goods X and Y are - ✔✔substitutes.
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 - ✔✔2/3.
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%? - ✔✔66.7%.
After a price decrease for good X, the new consumer equilibrium level of good X will be:
- ✔✔indeterminate without more information.
Which of the following cases violates the property of transitivity - ✔✔A>B, B>C, C>A.
Verified 100% Correct
An ad valorem tax causes supply curve to: - ✔✔become steeper.
Other things held constant, the greater the price of a good - ✔✔the lower the
consumer surplus.
Persuasive advertising influences demand by: - ✔✔altering the underlying tastes
of consumers.
Suppose market demand and supply are given by Q d = 100 - 2P and Q S = 5 + 3P. If the
government sets a price floor of $30 and agrees to purchase all surplus at $30 per unit, the
total cost to the government will be: - ✔✔$1,650.
Which of the following can explain an increase in the demand for housing in
retirement communities? - ✔✔an increase in the population of the elderly.
When government imposes a price floor above the market price, the result will be that -
✔✔surpluses occur.
The demand for food (a broad group) is more - ✔✔inelastic than the demand for
beef (specific commodity).
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
,When the own price elasticity of good X is -3.5 then total revenue can be increased by -
✔✔decreasing the price.
If the cross-price elasticity between ketchup and hamburgers is -2.5, a 2% increase in the price
of ketchup will lead to a - ✔✔5% drop in demanded of hamburgers.
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: - ✔✔0.4.
When a demand curve is linear, - ✔✔demand is inelastic at low prices.
The demand for good X has been estimated by Q xd =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. - ✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The
cross price elasticity of demand between goods X and Y is - ✔✔4.
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. - ✔✔-0.6.
The demand for good X has been estimated to be lnQ xd = 100 - 2.5 lnPX + 4 lnPY + lnM. The
own price elasticity of good X is - ✔✔-2.5.
We would expect the own price elasticity of demand for food to be: - ✔✔less elastic than
the demand for cereal.
The own-price elasticity of demand for apples is -1.2. If the price of apples falls by 5%, what
will happen to the quantity of apples demanded? - ✔✔It will increase 6%.
,The demand for video recorders has been estimated to linear and given by the demand
relation Qv = 145 - 3.2Pv + 7M - .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:
- ✔✔a and b. (video recorders are normal goods. AND
video recorder film is a complement for video recorders.)
Suppose demand is given by Q xd = 50 - 4Px + 6Py + Ax , where Px= $4, Py = $2, and Ax = $50.
What is the advertising elasticity of demand for good x? - ✔✔0.52.
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, the cross price elasticity between goods X and Y is - ✔✔0.008.
Demand is more inelastic in the short-term because consumers: - ✔✔have no time to
find available substitutes.
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: - ✔✔None of the above.
If the own price elasticity of demand is infinite in absolute value, then - ✔✔demand
is perfectly elastic.
If the income elasticity for lobster is .4, a 40% increase in income will lead to a: -
✔✔16% increase in demand for lobster.
The demand curve for a good is horizontal when it is: - ✔✔a perfectly elastic good.
, As a rule-of-thumb, a parameter estimate is statistically different from zero when the
absolute value of the t-statistic is: - ✔✔greater than or equal to two.
We would expect the demand for jeans to be: - ✔✔more elastic than the demand
for clothing.
The demand for Cinnamon Toast Crunch brand cereal is - ✔✔more elastic than the
demand for cereal in general.
If the income elasticity for lobster is .6, a 25% increase in income will lead to a - ✔✔15%
increase in demand for lobster.
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, goods X and Y are - ✔✔substitutes.
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 - ✔✔2/3.
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%? - ✔✔66.7%.
After a price decrease for good X, the new consumer equilibrium level of good X will be:
- ✔✔indeterminate without more information.
Which of the following cases violates the property of transitivity - ✔✔A>B, B>C, C>A.
