Question Question 3  Consider the following linear demand function where QD = quantity demande

Question 3
Consider the following linear demand function where QD = quantity demanded; P = selling price.

QD = 60 – 4P

The price elasticity of demand associated with P=10

?4.00

?2.00

–1.33

–0.67

Question 4
A simple linear regression function, Y = 20 ? 0.05X, where Y denotes the sales of gas (x 1,000 gallons) and X denotes the gas price ($ per gallon). We can estimate that one-dollar increases in gas price will decrease the sales by

5,000 gallons

50 gallons

0.05 gallons

15,000 gallons

Question 5
In general, which of the following methods is the most costly and risky in estimating market demand?

Consumer surveys

Market experiments

Statistical demand analysis

Consumer focus group

Question 6
Economic profit is defined as the difference between total revenue and

explicit cost.

total economic cost.

implicit cost.

shareholder wealth.

Question 7
If the current price elasticity of demand for product X is ?1.2, a 10% price cut will result in

12% decrease of quantity demanded.

0.8% increase of total revenue.

12% increase of total revenue.

0.8% increase of quantity demanded.

Which of the following is NOT the factor affecting how elastic a demand is?

Time of adjustment

Availability of close substitutes

Share in budget

Price of the good

Question 9
Which of the following is an example of an implicit cost for a firm?

The value of time worked by the owner.

Any wages and salaries paid to employed.

Rent on property not owned by firm.

Both b and c.

Question 10
Which of the following would increase the supply of corn?

An increase in the price of pesticides.

A decrease in the demand for corn.

A fall in the price of corn.

A decrease in the price of wheat.

Question 11
Mr. Smart still has money in pocket to spend. If only two products are available to him, apple (A) and beef (B); the current marginal utility (MU) and unit price (P) are as the following: MUA=3, MUB=10, PA=$1, PB=$4. In order to maximize his total utility, Mr. Smart should

purchase more beef because its marginal utility is greater than apple’s.

purchase more apples because the marginal utility per dollar is greater than beef’s.

purchase more beef because he likes it.

purchase more apples because the price is very low.

Question 12
A market demand curve

is the horizontal summation of the demand curves of all consumers in the market.

is the sum of the prices consumers are willing to pay at each quantity.

is more unpredictable compared with a consumer’s individual demand.

Both a and c

Question 13
Assume a country’s personal annual income is estimated by the following regression equation: Y= 33,000 + 1,200X ? 4,000DG , where X = Working Experience (Years); DG=1, if male; DG=0, if female. Which of the following statement is incorrect?

DG is a dummy variable for gender.

A female with 10 years working experience is supposed to earn $45,000 per year.

A male with 10 years working experience is supposed to earn $41,000 per year.

The regression equation indicates that male dominates in personal annual income.

Question 14
Consider the following linear demand function where QD = quantity demanded; P = selling price; M= disposable income; PR= price of related good:

QD = 60 – 4P

Assume that the current market price is P=10. In order to increase the total revenue, the sales manager should _______ the price.

raise

maintain

cut

freeze

Question 15
Your demand on the 10th edition textbook in this course is quite price-inelastic because

it has no close substitute.

it is expensive.

it is not important.

it takes a whole semester to consume

Question 16
“I like ice cream, but after eating homemade ice cream last night, I want to have something else for desert today.” This statement most clearly reflects

the law of demand.

the law of diminishing returns.

the law of diminishing marginal utility.

the law of increasing costs.

Which of the following is the correct procedure order to obtain a better linear regression function for estimation after Excel operation?

Check r2 (Good fit or not) ? F test? t test

F test? t test? Check r2 (Good fit or not)

Check r2 (Good fit or not) ? t test? F test

t test? F test? Check r2 (Good fit or not)

Question 18
A price elasticity (ED) of –0.50 indicates that for a ____________ increase in price, quantity demanded will ____________ by ______________.

one percent; increase; 0.50 units

one unit; increase; 0.50 units

one percent; decrease; 0.50 percent

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