Question 1

Which of the following best represents management's objective(s)in utilizing demand analysis?
A)it provides insights necessary for the effective manipulation of demand
B)it helps to measure the efficiency of the use of company resources
C)it aids in the forecasting of sales and revenues
D)a and b
E)a and c

Accepted Answer

Utilizing demand analysis helps management to both effectively manipulate demand by understanding customer behavior and preferences, and forecast sales and revenues by analyzing trends and patterns. This in turn aids in measuring the efficiency of resource use, making option E the most accurate choice.

Question 2

A price elasticity (E_D)of - 1.50 indicates that for a ____ increase in price,quantity demanded will ____ by ____. A)one percent;increase;1.50 units B)one unit;increase;1.50 units C)one percent;decrease;1.50 percent D)one unit;decrease;1.50 percent E)ten percent;increase;fifteen percent

Accepted Answer

A price elasticity of 1.50 means that a 1% increase in price will lead to a 1.50% decrease in quantity demanded. Therefore, option C is the correct choice. Options A, B, D, and E are incorrect.

Question 3

If demand were inelastic,then we should immediately:
A)cut the price.
B)keep the price where it is.
C)go to the Nobel Prize Committee to show we were the first to find an upward sloping demand curve.
D)stop selling it since it is inelastic.
E)raise the price.

Accepted Answer

When demand is inelastic, it means that the quantity demanded does not change significantly with a change in price. Therefore, raising the price can lead to higher revenue because consumers are relatively unresponsive to price increases.

Question 4

Producers' goods are:
A)consumers' goods
B)raw materials combined to produce consumer goods
C)durable goods used by consumers
D)always more expensive when used by corporations
E)none of the above

Accepted Answer

Producers' goods are raw materials and other inputs used in the production of consumer goods.

Question 5

Demand is given by Q_D = 620 ? 10·P and supply is given by Q_S = 100 + 3·P.What is the price and quantity when the market is in equilibrium? A)The price will be $30 and the quantity will be 132 units. B)The price will be $11 and the quantity will be 122 units. C)The price will be $40 and the quantity will be 220 units. D)The price will be $35 and the quantity will be 137 units E)The price will be $10 and the quantity will be 420 units.

Accepted Answer

The answer of Demand is given by Q_D = 620...

Question 6

Property taxes are the product of the tax rate (T)and the assessed value (V).The total property tax collected in your city (P)is: P = T•V.If the value of properties rise 4% and if Mayor and City Council reduces the property the tax rate by 2%,what happens to the total amount of property tax collected? [hint: the $\underline{\text{  percentage rate of change of a product }}$  is approximately the sum of the percentage rates of change.}
A)It rises 6 %.
B)It rises 4 %.
C)It rises 3 %.
D)It rises 2 %
E)If falls 2%.

Accepted Answer

The percentage rate of change of assessed value is +4%, and the percentage rate of change of tax rate is -2%. Therefore, the new total property tax collected will be:
P new = (T - 0.02T) * (V + 0.04V) = 0.98TV * 1.04V = 1.0192TV
The percentage rate of change of P is:
(P new - P)/P = (1.0192TV - TV)/TV = 0.0192 = 1.92%
Therefore, the total property tax collected rises by 2%.

Question 7

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded,$\underline{\text{ except: }}$ 
A)price of substitute goods
B)level of competitor advertising
C)consumer income level
D)consumer desires for goods and services
E)a and b

Accepted Answer

The answer of An increase in each of the following...

Question 8

An increase in the quantity demanded could be caused by:
A)an increase in the price of substitute goods
B)a decrease in the price of complementary goods
C)an increase in consumer income levels
D)all of the above
E)none of the above

Accepted Answer

All of the above choices can cause an increase in the quantity demanded. An increase in the price of substitute goods would make the original good relatively cheaper, leading to an increase in quantity demanded. A decrease in the price of complementary goods would make consumers more likely to purchase both goods together, thus increasing the quantity demanded of both. An increase in consumer income levels leads to an increase in disposable income, allowing consumers to buy more of all goods including the original good, hence increasing its quantity demanded.

Question 9

When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded,the net result being a constant total consumer expenditure.
A)elastic;price;quantity
B)unit elastic;price;quantity
C)inelastic;quantity;price
D)inelastic;price;quantity
E)none of the above

Accepted Answer

In unit elastic demand, a percentage change in price is exactly offset by the same percentage change in quantity demanded, resulting in a constant total consumer expenditure. Therefore, option B is the correct answer. Option A is incorrect because elastic demand would mean that a percentage change in price results in a greater percentage change in quantity demanded, resulting in a decrease in total consumer expenditure. Option C and D are incorrect because inelastic demand would mean that a percentage change in quantity or price does not significantly affect the total consumer expenditure.

Question 10

Which of the following would tend to make demand INELASTIC?
A)the amount of time analyzed is quite long
B)there are lots of substitutes available
C)the product is highly durable
D)the proportion of the budget spent on the item is very small
E)no one really wants the product at all

Accepted Answer

The answer of Which of the following would tend to...

Question 11

The demand for durable goods tends to be more price elastic than the demand for non-durables.

Accepted Answer

Durable goods are typically more expensive and are usually considered long-term investments, so consumers are more likely to weigh their options and consider alternative purchases if the price increases. On the other hand, non-durable goods are usually consumed quickly and are necessities, so consumers are less likely to change their buying behavior if prices increase.

Question 12

Iron ore is an example of a:
A)durable good
B)producers' good
C)nondurable good
D)consumer good
E)none of the above

Accepted Answer

Iron ore is a raw material used in the production process of steel. Therefore, it is considered a producers' good or an intermediate good as it is not directly consumed by the end consumer but rather used in the production process.

Question 13

In this problem,demonstrate your knowledge of percentage rates of change of an entire demand function (Hint: %$\Delta$Q = E_P•%$\Delta$P + E_Y•%$\Delta$Y).You have found that the price elasticity of motor control devices at Allen-Bradley Corporation is -2,and that the income elasticity is a +1.5.You have been asked to predict sales of these devices for one year into the future.Economists from the Conference Board predict that income will be rising 3% over the next year,and AB's management is planning to raise prices 2%.You expect that the number of AB motor control devices sold in one year will: A)fall .5%. B)not change. C)rise 1%r. D)rise 2%. E)rise .5%.

Accepted Answer

The answer of In this problem,demonstrate your knowledge of percentage...

Question 14

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:
A)complements
B)substitutes
C)inelastic as compared to each other
D)both b and c
E)a,b,and c

Accepted Answer

A positive cross price elasticity indicates that when the price of one product (A) increases, the demand for the other product (B) also increases. This suggests that the products are substitutes, meaning that consumers are likely to switch from one product to the other when the price of one changes.

Question 15

Identify the reasons why the quantity demanded of a product increases as the price of that product decreases.
A)as the price declines,the real income of the consumer increases
B)as the price of product A declines,it makes it more attractive than product B
C)as the price declines,the consumer will always demand more on each successive price reduction
D)a and b
E)a and c

Accepted Answer

A) As the price of a product decreases, consumers feel as though they have more purchasing power, effectively increasing their real income, which can lead to an increase in the quantity demanded. B) When the price of product A decreases, it becomes relatively cheaper compared to product B (assuming product B is a substitute), making product A more attractive to consumers, which can also increase the quantity demanded of product A. C) is incorrect because it assumes a constant increase in demand with each price reduction, which doesn't account for individual preferences, income effects, or diminishing marginal utility.

Question 16

Marginal revenue (MR)is ____ when total revenue is maximized.
A)greater than one
B)equal to one
C)less than zero
D)equal to zero
E)equal to minus one

Accepted Answer

When total revenue is maximized, it means the slope of the total revenue curve is zero, which is also equal to the marginal revenue. Therefore, the answer is D.

Question 17

Those goods having a calculated income elasticity that is negative are called:
A)producers' goods
B)durable goods
C)inferior goods
D)nondurable goods
E)none of the above

Accepted Answer

Goods with a negative income elasticity of demand are called inferior goods. This means that as people's incomes increase, they demand less of these goods.

Question 18

The factor(s)which cause(s)a movement along the demand curve include(s):
A)increase in level of advertising
B)decrease in price of complementary goods
C)increase in consumer disposable income
D)decrease in price of the good demanded
E)all of the above

Accepted Answer

A movement along the demand curve is caused by a change in the price of the good demanded. The other factors listed would cause a shift in the demand curve.

Question 19

An income elasticity (E_y)of 2.0 indicates that for a ____ increase in income,____ will increase by ____. A)one percent;quantity supplied;two units B)one unit;quantity supplied;two units C)one percent;quantity demanded;two percent D)one unit;quantity demanded;two units E)ten percent;quantity supplied;two percent

Accepted Answer

An income elasticity of demand (ES) coefficient measures the percentage change in the quantity demanded of a good or service as a result of a one percent change in income. Therefore, an ES of 2.0 means that for a one percent increase in income, the quantity demanded will increase by two percent. Therefore, only option C provides a correct interpretation of the ES coefficient.

Question 20

Suppose we estimate that the demand elasticity for fine leather jackets is ?.7 at their current prices.Then we know that:
A)a 1% increase in price reduces quantity sold by .7%.
B)no one wants to buy leather jackets.
C)demand for leather jackets is elastic.
D)a cut in the prices will increase total revenue.
E)leather jackets are luxury items.

Accepted Answer

A demand elasticity of .7 means that a 1% increase in price will reduce the quantity sold by .7%. This indicates that demand is somewhat elastic, but not highly elastic.

Quiz 3: Demand Analysis

Which of the following best represents management's objective(s) in utilizing demand analysis?

A price elasticity (E_D) of - 1.50 indicates that for a increase in price,quantity demanded will by .

If demand were inelastic,then we should immediately:

Producers' goods are:

Demand is given by Q_D = 620 ? 10·P and supply is given by Q_S = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, $\underline{\text{ except: }}$

An increase in the quantity demanded could be caused by:

When demand is a percentage change in is exactly offset by the same percentage change in demanded,the net result being a constant total consumer expenditure.

Which of the following would tend to make demand INELASTIC?

The demand for durable goods tends to be more price elastic than the demand for non-durables.

Iron ore is an example of a:

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:

Identify the reasons why the quantity demanded of a product increases as the price of that product decreases.

Marginal revenue (MR) is ____ when total revenue is maximized.

Those goods having a calculated income elasticity that is negative are called:

The factor(s) which cause(s) a movement along the demand curve include(s) :

An income elasticity (E_y) of 2.0 indicates that for a increase in income, will increase by .

Suppose we estimate that the demand elasticity for fine leather jackets is ?.7 at their current prices.Then we know that:

Quiz 3: Demand Analysis

Which of the following best represents management's objective(s) in utilizing demand analysis?

A price elasticity (ED) of - 1.50 indicates that for a ____ increase in price,quantity demanded will ____ by ____.

If demand were inelastic,then we should immediately:

Producers' goods are:

Demand is given by QD = 620 ? 10·P and supply is given by QS = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, except: ‾\underline{\text{ except: }} except: ​

An increase in the quantity demanded could be caused by:

When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded,the net result being a constant total consumer expenditure.

Which of the following would tend to make demand INELASTIC?

The demand for durable goods tends to be more price elastic than the demand for non-durables.

Iron ore is an example of a:

If the cross price elasticity measured between items A and B is positive,the two products are referred to as:

Identify the reasons why the quantity demanded of a product increases as the price of that product decreases.

Marginal revenue (MR) is ____ when total revenue is maximized.

Those goods having a calculated income elasticity that is negative are called:

The factor(s) which cause(s) a movement along the demand curve include(s) :

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income,____ will increase by ____.

Suppose we estimate that the demand elasticity for fine leather jackets is ?.7 at their current prices.Then we know that:

A price elasticity (E_D) of - 1.50 indicates that for a increase in price,quantity demanded will by .

Demand is given by Q_D = 620 ? 10·P and supply is given by Q_S = 100 + 3·P.What is the price and quantity when the market is in equilibrium?

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, $\underline{\text{ except: }}$

When demand is a percentage change in is exactly offset by the same percentage change in demanded,the net result being a constant total consumer expenditure.

An income elasticity (E_y) of 2.0 indicates that for a increase in income, will increase by .