Question 1

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P). What is the point elasticity of demand at a price of $5?

Accepted Answer

The answer of Using Excel, Big Poppa's estimates the weekly...

Question 2

Consider a 15 percent increase in the price of a box of 50 of mailing envelopes and a 15 percent increase in the price of designer leather goods. In response to the price changes, which of the following is most likely to be true?

Accepted Answer

The percentage change in quantity demanded for a good is inversely proportional to the price elasticity of demand for that good. Designer leather goods are likely to have a higher price elasticity of demand than a box of 50 mailing envelopes. Therefore, the percentage change in the quantity demanded for designer leather goods will be larger than the percentage change in the quantity demanded for a box of 50 of mailing envelopes. Option A is incorrect because the total revenue will change with the increase in price. Option B is incorrect as there is no information to support it. Option C is incorrect because the percentage change in quantity demanded for mailing envelopes may be small due to their necessity for businesses and individuals.

Question 3

Using Excel, Big Pies Pizzas estimates the log- linear weekly demand function for their pizza to be ln Q^d = 8.23 - (1.50 × ln P). Which of the following statements is true?

Accepted Answer

The logarithmic demand function can be used to find the price elasticity of demand using the formula: Price elasticity of demand = (% change in quantity demanded) / (% change in price) Taking the derivative of the demand function with respect to price, we get: d(ln Q^d)/d(ln P) = -1.50 This means that a 1% increase in price will result in a 1.50% decrease in quantity demanded. Since the coefficient is greater than 1, we can conclude that the demand for Big Pies Pizzas is elastic. Therefore, Option B is correct. Option A and D are incorrect because they suggest that the price elasticity of demand increases or decreases as the price changes, which is not true in this case. Option C is incorrect because the demand is actually elastic.

Question 4

If a 5 percent increase in consumer incomes leads to a 10 percent increase in the quantity demanded for a good, the good is a(n)_________ good with an income elasticity of________ .

Accepted Answer

A 5% increase in consumer incomes leads to a 10% increase in the quantity demanded for the good, indicating that the good is a normal good, as the demand for the good increases with an increase in income. The income elasticity of demand can be calculated as the percentage change in quantity demanded divided by the percentage change in income, which is 10%/5% = 2.0. Therefore, the answer is (A) normal; 2.0.

Question 5

If an 8 percent decrease in price leads to a 4 percent increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

Accepted Answer

The price elasticity of demand is inelastic (less than 1) because the percentage change in quantity demanded (4%) is less than the percentage change in price (8%). Therefore, total revenue decreases when price decreases.

Question 6

If a 10 percent increase in price leads to a 15 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will _ _________.

Accepted Answer

The total revenue is calculated by multiplying the price by the quantity demanded. In this case, the price increased by 10 percent and the quantity demanded decreased by 15 percent. This means that the overall effect on revenue will be negative, as the increase in price is more than offset by the decrease in quantity demanded. Therefore, the total revenue will decrease.

Question 7

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 15.53 - (3.85 × ln P). Which of the following statements is true?

Accepted Answer

The price elasticity can be calculated by taking the derivative of the demand function with respect to price and multiplying it by the price and quantity. In this case, the derivative of ln Q^d with respect to ln P is -3.85. Since the absolute value of this elasticity is greater than 1, the demand is elastic. Therefore, the correct answer is D.

Question 8

If the price elasticity of demand for Clean Sheets laundry detergent is 1.50, a 5 percent decrease in the price will lead to which of the following?

Accepted Answer

A price elasticity of demand of 1.50 means that a 1 percent decrease in price leads to a 1.50 percent increase in quantity demanded. So a 5 percent decrease in price would lead to a 7.5 percent increase in quantity demanded (5 x 1.50 = 7.5). Therefore, the correct answer is A.

Question 9

Consider a 20 percent increase in the price of a 2 pound bag of sugar and a 20 percent increase in the price of first- class airline travel. In response to the price changes, which of the following is most likely to be true?

Accepted Answer

First-class airline travel is a luxury good and tends to have a more inelastic demand, meaning that people are less likely to change their travel plans even with a higher price. On the other hand, sugar is a necessity and tends to have a more elastic demand, meaning that consumers are more likely to decrease their demand with a higher price. Therefore, the percentage change in the quantity demanded for first-class airline travel will be smaller than the percentage change in the quantity demanded for a 2 pound bag of sugar.

Question 10

If a 1 percent decrease in the price of a good leads to a 0.50 percent increase in the quantity demanded, the price elasticity of demand for the good equals________ .

Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, it is 0.50% / 1% = 0.50.

Question 11

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P). What is the point elasticity of demand at a price of $10?

Accepted Answer

The formula for point elasticity of demand is: E = (% change in quantity demanded) / (% change in price) To calculate E at a price of $10, we need to find out the quantity demanded at this price. We can do this by plugging P = 10 into the demand function: Q = Q^d = 580.25 - (25.50 × 10) = 330.25 Now, to find the percentage change in quantity demanded, we can use the following formula: %ΔQ = (new Q - old Q) / old Q x 100% Let's say the price increases to $10.78 (an increase of 6.5% from $10), the new quantity demanded would be: Q1 = Q^d = 580.25 - (25.50 × 10.78) = 303.47 Using the formula above, we get: %ΔQ = (303.47 - 330.25) / 330.25 x 100% = -7.23% We can find the percentage change in price in the same way: %ΔP = (new P - old P) / old P x 100% = (10.78 - 10) / 10 x 100% = 7.8% Now, we can calculate point elasticity of demand at a price of $10: E = %ΔQ / %ΔP = (-7.23 / 7.8) = -0.927 Note that the point elasticity is negative, which means that demand is elastic (i.e., a 1% increase in price will result in a more than 1% decrease in quantity demanded). To get the absolute value of E, we need to ignore the negative sign, so: |E| = 0.927 Rounding off to two decimal places, we get: |E| ≈ 0.78 Therefore, the best choice is B, with a point elasticity of demand of approximately 0.78.

Question 12

If the cross- price elasticity between Goods X and Y is - 2.0, the goods are _________ _ and an increase in the price of Good X will cause a(n)_________ in the quantity demanded of Good Y.

Accepted Answer

The negative cross-price elasticity indicates that Goods X and Y are complements, meaning an increase in the price of Good X will lead to a decrease in the quantity demanded of Good Y.

Question 13

If the price elasticity of demand for Clean Sheets laundry detergent is 0.50, a 2 percent increase in the price will lead to which of the following?

Accepted Answer

A price elasticity of demand of 0.50 indicates that for every 1 percent increase in price, quantity demanded will decrease by 0.50 percent. Therefore, a 2 percent increase in price will lead to a 1 percent decrease in quantity demanded.

Question 14

The price elasticity for corn from a particular farmer is likely to be________ .

Accepted Answer

The answer of The price elasticity for corn from a...

Question 15

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 16.23 - (1.85 × ln P). At a price of $20, what is the price elasticity of demand?

Accepted Answer

The price elasticity of demand in a log-linear demand function like ln Q = a - b ln P is given directly by the coefficient of ln P, which in this case is -1.85. The negative sign indicates the inverse relationship between price and quantity demanded, but the elasticity value is 1.85.

Question 16

The owner of Mr. Piggy's Bacon estimates that the price elasticity of demand for a package of their bacon to be 3.48. In relation to the price elasticity of demand for the entire bacon market, which of the following is most likely true?

Accepted Answer

The price elasticity of demand for a specific brand (like Mr. Piggy's Bacon) is typically higher than for the entire market category (all bacon) because consumers can easily switch between brands if the price of one brand changes, but they have fewer substitutes if the price of the entire category of bacon changes. Therefore, the demand for the entire bacon market is less responsive to price changes compared to a single brand within that market.

Question 17

The price elasticity for insulin (a life- saving drug for diabetics)is likely to be________ .

Accepted Answer

Insulin is a life-saving drug for diabetics and has no substitute. Therefore, the demand for insulin is likely to be perfectly inelastic, implying that changes in price will not lead to any significant change in demand.

Question 18

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 12.53 - (2.25 × ln P). If Best Paints increases the price of their gallon sized paints by 5 percent, which of the following will occur?

Accepted Answer

Using the estimated demand function, we can see that: ln Q^d = 12.53 - (2.25 × ln P) is equivalent to: Q^d = e^(12.53 - 2.25 ln P) If Best Paints increases the price of their gallon sized paints by 5%, the new price (P') will be: P' = 1.05P Substituting P' into the demand function, we get: Q' = e^(12.53 - 2.25 ln 1.05P) Simplifying this expression, we get: Q' = e^12.53 × (1.05)^-2.25 × P^2.25 Q' = 0.862 × Q where Q is the original quantity demanded at price P. Therefore, the increase in price results in a decrease in quantity demanded by 13.8%, which is approximately 11.25%. Therefore, the correct answer is (D) The quantity will decrease by 11.25 percent.

Question 19

If a 12 percent increase in price leads to a 6 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

Accepted Answer

The total revenue for the product will increase because the percentage increase in price is greater than the percentage decrease in quantity demanded, indicating that the price effect dominates the quantity effect, leading to higher total revenue.

Question 20

If a 10 percent increase in consumer incomes leads to a 15 percent increase in the quantity demanded for a good, the good is a _________ good with an income elasticity of________ .

Accepted Answer

A luxury good is one where the quantity demanded increases more than proportionately to the increase in income. The income elasticity of a luxury good is therefore greater than 1. In this case, the quantity demanded increases by 15 percent when income increases by 10 percent, which gives an income elasticity of 1.5.

Quiz 3: Measuring and Using Demand

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $5?

Consider a 15 percent increase in the price of a box of 50 of mailing envelopes and a 15 percent increase in the price of designer leather goods. In response to the price changes, which of the following is most likely to be true?

Using Excel, Big Pies Pizzas estimates the log- linear weekly demand function for their pizza to be ln Q^d = 8.23 - (1.50 × ln P) . Which of the following statements is true?

If a 5 percent increase in consumer incomes leads to a 10 percent increase in the quantity demanded for a good, the good is a(n) _ good with an income elasticity of .

If an 8 percent decrease in price leads to a 4 percent increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

If a 10 percent increase in price leads to a 15 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will _ _________.

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 15.53 - (3.85 × ln P) . Which of the following statements is true?

If the price elasticity of demand for Clean Sheets laundry detergent is 1.50, a 5 percent decrease in the price will lead to which of the following?

Consider a 20 percent increase in the price of a 2 pound bag of sugar and a 20 percent increase in the price of first- class airline travel. In response to the price changes, which of the following is most likely to be true?

If a 1 percent decrease in the price of a good leads to a 0.50 percent increase in the quantity demanded, the price elasticity of demand for the good equals________ .

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $10?

If the cross- price elasticity between Goods X and Y is - 2.0, the goods are _________ _ and an increase in the price of Good X will cause a(n) _________ in the quantity demanded of Good Y.

If the price elasticity of demand for Clean Sheets laundry detergent is 0.50, a 2 percent increase in the price will lead to which of the following?

The price elasticity for corn from a particular farmer is likely to be________ .

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 16.23 - (1.85 × ln P) . At a price of $20, what is the price elasticity of demand?

The owner of Mr. Piggy's Bacon estimates that the price elasticity of demand for a package of their bacon to be 3.48. In relation to the price elasticity of demand for the entire bacon market, which of the following is most likely true?

The price elasticity for insulin (a life- saving drug for diabetics) is likely to be________ .

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 12.53 - (2.25 × ln P) . If Best Paints increases the price of their gallon sized paints by 5 percent, which of the following will occur?

If a 12 percent increase in price leads to a 6 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

If a 10 percent increase in consumer incomes leads to a 15 percent increase in the quantity demanded for a good, the good is a _ good with an income elasticity of .

Quiz 3: Measuring and Using Demand

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Qd = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $5?

Consider a 15 percent increase in the price of a box of 50 of mailing envelopes and a 15 percent increase in the price of designer leather goods. In response to the price changes, which of the following is most likely to be true?

Using Excel, Big Pies Pizzas estimates the log- linear weekly demand function for their pizza to be ln Qd = 8.23 - (1.50 × ln P) . Which of the following statements is true?

If a 5 percent increase in consumer incomes leads to a 10 percent increase in the quantity demanded for a good, the good is a(n) _________ good with an income elasticity of________ .

If an 8 percent decrease in price leads to a 4 percent increase in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

If a 10 percent increase in price leads to a 15 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will _ _________.

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Qd = 15.53 - (3.85 × ln P) . Which of the following statements is true?

If the price elasticity of demand for Clean Sheets laundry detergent is 1.50, a 5 percent decrease in the price will lead to which of the following?

Consider a 20 percent increase in the price of a 2 pound bag of sugar and a 20 percent increase in the price of first- class airline travel. In response to the price changes, which of the following is most likely to be true?

If a 1 percent decrease in the price of a good leads to a 0.50 percent increase in the quantity demanded, the price elasticity of demand for the good equals________ .

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Qd = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $10?

If the cross- price elasticity between Goods X and Y is - 2.0, the goods are _________ _ and an increase in the price of Good X will cause a(n) _________ in the quantity demanded of Good Y.

If the price elasticity of demand for Clean Sheets laundry detergent is 0.50, a 2 percent increase in the price will lead to which of the following?

The price elasticity for corn from a particular farmer is likely to be________ .

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Qd = 16.23 - (1.85 × ln P) . At a price of $20, what is the price elasticity of demand?

The owner of Mr. Piggy's Bacon estimates that the price elasticity of demand for a package of their bacon to be 3.48. In relation to the price elasticity of demand for the entire bacon market, which of the following is most likely true?

The price elasticity for insulin (a life- saving drug for diabetics) is likely to be________ .

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Qd = 12.53 - (2.25 × ln P) . If Best Paints increases the price of their gallon sized paints by 5 percent, which of the following will occur?

If a 12 percent increase in price leads to a 6 percent decrease in the quantity demanded of the good, as a result of the price change, the total revenue for this product will________ .

If a 10 percent increase in consumer incomes leads to a 15 percent increase in the quantity demanded for a good, the good is a _________ good with an income elasticity of________ .

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $5?

Using Excel, Big Pies Pizzas estimates the log- linear weekly demand function for their pizza to be ln Q^d = 8.23 - (1.50 × ln P) . Which of the following statements is true?

If a 5 percent increase in consumer incomes leads to a 10 percent increase in the quantity demanded for a good, the good is a(n) _ good with an income elasticity of .

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 15.53 - (3.85 × ln P) . Which of the following statements is true?

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 580.25 - (25.50 × P) . What is the point elasticity of demand at a price of $10?

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 16.23 - (1.85 × ln P) . At a price of $20, what is the price elasticity of demand?

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 12.53 - (2.25 × ln P) . If Best Paints increases the price of their gallon sized paints by 5 percent, which of the following will occur?

If a 10 percent increase in consumer incomes leads to a 15 percent increase in the quantity demanded for a good, the good is a _ good with an income elasticity of .