1)If demand is such that , then ???? = 40 − 2???? a

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1)If demand is such that , then ???? = 40 − 2????

a.???????? = 40???? − 2????2

b. ???????? = 40 − 4????

c. ???????? = 40 − ????

 

2)"Every company needs to worry about a recession." This statement should be modified because

Select one:

a. companies that sell inferior goods (negative income elasticity) will likely enjoy more sales during a

recession with falling incomes.

b. companies that sell goods with a high own-price elasticity of demand will likely enjoy more sales as

their prices rise during a recession.

c. companies that sell normal goods will likely enjoy more sales during a recession with falling incomes.

d. companies with a negative cross-price elasticity will likely enjoy more sales because recessions do

not affect the sales of complementary products.

 

3)Everyone knows that the biggest rival to your company (Frank's Fantastic Fudge-Filled Fedoras) is Nate's

Nutella-eNgorged Neckerchiefs. On a lark and using sales and price data, you estimate the cross-price

elasticity between Frank's and Nate's two products to be 0.08, while the cross-price elasticity between

Frank's product and Cole's Cocoa-Covered Corduroy Caps is 1.12. Your calculations suggest that

Select one:

a. consumers consider Frank's and Cole's products to be better substitutes than are Frank's and

Nate's products.

b. Frank's should be more concerned if Nate's drops the price of their product than if Cole's drops the

price of their product.

c. consumers consider Frank's and Cole's products to be more complementary to each other than are

Frank's and Nate's products.

d. consumers consider Frank's and Nate's products to be better substitutes than are Frank's and

Cole's products.

 

4.The basic structure of every elasticity measure is

Select one:

a. the percentage change in quantity demanded that results from a one-percent change in

(price/income/price of related good).

b. the percentage change in price that results from a one-percent change in quantity demanded.

c. the percentage change in quantity demanded that results from a ten-percent change in price.

 

5.Which product would tend to have the most elastic demand?

Select one:

a. A penthouse apartment across the street from Central Park in New York City.

b. An Almond Joy (coconut, almonds, and chocolate) candy bar.

c. A typical three-bedroom, two-bathroom home in the suburbs.

d. A refrigerator that is needed after your old one unexpectedly stops working.