# demand elasticity

1. Remembering that demand elasticity is defined as the percentage change in quantity divided by the percentage change in price, if price

decreases and, in percentage terms, quantity rises more than the price has dropped, total revenue will

a) decrease

b) increase

c) remain the same

d) either increase or decrease

e) nothing will change except taste

3. Which of the following indicators will always improve when more variables are added to a regression equation?

a) the magnitudes of the coefficients

b) the t-test

c) the standard error of the coefficients

d) the correlation coefficient

6. If the income elasticity coefficient equals 1, the proportion of a consumer's income spent on a given product after a change in income will be ________ the proportion of income spent on that product prior to the income change.

a) greater than

b) smaller than

c) less than and greater than

d) either greater than or equal to

e) equal to

9. When using regression analysis for forecasting, the confidence interval indicates:

a) the degree of confidence that one has in the equation's R.

b) the range in which the value of the dependent variable is expected to lie with a given degree of probability.

c) the degree of confidence that one has in the regression coefficients.

d) the range in which the actual outcome of a forecast is going to lie.

13. The coefficient of a linear regression equation indicates

a) the change in the independent variable relative to a unit change in the dependent variable.

b) the change in the dependent variable relative to a unit change in the independent variable.

c) the percentage change in the dependent variable relative to a unit change in the independent variable.

d) the percentage change in the independent variable relative to a unit change in the dependent variable.

14. Which of the following is most likely to indicate a statistically significant regression coefficient?

a) t > 2

b) R2 > .90

c) t > R2

d) F > 4

e) none of the above because of insufficient information.

#### Solution Summary

Demand elasticity is one of the focal areas.