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    price-elastic demand curve

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    1. If a company faces a price-elastic demand curve, it can increase the revenue by decreasing the price. True
    False

    2. F-test measures the statistical significance of each explanatory variable. True
    False

    3. A lawyer whose annual income used to be $150,000 quit the job and opened a restaurant. The total cost of operating the restaurant business is $100,000, and the annual revenue is $250,000. What is the lawyer's economic cost of running the restaurant business?
    $100,000
    $150,000
    $250,000
    $300,000
    $50,000

    4. Total revenue function is

    TR = -Q(Q-10)
    and total cost function is
    TC = 2Q.
    What is the profit-maximizing Q?
    (Points: 5)
    2
    4
    6
    10
    12

    5. What was NOT the effect of the "voluntary export restraint" on Japanese cars in 1981?
    Japan started to export high-end automobiles to U.S.
    Domestic car prices jumped up.
    U.S. consumers had to pay more to purchase cars.
    Japanese auto manufacturers suffered a significant decrease in revenue.
    US car auto manufacturers enjoyed higher profits.

    7. ( ) method is a popular method of qualitative forecasting. Developed at the Rand Corporation in the 1950s, it is utilized predominantly in predicting technological trends and changes. It uses a panel of experts and unlike the jury of executive opinion, the participants do not meet ot discuss and agree on a forecast.

    8.
    Month Sales 3-Month Moving Average of Sales
    Jan 843
    Feb 939
    Mar 1236
    Apr 876 1006
    May ( )
    Note: Do not round the number. Write the whole number.

    9. What is time-series data. Give an example. What is cross-sectional data. Give an example.

    10. What is the key difference in assumption between a short-run production function and a long-run production function?

    11. Diminishing returns are short-run phenomena. Define the law of diminishing returns. In a well-defined cubic production function, in which stage does it kick in?

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    https://brainmass.com/economics/regression/price-elastic-demand-curve-67963

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    1. If a company faces a price-elastic demand curve, it can increase the revenue by decreasing the price. (Points: 5)
    True
    False
    Answer: True, when the demand is in price elastic range, the decrease in price is more than compensated by the increase in demand and hence the total revenues are higher.

    2. F-test measures the statistical significance of each explanatory variable. (Points: 5)
    True
    False
    Answer: False. F test measures the statistical significance of overall regression model. The significance of each explanatory variables is checked using t-test.

    3. A lawyer whose annual income used to be $150,000 quit the job and opened a restaurant. The total cost of operating the restaurant business is $100,000, and the annual revenue is $250,000. What is the lawyer's economic cost of running the restaurant business? (Points: 5)
    $100,000
    $150,000
    $250,000
    $300,000
    $50,000
    Answer:
    Economic cost = Operating cost of restaurant + The opportunity cost of the Lawyers time
    =100,000+150,000
    =$250,000

    4. Total revenue function is

    TR = -Q(Q-10)
    and total cost function is
    TC = 2Q.
    What is the profit-maximizing Q?
    (Points: 5)
    2
    4
    6
    10
    12
    ANSWER:
    At price maximizing Q, MC=MR
    MR=dTR/dQ= -2Q+10
    MC=dTC/dQ=2
    So we have
    -2Q+10=2
    Solving we get Q=4

    5. What was NOT the effect of the "voluntary export restraint" on Japanese cars in 1981? (Points: 5)
    Answer: Japan started to export high-end automobiles to U.S.
    Domestic car prices jumped up.
    U.S. consumers had to pay more to purchase cars.
    Japanese auto manufacturers suffered a significant decrease in revenue.
    US car auto manufacturers enjoyed higher profits.

    6. ...

    Solution Summary

    The expert assess a price-elastic demand curve.

    $2.19