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price-elastic demand curve

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

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

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?

4. Total revenue function is

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

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.

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?


Solution Summary

Assess a price-elastic demand curve.