(Test Bank)Economics for Managers, 3rd Edition by Paul G. Farnham chapter 3

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1、EconomicsforManagers,3e(Farnham)Chapter3DemandElasticities1)Foraparticularproduct,ademandelasticityisaquantitativemeasurethatshows:A)thepercentagechangeinquantitydemandedrelativetotheabsolutechangeinanyoftheothervariablesincludedinthedemandfunctionforthatproduct.B)theabsolu

2、techangeinquantitydemandedrelativetothepercentagechangeinanyoftheothervariablesincludedinthedemandfunctionforthatproduct.C)thepercentagechangeinquantitydemandedrelativetothepercentagechangeinanyoftheothervariablesincludedinthedemandfunctionforthatproduct.D)theabsolutechange

3、inquantitydemandedrelativetotheabsolutechangeinanyoftheothervariablesincludedinthedemandfunctionforthatproduct.Answer:CDiff:1Topic:Definingelasticity2)Thepriceelasticityofdemandiscalculatedas:A)thechangeinpricedividedbythechangeinquantitydemanded.B)thechangeinquantitydemand

4、eddividedbythechangeinprice.C)thepercentagechangeinpricedividedbythepercentagechangeinquantitydemanded.D)thepercentagechangeinquantitydemandeddividedbythepercentagechangeinprice.Answer:DDiff:1Topic:Calculatingelasticity3)Whyisthepriceelasticityofdemandarelativemeasure?Thati

5、s,whyiselasticitymeasuredinpercentagetermsratherthaninabsoluteterms?A)Sothecoefficientofelasticitywillnotbedependentonthephysicalunitsofthegood.B)Becauseabsolutemeasuresdonotaccountforthedirectionofthechangeinquantity.C)Sothatthecoefficientofelasticitywillnotbenegative.D)Be

6、causetheabsolutepriceorquantitydemandedofaproductisirrelevanttotheelasticitymeasure.Answer:ADiff:2Topic:Measuringelasticity4)Whencalculatingthepriceelasticityofdemand,whichofthefollowingconditionsmustbesatisfied?A)Allotherfactorsthatinfluencedemandmustbeheldconstant.B)Price

7、sofrelatedgoodsmustbeheldconstantbutallotherfactorsmustbeallowedtovary.C)Pricesofrelatedgoodsmustbeallowedtovarybutallotherfactorsmustbeheldconstant.D)Allotherfactorsthaninfluencedemandmustbeallowedtovary.Answer:ADiff:3Topic:Calculatingelasticity25Copyright©2014PearsonEduca

8、tion,Inc.5)Assumethedemandforagoodispriceinelastic,i.e.,ed<1(inabsolutevalue).This