The estimated demand for a good is
= 25 - 5P + 0.32M + 12PRwhere Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. The good is
A. an inferior good since the coefficient on M is greater than one.
B. a normal good since the coefficient on PR is positive.
C. a normal good since the coefficient on M is positive.
D. an inferior good since the coefficient on PR is positive.
E. none of the above
Answer: C
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Some sales managers are talking shop. Which of the following quotations refers to a movement along the demand curve?
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a. steep (inelastic) demand curve and steep (inelastic) demand curve. b. steep (inelastic) demand curve and a flat (elastic) supply curve. c. flat (elastic) demand curve and a steep (inelastic) supply curve. d. flat (elastic) demand curve and a flat (elastic) supply curve.
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