The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:Q = a + bP +cM +dPRwhere Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and PR is the price of a related product. The results of the estimation are presented below: 
For the next 2 questions suppose income remains at $10,000 but the price of the related good increases to $60 and Conlan decides to raise the price of its product to $50. What is the new own price elasticity of demand?
A. -0.87
B. -1.26
C. -0.24
D. -0.43
E. -1.00
Answer: B
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Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of
A) increasing return. B) capital deepening. C) diminishing returns. D) constant returns.
The inefficiency of a sales tax on a good is ultimately the result of the
A) low tax revenue earned by the government relative to the cost of collection. B) wedge between what buyers pay for the good and what sellers receive for the good. C) buyers being unable to avoid paying the tax. D) sellers being unable to avoid paying the tax. E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus.
Price elasticity of demand can be written as percentage change in Q divided by percentage change in P.
Answer the following statement true (T) or false (F)
Assume there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?
A) The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease. B) Some consumers will be unable to obtain hybrid automobiles at the market price and will have an incentive to offer to buy the product at a higher price. C) The supply of hybrid automobiles is greater than the demand for hybrid automobiles. D) The surplus will cause an increase in the equilibrium price of hybrid automobiles.