The demand for hamburgers is estimated from this theoretical model:
Q = kPaIbAce,
where Q = units per day, P = price per unit, A = advertising budget per month by sellers, I = per capita income of consumers, and e = a random error. In a recent study, one researcher estimated the log-linear form of this equation with regression analysis as:
log Q = 2.5 - 0.33 log P + 0.15 log I + 0.2 log A.
Explain what the coefficients of log P, log I, and log A reveal about this product.
The coefficients of the variables are the respective elasticities of demand. The price elasticity is (-0.33), income elasticity is 0.15, and advertising elasticity is 0.2. These coefficients indicate that the product is relatively price inelastic, is a normal good, and is responsive to advertising outlays by sellers.
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As a result of U.S. tariffs on fishnets produced in other nations, the quantity of fishnets purchased in the United States has
A) fallen to zero. B) not been affected. C) increased. D) decreased but not to zero. E) probably changed but whether it has increased or decreased is ambiguous.
If two partners have a firm with more debt than assets,
a. the business is a success b. the partners are equally liable for the debt c. there is a limit to their personal liability d. each one's liability is limited to the investment made in the business e. the burden of debt is proportionate to the partners' original investment
Each of the following are characteristics of a typical indifference curve map except
a. moving northeast to a new indifference curve will increase utility. b. points on the same indifference curve yield equal utility. c. the axes represent levels of utility for each of the goods. d. indifference curves cannot cross.
What is the horizontal intercept of the budget line, given that M = $1,000, PX = $50, and PY = $40?
A. 20.0 B. 2000.0 C. 11.11 D. 25.0