Exam (elaborations)
S86 CHAPTER 1 TEST QUESTIONS AND ANSWERS
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S86 CHAPTER 1 TEST QUESTIONS AND ANSWERS...
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Ed = % change in quantity demanded / % change in price - ANSWERUse average divisor in calculation...
5000 - 3000 = 2000 = 50% change in quantity
12 - 9 = .5 = 28.5% change in price
Ed = 50% / 28.5% = 1.75
Increase in Quantity = % change in price/complement % of price change
- ANSWER If the price of an item declines by 6%, what increase in sales
is necessary to maintain revenue? Currently, units are priced at $40 and
sales volume is 30,000 units.
Increase in quantity = 6% / 94% = 6.4%
If the price of an item declines by 6%, what percentage increase in sales
is required to increase revenue by 8%?
((1+% increase in revenue) - complement % of price decline) /
complement of price decline
Increase in quantity = (1.08-.94) / .94
= .149 or 15%
The degree of relationship between two variables: - ANSWER If they
move together, they're highly correlated
If they move opposite, they're negatively correlated
If they move randomly, they're uncorrelated
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