Marketing
Question Archives

Answer: What is a Linear Demand Curve? A linear demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded. The curve is downward sloping, with an inverse relationship between

Answer: The Typical Demand Curve Describes the Inverse Relationship Between Price and Quantity Supplied The typical demand curve describes the inverse relationship between price and quantity supplied. This means that as the price of a good increases, the quantity of

Answer: Two Countries Producing the Same Two Goods When two countries produce the same two goods, and one of the two countries has an absolute advantage in the production of both goods, then both countries can gain from trade if

Answer Summary The cross-price elasticity of demand can be calculated by dividing the percentage change in the quantity of burgers buns sold by the percentage change in the price of burgers. In this case, the cross-price elasticity of demand is

Answer: Price Elasticity of Supply & Percentage Change in Price Resulting in 24% Increase in Quantity Supplied The Price Elasticity of Supply (PES) measures the rate of change in the quantity supplied with respect to a change in the price

Feelgood Drug Company’s Profit Maximizing Price and Quantity The Feelgood Drug Company holds a patent on one of its discoveries, and as such, is able to charge a higher price for the drug than if it did not have the

Answer: Optimal Labor Input for Ice Cream Stores in Madison The market for ice cream scoops in Madison has a total demand of Qd=15-2P and total supply of Qs=3+P, where P is the price per scoop of ice cream. The

Answer: Colombian Coffee In the domestic market for coffee in the country of Colombia, the demand and supply curves are represented by the equations QD = 12 – 2P and QS = P. The world price for coffee is $3

Answer The total tax revenue for Colombia when they impose a $1 tariff per pound of coffee is $6. This is calculated by taking the difference between the domestic demand and supply for coffee in Colombia, multiplied by the $1

Answer: Colombian Coffee The world price for coffee is $3 per pound. When Colombia imposes a $1 tariff per pound of coffee, the domestic market will be affected. The demand curve for Colombian coffee is QD = 12 – 2P

Answer: False Explanation Given the information regarding Emma’s cosmetic store, Emma’s minimum average total cost for a typical bottle of perfume is equal to $15 and not less than $15. Reasoning The long-run equilibrium for the profit-maximizing price of a

Market Supply Curve The market supply curve is an equation that describes the relationship between the price of a good and the quantity supplied. In the Chicago pizza market, the market supply curve is derived from the individual supply curves

Answer Amazon, Inc. is a monopolist in the market for books. Its marginal cost is $2 per book sold and it has no fixed cost of production. The demand for books is P = 1,000 – Q and its marginal

Answer In order for Amazon, Inc. to maximize its profits as a monopolist in the market for books, it will need to sell a quantity of books where its marginal revenue (MR) equals its marginal cost (MC). Given that the

Answer: The Socially Optimal Quantity of Books The socially optimal quantity (Q*) of books is determined by the intersection of the demand curve and the marginal cost curve. In this case, Amazon, Inc. is a monopolist in the market for

Answer: Who Will Pay More of the Luxury Tax on ZEGNA Coats in Aspen, Colorado? In Aspen, Colorado the price elasticity of demand for ZEGNA coats is 5.05, while the price elasticity of supply for ZEGNA coats is 0.33. This

Answer: Demand for Peaches in Atlanta, GA The demand for peaches in Atlanta, GA is given by P = 10 – Q and the supply for peaches is given by P = (1/4)Q. This means that the market for peaches

Answer True. A tax placed on wheat in Kansas would have a smaller deadweight loss than an equivalent tax on apple juice, as the demand for wheat is more elastic than the demand for apple juice, assuming all else equal.

What Is Deadweight Loss? Deadweight loss is a concept in economics that refers to a lost level of economic efficiency caused by market imperfections, such as taxes, monopolies, and externalities. It is the difference between the amount of output that

Answer: Introduction A price ceiling is a governmental regulation that sets the maximum price for a good or service that can be charged. When a price ceiling is imposed below the market equilibrium price, there will be a deadweight loss.

Answer: Loss of Consumer Surplus Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they pay for a good or service. When Max decided to charge $10 for each balloon

Answer: Max can expect a large influx of customers if he makes the hot air balloon rides completely free. According to Max’s market demand curve, the number of people willing to take a hot air balloon ride would be 40

H2: Price for West Madison In order to maximize revenue, James should charge West Madison a price of $100. This can be calculated from the demand equation for West Madison, which is QWM = 500 – 5P. At a price

Answer: Cello Lessons James is attempting to maximize his revenue by charging the same price to customers in both West and East Madison for cello lessons. However, his price of $30 may not be the optimal price for maximizing his

What is a One-Sided Test? A one-sided test is a statistical test that tests a hypothesis at a single end of the range of possible values. The goal of one-sided tests is to determine whether the value of a sample

Answer: One Sided Test A one-sided test is a type of statistical test used in hypothesis testing to determine whether the population parameter for a given sample is greater than, less than, or equal to a specified value. Usually, the

Main Channels Through Which Education Can Influence Health Behavior Cutler & Lleras-Muney (2005) identified three main channels through which education can influence health behavior: increased knowledge, increased labor market opportunities, and improved health systems. Increased knowledge refers to the idea

What is a Deductible? A deductible is an amount of money that an insured party must pay out-of-pocket for expenses before the insurance company covers them. It is an amount that is paid up-front before the insurance company pays out

What are Physician-Induced Demand Indifference Curves? Physician-induced demand indifference curves are a tool used to explain the relationship between the prices of medical services and the quantity of services demanded by the patient. In this context, the term “indifference” implies

Summary Physician-induced demand (PID) is a phenomenon whereby physicians influence their patients to receive treatment or medical services that are unnecessary, excessive, or not medically indicated. Indifference curves are used to determine the level of a patient’s demand for medical

Answer: What is the Grossman Model? The Grossman Model is an economic model used to describe the behavior of firms in imperfectly competitive markets. It was developed by Sanford Grossman of the University of Pennsylvania in 1976. The Grossman Model

Answer: Continuity Assumption of Regression Discontinuity Design (RDD) The continuity assumption of the regression discontinuity design (RDD) is the requirement that the potential outcomes for individuals near the threshold must be continuous in the assignment variable. This assumption is violated

Answer: Null and Alternative Hypothesis of Women with Children and Affair Probability The null hypothesis of this population model is that women with and without children have an equal probability of having an affair (ceteris paribus). The alternative hypothesis is

Answer: Heteroskedasticity and Bias of OLS Estimators Heteroskedasticity occurs when the variance of the error term (u) differs across observations. In this case, the OLS estimators of the βj (the slope coefficients) are certainly biased. Variance of Error Term The

Answer: Indifference Curves and Utility Function A utility function is used to measure the satisfaction a consumer gets from consuming a certain combination of two or more goods. In this case, the given utility function is u = (x-3)2 +

Answer: D – Low, High The movement of air, or wind, is determined by the difference in air pressure between two areas. When air pressure is high in one area and low in another, wind will move from the area

Answer: C. Habitat Loss Habitat loss is widely recognized as the main cause of biodiversity loss in birds. Habitat loss is the destruction, degradation, and fragmentation of bird habitats. This includes the conversion of natural habitats into agricultural land, urbanization,

Answer: Tropical Rainforest The Philippines is located in the equatorial zone, making it part of the tropical rainforest biome. This type of biome is characterized by high temperatures and precipitation year-round, resulting in lush vegetation and a diversity of animal

Tropical Rainforest The tropical rainforest is the most prevalent biome in the equatorial zone, to which the Philippines belongs. This type of biome is characterized by its high temperatures and abundant rainfall throughout the year. The climate in these biomes

Answer: Economic Provision of Forests Forests provide a multitude of services, both economically and ecologically. Economically, forests provide resources such as timber, game and fish, recreation, local climate regulation, and carbon storage. Timber Forests are a renewable resource, and the