The Following Linear Demand Specification Is Estimated for Conlan Enterprises,a $Q = a + b P + c M + d P _ { R }$

question 57

Multiple Choice

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm: $Q = a + b P + c M + d P _ { R }$ where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and $P _ { R }$ 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)-0.24
• B)-0.43
• C)-0.87
• D)-1.00
• E)-1.26

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Definitions:

Per Hour

A rate or measurement that denotes something occurring or calculated over the course of an hour.

Material Variance

The difference between the actual cost of materials used in production and the standard cost expected.

Favourable Variances

Differences between actual and budgeted performance that result in better than expected financial outcomes.

Raw Material

The basic materials from which products are manufactured or made.