Assume an Analyst Has Been Hired to Estimate the Price

question 102

Multiple Choice

Assume an analyst has been hired to estimate the price elasticity of demand for hamburger (which sells for about $2.30 per pound) and filet mignon (which sells for about $20 per pound) ,respectively.Considering the different determinants of the price elasticity of demand and assuming the consumers in both markets have approximately the same incomes,we would expect the coefficient of price elasticity of demand in absolute value to be:

• A)larger for hamburger than for filet mignon.
• B)larger for filet mignon than for hamburger.
• C)approximately the same for both hamburger and filet mignon.
• D)none of the above because different determinants would have opposing effects on the two estimates.

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Definitions:

Dealer Markets

Markets where dealers buy and sell securities for their own accounts at their own risk.

OTC Market

The Over-the-Counter (OTC) market refers to decentralized trading of securities, such as stocks and bonds, not conducted on a formal exchange.

TSX

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NYSE

The New York Stock Exchange, one of the largest equity markets in the world, where public corporations list their shares for trading by investors, providing a platform for buying and selling equity securities.