The Demand Function for Small Business Computers in the United

question 55

Multiple Choice

The demand function for small business computers in the United States is given by x = 200 - 10p, where x is annual sales measured in thousands of computers and p is the price of a computer measured in thousands of dollars. Japanese firms supply a big share of these computers. They measure prices in yen where 150 yen equal 1 dollar. The price of 1 computer is $10,000. Let E_u be the price elasticity of demand at this price as calculated by US firms who measure in dollars, and let E_j be the price elasticity of demand at the same $10,000 price but measured in yen by the Japanese firms. Which of the following are the values of E_u and E_j, respectively?

• A) -1, 2150
• B) -1, 21
• C) -2, 22
• D) -2, 2300
• E) -2, 20.0133

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Definitions:

Independent Variable

In an experimental setting, this is the variable that is manipulated or changed by the researcher to observe its effect on the dependent variable.

Sample

Group of subjects selected from a larger population of subjects, usually selected randomly.

Population

In statistics and research, the entire group of individuals or instances about whom the information is desired; in biology, all the organisms of the same group or species living in a particular geographic area.

Correlational Method

A research strategy that involves measuring two or more variables to determine the degree of relationship between them.