The Demand for Good X Is Estimated to Be Q_x^d

question 94

Multiple Choice

The demand for good X is estimated to be Q_x^d = 10,000 − 4P_X + 5P_Y + 2M + A_X, where P_X is the price of X,P_Y is the price of good Y,M is income,and A_X is the amount of advertising on X.Suppose the present price of good X is $50,P_Y = $100,M = $25,000,and A_X = 1,000 units.Based on this information,the cross-price elasticity between goods X and Y is:

• A) 0.008.
• B) −0.08.
• C) −0.8.
• D) −8.

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Definitions:

Volume Variance

The difference between the expected (budgeted) volume of activity and the actual volume, and its impact on the budgeted costs.

Control

The process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change.

Budgets

A financial plan for a defined period, often one year, detailing projected revenues and expenses.

Responsibility Accounting

An accounting system that measures the financial performance of different business segments or managers responsible for certain business operations.