The wrist watch industry in a country is not very competitive. there are limited brands available and the existing firms use their market power to keep prices high. envy, one of the leading brands in the market, is planning to increase the price from $1,000 to $1, 100 per watch. the firm is expecting the quantity demanded to fall by only 7 percent. however, after the price is increased to $1, 100, quantity demanded actually declined by 12 percent. sonia, a student of economics, knows that the average income level in this country has increased over the last year when actual sales of envy watches turn out to be lower than anticipated, she concludes that the income elasticity of demand for envy watches is negative her conclusion is flawed because

a. she is confusing between consumer and producer surplus.
b. she is confusing between price elasticity of demand and income elasticity of demand.
c. she is assuming that rival firms have reduced the price of their watches.
d. she is assuming that the government of this country does not import watches.
e. she is ignoring the fact that the cost of production of envy watches could be high.

Abakery wants to determine how many trays of doughnuts it should prepare each day. demand is normal with a mean of 5 trays and standard deviation of 1 tray. if the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? assume doughnuts have no salvage value after the day is complete.

Uppose that the federal reserve purchases a bond for $100,000 from donald truck, who deposits the proceeds in the manufacturer’s national bank. what will be the impact of this purchase on the supply of money? the money supply will increase by $100,000. the money supply will increase by $80,000. the money supply will increase by $500,000. this action will have no effect on the money supply. if the reserve requirement ratio is 20 percent, what is the maximum amount of additional loans that the manufacturer’s bank will be able to extend as the result of truck’s deposit? the maximum additional loans is $100,000. the maximum additional loans is $80,000. the maximum additional loans is $20,000. the maximum additional loans is $500,000. given the 20 percent reserve requirement, what is the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system because of the fed’s action? this action will have no effect on the money supply. the money supply will eventually increase by $80,000. the money supply will eventually increase by $500,000. the money supply will eventually increase by $100,000.

Sales at a fast-food restaurant average $6,000 per day. the restaurant decided to introduce an advertising campaign to increase daily sales. to determine the effectiveness of the advertising campaign, a sample of 49 days of sales were taken. they found that the average daily sales were $6,300 per day. from past history, the restaurant knew that its population standard deviation is about $1,000. if the level of significance is 0.01, have sales increased as a result of the advertising campaign? multiple choicea)fail to reject the null hypothesis. b)reject the null hypothesis and conclude the mean is higher than $6,000 per day. c)reject the null hypothesis and conclude the mean is lower than $6,000 per day. d)reject the null hypothesis and conclude that the mean is equal to $6,000 per day. expert answer