Question 1

In regression analysis, the explanatory variables

Accepted Answer

A) are always price and income. 
B) are the variables whose variations are to be explained. 
C) are the factors that are thought to affect the dependent variable. 
D) are used to explain the random error term. 
A) are always price and income. 
B) are the variables whose variations are to be explained. 
C) are the factors that are thought to affect the dependent variable. 
D) are used to explain the random error term. C

Question 2

A normal good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

Accepted Answer

A) negative; increases 
B) negative; decreases 
C) positive; increases 
D) positive; decreases 
A) negative; increases 
B) negative; decreases 
C) positive; increases 
D) positive; decreases C

Question 3

If demand is perfectly elastic,

Accepted Answer

A) then a 1% increase in price leads to a fall in quantity of greater than 1%. 
B) then a 1% increase in price leads to a fall in quantity of less than 1%. 
C) then a 1% increase in price causes quantity demanded to fall to zero. 
D) then a 1% increase in price has no effect on quantity demanded. 
A) then a 1% increase in price leads to a fall in quantity of greater than 1%. 
B) then a 1% increase in price leads to a fall in quantity of less than 1%. 
C) then a 1% increase in price causes quantity demanded to fall to zero. 
D) then a 1% increase in price has no effect on quantity demanded. C

Question 4

If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

Accepted Answer

A) only when p = 10,000. 
B) only when p = 100. 
C) always. 
D) never. 
A) only when p = 10,000. 
B) only when p = 100. 
C) always. 
D) never.

Question 5

An R2 close to 1

Accepted Answer

A) does not happen with real data. 
B) indicates that almost all of the variation in the dependent variable is explained by the regression. 
C) does not explain variation as well as an R2 that is above 2. 
D) means that the regression line does not fit the data very well. 
A) does not happen with real data. 
B) indicates that almost all of the variation in the dependent variable is explained by the regression. 
C) does not explain variation as well as an R2 that is above 2. 
D) means that the regression line does not fit the data very well.

Question 6

In regression analysis, the dependent variable

Accepted Answer

A) is always quantity demanded. 
B) is the variable whose variation is to be explained. 
C) is one of the factors that explains what is happening with demand. 
D) is represented by the inverse demand function. 
A) is always quantity demanded. 
B) is the variable whose variation is to be explained. 
C) is one of the factors that explains what is happening with demand. 
D) is represented by the inverse demand function.

Question 7

If demand is inelastic,

Accepted Answer

A) then it changes very little in response to a price change. 
B) then it changes significantly in response to a price change. 
C) then demand is zero. 
D) then demand is infinite. 
A) then it changes very little in response to a price change. 
B) then it changes significantly in response to a price change. 
C) then demand is zero. 
D) then demand is infinite.

Question 8

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand

Accepted Answer

A) equals (-4/46). 
B) equals (-46). 
C) equals (-1). 
D) cannot be calculated without more information. 
A) equals (-4/46). 
B) equals (-46). 
C) equals (-1). 
D) cannot be calculated without more information.

Question 9

If the cross price elasticity of two goods is -3.5, then

Accepted Answer

A) these two products are relatively elastic substitutes. 
B) these two products are relatively inelastic substitutes. 
C) these two products are relatively elastic complements. 
D) these two products are relatively inelastic complements. 
A) these two products are relatively elastic substitutes. 
B) these two products are relatively inelastic substitutes. 
C) these two products are relatively elastic complements. 
D) these two products are relatively inelastic complements.

Question 10

If R2 is less than 1,

Accepted Answer

A) the regression analysis is incorrect. 
B) the observation data is suspect. 
C) some observations do not lie on the regression line. 
D) the probability of having the correct fit is very low. 
A) the regression analysis is incorrect. 
B) the observation data is suspect. 
C) some observations do not lie on the regression line. 
D) the probability of having the correct fit is very low.

Question 11

Forecasts are

Accepted Answer

A) generally incorrect. 
B) predictions about the future. 
C) explanations of past occurrences. 
D) limited to short time periods. 
A) generally incorrect. 
B) predictions about the future. 
C) explanations of past occurrences. 
D) limited to short time periods.

Question 12

Smoothing a time series of observations

Accepted Answer

A) is a form of statistical cheating. 
B) is used to reveal an underlying pattern in the data. 
C) renders the resultant forecast unusable. 
D) allows statisticians to use less data than would otherwise be required. 
A) is a form of statistical cheating. 
B) is used to reveal an underlying pattern in the data. 
C) renders the resultant forecast unusable. 
D) allows statisticians to use less data than would otherwise be required.

Question 13

When a variable is determined by a factor outside of the function or model being evaluated, it is said to be

Accepted Answer

A) endogenous. 
B) exogenous. 
C) unexplained. 
D) statistically insignificant. 
A) endogenous. 
B) exogenous. 
C) unexplained. 
D) statistically insignificant.

Question 14

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

Accepted Answer

A) slope of the supply curve. 
B) excess supply. 
C) price elasticity of supply. 
D) All of the above. 
A) slope of the supply curve. 
B) excess supply. 
C) price elasticity of supply. 
D) All of the above.

Question 15

The t-statistic measures

Accepted Answer

A) the efficiency of the t-test relative to the standard z-test. 
B) the probability that the estimated coefficient is within the range of the standard error. 
C) whether the estimated coefficient is independent of the standard error. 
D) whether the estimated coefficient is large relative to the standard error. 
A) the efficiency of the t-test relative to the standard z-test. 
B) the probability that the estimated coefficient is within the range of the standard error. 
C) whether the estimated coefficient is independent of the standard error. 
D) whether the estimated coefficient is large relative to the standard error.

Question 16

If you are testing the null hypothesis, you are testing

Accepted Answer

A) the hypothesis that the coefficient for an explanatory variable is zero and therefore has no impact on your results. 
B) whether or not price should be set to 0. 
C) the relationship between the t-statistic and the standard error. 
D) the hypothesis that setting a given price will yield no increase in profits. 
A) the hypothesis that the coefficient for an explanatory variable is zero and therefore has no impact on your results. 
B) whether or not price should be set to 0. 
C) the relationship between the t-statistic and the standard error. 
D) the hypothesis that setting a given price will yield no increase in profits.

Question 17

If two variables B and V are positively correlated, B ________ when V ________.

Accepted Answer

A) goes up; goes down 
B) goes up; goes up 
C) goes down; goes up 
D) remains unchanged; goes up 
A) goes up; goes down 
B) goes up; goes up 
C) goes down; goes up 
D) remains unchanged; goes up

Question 18

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

Accepted Answer

A) income. 
B) the price of that good. 
C) the price of another good. 
D) the quantity demanded of another good. 
A) income. 
B) the price of that good. 
C) the price of another good. 
D) the quantity demanded of another good.

Question 19

If demand is elastic,

Accepted Answer

A) then a 1% decrease in price leads to a rise in quantity of greater than 1%. 
B) then a 1% decrease in price leads to a rise in quantity of less than 1%. 
C) then a 1% decrease in prices leads to a rise in quantity of 1%. 
D) then a 1% decrease in price leads to a fall in quantity greater than 1%. 
A) then a 1% decrease in price leads to a rise in quantity of greater than 1%. 
B) then a 1% decrease in price leads to a rise in quantity of less than 1%. 
C) then a 1% decrease in prices leads to a rise in quantity of 1%. 
D) then a 1% decrease in price leads to a fall in quantity greater than 1%.

Question 20

Premium beer is likely considered

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) to have inelastic demand. 
D) to have perfectly elastic demand. 
A) a normal good. 
B) an inferior good. 
C) to have inelastic demand. 
D) to have perfectly elastic demand.

In regression analysis, the explanatory variables

A normal good has a income elasticity of demand and quantity demanded as income rises.

If demand is perfectly elastic,

If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

An R²close to 1

In regression analysis, the dependent variable

If demand is inelastic,

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand

If the cross price elasticity of two goods is -3.5, then

If R² is less than 1,

Forecasts are

Smoothing a time series of observations

When a variable is determined by a factor outside of the function or model being evaluated, it is said to be

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

The t-statistic measures

If you are testing the null hypothesis, you are testing

If two variables B and V are positively correlated, B when V .

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

If demand is elastic,

Premium beer is likely considered

Introduction

Supply and Demand

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 3: Empirical Methods for Demand Analysis

In regression analysis, the explanatory variables

A normal good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

If demand is perfectly elastic,

If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

An R2 close to 1

In regression analysis, the dependent variable

If demand is inelastic,

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand

If the cross price elasticity of two goods is -3.5, then

If R2 is less than 1,

Forecasts are

Smoothing a time series of observations

When a variable is determined by a factor outside of the function or model being evaluated, it is said to be

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

The t-statistic measures

If you are testing the null hypothesis, you are testing

If two variables B and V are positively correlated, B ________ when V ________.

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

If demand is elastic,

Premium beer is likely considered

Introduction

Supply and Demand

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

A normal good has a income elasticity of demand and quantity demanded as income rises.

An R²close to 1

If R² is less than 1,

If two variables B and V are positively correlated, B when V .