Question 1

A regression specification must include

Accepted Answer

A) the functional relationship between dependent and explanatory variables. 
B) the estimated coefficients. 
C) the estimated t-statistic. 
D) All of the above. 
A) the functional relationship between dependent and explanatory variables. 
B) the estimated coefficients. 
C) the estimated t-statistic. 
D) All of the above.

Question 2

If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfect. 
D) vertical. 
A) elastic. 
B) inelastic. 
C) perfect. 
D) vertical.

Question 3

-If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals

Accepted Answer

A) $0. 
B) $1. 
C) $2. 
D) $4. 
A) $0. 
B) $1. 
C) $2. 
D) $4.

Question 4

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

Accepted Answer

A) -1.25. 
B) elastic. 
C) Both A and B above. 
D) Neither A nor B above. 
A) -1.25. 
B) elastic. 
C) Both A and B above. 
D) Neither A nor B above.

Question 5

Ramen noodles are 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.

Question 6

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

Accepted Answer

A) -1.25. 
B) -80.0. 
C) -0.80. 
D) -10.0. 
A) -1.25. 
B) -80.0. 
C) -0.80. 
D) -10.0.

Question 7

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 8

-If the demand curve for a good always has unitary price elasticity, what does this imply about consumer behavior?

Accepted Answer

A) Consumers do not react to a price change. 
B) Consumers will spend a constant total amount on the good. 
C) Consumers are irrational. 
D) Consumers do not obey the Law of Demand. 
A) Consumers do not react to a price change. 
B) Consumers will spend a constant total amount on the good. 
C) Consumers are irrational. 
D) Consumers do not obey the Law of Demand.

Question 9

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 10

Demand curves and other economic relationships

Accepted Answer

A) are always linear. 
B) produce linear regression equations. 
C) can take many different functional forms. 
D) are dependent upon the type of advertising done. 
A) are always linear. 
B) produce linear regression equations. 
C) can take many different functional forms. 
D) are dependent upon the type of advertising done.

Question 11

A vertical demand curve

Accepted Answer

A) is impossible. 
B) reasonably represents demand for essential goods. 
C) has a price elasticity of negative infinity since people will pay an infinite amount for the good. 
D) represents a normal good. 
A) is impossible. 
B) reasonably represents demand for essential goods. 
C) has a price elasticity of negative infinity since people will pay an infinite amount for the good. 
D) represents a normal good.

Question 12

The random error term ________ the effects of ________ influences on the dependent variable that are not included as explanatory variables.

Accepted Answer

A) captures; observed 
B) ignores; unobserved 
C) ignores; observed 
D) captures; unobserved 
A) captures; observed 
B) ignores; unobserved 
C) ignores; observed 
D) captures; unobserved

Question 13

If the demand curve is given by Q = a + bp, then a is

Accepted Answer

A) negative. 
B) the quantity demanded when price is zero. 
C) the slope of the demand curve. 
D) measured in money. 
A) negative. 
B) the quantity demanded when price is zero. 
C) the slope of the demand curve. 
D) measured in money.

Question 14

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

Accepted Answer

A) -1.25. 
B) inelastic. 
C) Both A and B above. 
D) Neither A nor B above. 
A) -1.25. 
B) inelastic. 
C) Both A and B above. 
D) Neither A nor B above.

Question 15

-If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve

Accepted Answer

A) is elastic. 
B) has a unitary elasticity. 
C) is inelastic. 
D) is perfectly inelastic. 
A) is elastic. 
B) has a unitary elasticity. 
C) is inelastic. 
D) is perfectly inelastic.

Question 16

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.

Question 17

Which of the following statements is TRUE?

Accepted Answer

A) If two variables X and Y are correlated, then X causes changes in Y. 
B) If two variables X and Y are correlated, then Y causes changes in X. 
C) If X causes changes in Y, then X and Y are correlated. 
D) None of the above. 
A) If two variables X and Y are correlated, then X causes changes in Y. 
B) If two variables X and Y are correlated, then Y causes changes in X. 
C) If X causes changes in Y, then X and Y are correlated. 
D) None of the above.

Question 18

If you are using a 95% confidence interval and the absolute value of the t-statistic is larger than the critical value, then

Accepted Answer

A) we accept the null hypothesis at a 95% confidence level. 
B) we reject the null hypothesis at a 95% confidence level. 
C) we will be wrong less than 5% of the time if we accept the null hypothesis. 
D) we will be wrong 95% of the time if we reject the null hypothesis. 
A) we accept the null hypothesis at a 95% confidence level. 
B) we reject the null hypothesis at a 95% confidence level. 
C) we will be wrong less than 5% of the time if we accept the null hypothesis. 
D) we will be wrong 95% of the time if we reject the null hypothesis.

Question 19

Omitted variables

Accepted Answer

A) can cause hypothesis tests to be unreliable. 
B) require multiple regression analyses to find. 
C) are usually those with t-statistics less than the critical value. 
D) are usually outside the confidence interval. 
A) can cause hypothesis tests to be unreliable. 
B) require multiple regression analyses to find. 
C) are usually those with t-statistics less than the critical value. 
D) are usually outside the confidence interval.

Question 20

An inferior 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

A regression specification must include

If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is

-If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

Ramen noodles are likely considered

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

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 demand curve for a good always has unitary price elasticity, what does this imply about consumer behavior?

If you are testing the null hypothesis, you are testing

Demand curves and other economic relationships

A vertical demand curve

The random error term the effects of influences on the dependent variable that are not included as explanatory variables.

If the demand curve is given by Q = a + bp, then a is

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

-If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve

In regression analysis, the explanatory variables

Which of the following statements is TRUE?

If you are using a 95% confidence interval and the absolute value of the t-statistic is larger than the critical value, then

Omitted variables

An inferior good has a income elasticity of demand and quantity demanded as income rises.

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

A regression specification must include

If the price elasticity of demand for a good is greater than one in absolute value, economists characterize that demand is

-If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

Ramen noodles are likely considered

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

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 demand curve for a good always has unitary price elasticity, what does this imply about consumer behavior?

If you are testing the null hypothesis, you are testing

Demand curves and other economic relationships

A vertical demand curve

The random error term ________ the effects of ________ influences on the dependent variable that are not included as explanatory variables.

If the demand curve is given by Q = a + bp, then a is

If the price of orange juice rises 10%, and as a result the quantity demanded falls by 8%, the price elasticity of demand for orange juice is

-If the demand for orange juice is expressed as Q = 2000 - 500p, where Q is measured in gallons and p is measured in dollars, then at the price of $3, the demand curve

In regression analysis, the explanatory variables

Which of the following statements is TRUE?

If you are using a 95% confidence interval and the absolute value of the t-statistic is larger than the critical value, then

Omitted variables

An inferior good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

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

The random error term the effects of influences on the dependent variable that are not included as explanatory variables.

An inferior good has a income elasticity of demand and quantity demanded as income rises.