Question 1

If a study examines several different markets at the same time,and compares outcomes with conditions in each market,it is specifically using:

Accepted Answer

A) time series data. 
B) censored data. 
C) controlled data. 
D) truncated data. 
E) cross-sectional data. 
A) time series data. 
B) censored data. 
C) controlled data. 
D) truncated data. 
E) cross-sectional data. E

Question 2

Which of the following is true of the t-statistic?

Accepted Answer

A) It is the value of the coefficient estimate divided by its standard error. 
B) It is the sum of the value of the coefficient estimate and its standard error. 
C) It is the coefficient's standard error normalized to lie between 0 and 1. 
D) It measures the overall statistical validity of the regression equation. 
E) It tells us how many standard errors the coefficient estimate is equal to zero. 
A) It is the value of the coefficient estimate divided by its standard error. 
B) It is the sum of the value of the coefficient estimate and its standard error. 
C) It is the coefficient's standard error normalized to lie between 0 and 1. 
D) It measures the overall statistical validity of the regression equation. 
E) It tells us how many standard errors the coefficient estimate is equal to zero. A

Question 3

Jim Bradley is the manager of a bakery,located on a major intersection in a suburban area of Midwestern city.He has been collecting data on sales at his store for the past year.Recently,he has developed a model that he thinks explains sales at the bakery.Unfortunately,he never had a course in statistics,and isn't sure that he has done his computing correctly and asks for your opinion.
According to Jim,weekly sales at the Bradley Bakery can be described by the equation:
Q = 5,000 - 1,000P + 10A + 1.5Y - 400Pc - 25Ac,
where Q denotes unit sales,P is the firm's price,A is the firm's advertising spending,Y is the per capita income in the local area,Pc is the average price charged by a nearby competing bakery and Ac is the competitor's advertising spending.Jim didn't keep the printout from the analysis.He only kept the equation,which he is eager to use to plan for his likely sales in the next few months.
What advice would you give Jim on using the equation?

Accepted Answer

Without the regression's statistical output,Jim's equation is highly problematic.It is impossible to test the reliability or statistical significance,of any of the results.Specifically,there is no information on t-ratios to test the significance of any of the independent variables.The R² has not been computed to test the significance of the regression as a whole.There is no standard error of the regression to compute confidence intervals for the dependent variable.Furthermore,it is possible that P_c and A_c are collinear.A competing firm might increase advertising while decreasing price at the same time.In short,Jim cannot use the results with any confidence.

Question 4

The following table shows the predicted and the actual sales of a firm in the quarters of a year.
Table 4-1
  
-Calculate the sum of squared errors of the observations from Table 4-1.

Accepted Answer

A) 20 
B) 34 
C) 18 
D) 22 
E) 15 
A) 20 
B) 34 
C) 18 
D) 22 
E) 15

Question 5

A regression analysis is said to suffer from multicollinearity when:

Accepted Answer

A) the dependent and independent variables move in the same direction. 
B) two or more explanatory variables tend to move together. 
C) the degrees of freedom in the regression is equal to zero. 
D) the explanatory variables vary independently of one another. 
E) the correlation coefficient between the predicted and the explanatory variables is equal to zero. 
A) the dependent and independent variables move in the same direction. 
B) two or more explanatory variables tend to move together. 
C) the degrees of freedom in the regression is equal to zero. 
D) the explanatory variables vary independently of one another. 
E) the correlation coefficient between the predicted and the explanatory variables is equal to zero.

Question 6

A regression analysis is assumed to be free of serial correlation,if the Durbin-Watson statistic for the regression is approximately equal to _____.

Accepted Answer

A) −2 
B) 2 
C) 1 
D) −1 
E) 0 
A) −2 
B) 2 
C) 1 
D) −1 
E) 0

Question 7

A response bias occurs when:

Accepted Answer

A) responses do not reflect the true preferences and attitudes of respondents. 
B) insufficient sample size tends to lower the variability of the responses. 
C) the questions do not reflect the true intentions of the surveyor. 
D) different versions of the question are targeted to different segments of respondents. 
E) the large sample size makes it difficult for the surveyor to reconcile one response with another. 
A) responses do not reflect the true preferences and attitudes of respondents. 
B) insufficient sample size tends to lower the variability of the responses. 
C) the questions do not reflect the true intentions of the surveyor. 
D) different versions of the question are targeted to different segments of respondents. 
E) the large sample size makes it difficult for the surveyor to reconcile one response with another.

Question 8

In contrast to simple regression,multiple regression considers:

Accepted Answer

A) several dependent variables rather than one. 
B) several independent variables rather than one. 
C) more than one dependent and independent variable. 
D) multiple equation specifications in order to find the best statistical fit. 
E) both times-series data and cross-section data. 
A) several dependent variables rather than one. 
B) several independent variables rather than one. 
C) more than one dependent and independent variable. 
D) multiple equation specifications in order to find the best statistical fit. 
E) both times-series data and cross-section data.

Question 9

A firm has prepared two different models to be used for forecasting.One has a fairly large root mean squared error (RMSE),the other has a much smaller RMSE.Which forecast would you expect to give the more accurate prediction? Explain.

Accepted Answer

The model with the smaller RMSE will typ

Question 10

What role do leading indicators play in forecasting? What are some of their limitations?

Accepted Answer

A leading indicator is a variable that m

Question 11

(a)If a forecaster is analyzing sales of gasoline in a large city during the next two years,which time-series component is likely to be most important?

Accepted Answer

Over 10 years,the general grow

Question 12

Is it always worthwhile gathering more information about customer needs and preferences?

Accepted Answer

A) Yes,the cost of gathering information is always negligible. 
B) Yes,provided that this information is relevant to the firm's decisions. 
C) No,a good rule of thumb is not to spend on information more than 2% of what is at stake in the decision. 
D) No,the value of additional information must be compared to its additional cost. 
E) Yes,gathering more information enables the concerned firm to forecast the demand for its product more accurately. 
A) Yes,the cost of gathering information is always negligible. 
B) Yes,provided that this information is relevant to the firm's decisions. 
C) No,a good rule of thumb is not to spend on information more than 2% of what is at stake in the decision. 
D) No,the value of additional information must be compared to its additional cost. 
E) Yes,gathering more information enables the concerned firm to forecast the demand for its product more accurately.

Question 13

A regression coefficient measures:

Accepted Answer

A) the change in the dependent variable due to a unit change in a particular independent variable. 
B) the correlation between the dependent and independent variables. 
C) the correlation between the explanatory variables. 
D) the intercept of the regression line. 
E) the value of the predicted variable when the explanatory variables remain unchanged. 
A) the change in the dependent variable due to a unit change in a particular independent variable. 
B) the correlation between the dependent and independent variables. 
C) the correlation between the explanatory variables. 
D) the intercept of the regression line. 
E) the value of the predicted variable when the explanatory variables remain unchanged.

Question 14

What is regression analysis,and what are the major steps in using it?

Accepted Answer

Regression analysis is a set of statisti

Question 15

Which of the following is true of barometric models?

Accepted Answer

A) Barometric models accurately predict changes in trends. 
B) Barometric models search for patterns among different variables over time. 
C) Barometric models determine the magnitude of changes in different variables within a given time frame. 
D) Barometric models forecast changes in one variable induced by changes in other variables at a particular point of time. 
E) Barometric models explain changes in market outcomes induced by changes in demand or supply. 
A) Barometric models accurately predict changes in trends. 
B) Barometric models search for patterns among different variables over time. 
C) Barometric models determine the magnitude of changes in different variables within a given time frame. 
D) Barometric models forecast changes in one variable induced by changes in other variables at a particular point of time. 
E) Barometric models explain changes in market outcomes induced by changes in demand or supply.

Question 16

Which of the following can be used to correct for seasonality in time-series modeling?

Accepted Answer

A) Error terms 
B) Binomial coefficients 
C) Dummy variables 
D) Stochastic constants 
E) Confidence intervals 
A) Error terms 
B) Binomial coefficients 
C) Dummy variables 
D) Stochastic constants 
E) Confidence intervals

Question 17

If the sample variance of a set of observations is 225,its sample standard deviation is equal to _____.

Accepted Answer

A) 0.225 
B) 15 
C) 22.5 
D) 0.15 
E) 2.25 
A) 0.225 
B) 15 
C) 22.5 
D) 0.15 
E) 2.25

Question 18

Carefully explain why adjusted R2 is always less than R2.

Accepted Answer

Mathematically,the formula for adjusted

Question 19

An economic variable's trend over time indicates:

Accepted Answer

A) a general tendency for an event to occur. 
B) a steady movement in the variable. 
C) an irregular pattern in the movement of an economic variable. 
D) a fixed path along which the variable must move. 
E) a periodic variation in an economic variable. 
A) a general tendency for an event to occur. 
B) a steady movement in the variable. 
C) an irregular pattern in the movement of an economic variable. 
D) a fixed path along which the variable must move. 
E) a periodic variation in an economic variable.

Question 20

What are the major advantages and drawbacks of using controlled customer experiments to determine demand?

Accepted Answer

An advantage is that experiments require

If a study examines several different markets at the same time,and compares outcomes with conditions in each market,it is specifically using:

Which of the following is true of the t-statistic?

The following table shows the predicted and the actual sales of a firm in the quarters of a year. Table 4-1 -Calculate the sum of squared errors of the observations from Table 4-1.

A regression analysis is said to suffer from multicollinearity when:

A regression analysis is assumed to be free of serial correlation,if the Durbin-Watson statistic for the regression is approximately equal to _____.

A response bias occurs when:

In contrast to simple regression,multiple regression considers:

A firm has prepared two different models to be used for forecasting.One has a fairly large root mean squared error (RMSE),the other has a much smaller RMSE.Which forecast would you expect to give the more accurate prediction? Explain.

What role do leading indicators play in forecasting? What are some of their limitations?

(a)If a forecaster is analyzing sales of gasoline in a large city during the next two years,which time-series component is likely to be most important?

Is it always worthwhile gathering more information about customer needs and preferences?

A regression coefficient measures:

What is regression analysis,and what are the major steps in using it?

Which of the following is true of barometric models?

Which of the following can be used to correct for seasonality in time-series modeling?

If the sample variance of a set of observations is 225,its sample standard deviation is equal to _____.

Carefully explain why adjusted R2 is always less than R2.

An economic variable's trend over time indicates:

What are the major advantages and drawbacks of using controlled customer experiments to determine demand?

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Game Theory and Competitive Strategy

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

The Value of Information

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Auctions and Competitive Bidding

Linear Programming

Filters

Exam 4: Estimating and Forecasting Demand

If a study examines several different markets at the same time,and compares outcomes with conditions in each market,it is specifically using:

Which of the following is true of the t-statistic?

The following table shows the predicted and the actual sales of a firm in the quarters of a year. Table 4-1 -Calculate the sum of squared errors of the observations from Table 4-1.

A regression analysis is said to suffer from multicollinearity when:

A regression analysis is assumed to be free of serial correlation,if the Durbin-Watson statistic for the regression is approximately equal to _____.

A response bias occurs when:

In contrast to simple regression,multiple regression considers:

A firm has prepared two different models to be used for forecasting.One has a fairly large root mean squared error (RMSE),the other has a much smaller RMSE.Which forecast would you expect to give the more accurate prediction? Explain.

What role do leading indicators play in forecasting? What are some of their limitations?

(a)If a forecaster is analyzing sales of gasoline in a large city during the next two years,which time-series component is likely to be most important?

Is it always worthwhile gathering more information about customer needs and preferences?

A regression coefficient measures:

What is regression analysis,and what are the major steps in using it?

Which of the following is true of barometric models?

Which of the following can be used to correct for seasonality in time-series modeling?

If the sample variance of a set of observations is 225,its sample standard deviation is equal to _____.

Carefully explain why adjusted R2 is always less than R2.

An economic variable's trend over time indicates:

What are the major advantages and drawbacks of using controlled customer experiments to determine demand?

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Game Theory and Competitive Strategy

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

The Value of Information

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Auctions and Competitive Bidding

Linear Programming

Filters