Question 1

An equation's root mean squared error is:

Accepted Answer

A) a measure of how closely its predictions match actual outcomes. 
B) a measure of how closely the equation explains past data. 
C) inversely proportional to the difference between the actual value and the predicted value. 
D) derived from the R2 statistic. 
E) equal to the square root of the sum of squared errors. 
A) a measure of how closely its predictions match actual outcomes. 
B) a measure of how closely the equation explains past data. 
C) inversely proportional to the difference between the actual value and the predicted value. 
D) derived from the R2 statistic. 
E) equal to the square root of the sum of squared errors.

Question 2

Computing the F-statistic allows one to:

Accepted Answer

A) measure the forecasting accuracy of the regression equation. 
B) determine which variable contributes the most explanatory power to the regression. 
C) measure the degrees of freedom in the regression. 
D) predict the increased explanation of any additional variables that might be included. 
E) test the overall statistical significance of the regression equation. 
A) measure the forecasting accuracy of the regression equation. 
B) determine which variable contributes the most explanatory power to the regression. 
C) measure the degrees of freedom in the regression. 
D) predict the increased explanation of any additional variables that might be included. 
E) test the overall statistical significance of the regression equation.

Question 3

How can regression analysis use uncontrolled data to estimate demand?

Accepted Answer

Regression analysis uses uncontrolled da

Question 4

Business cycles are:

Accepted Answer

A) short-term patterns of increases and decreases in economic activity around a general trend. 
B) irregular fluctuations in the level of economic activity,which rarely occur anymore. 
C) predictable economic expansions above the long-term trend. 
D) abrupt and unexpected departures from the current economic trend. 
E) periodic fluctuations in aggregate demand that depend on the time of the year. 
A) short-term patterns of increases and decreases in economic activity around a general trend. 
B) irregular fluctuations in the level of economic activity,which rarely occur anymore. 
C) predictable economic expansions above the long-term trend. 
D) abrupt and unexpected departures from the current economic trend. 
E) periodic fluctuations in aggregate demand that depend on the time of the year.

Question 5

The standard error of the regression:

Accepted Answer

A) measures the explanatory power of the regression equation and lies between 0 and 1. 
B) measures the explained variation in the dependent variable. 
C) measures the unexplained variation in the dependent variable. 
D) is equal to the sum of squared errors minus the total sum of squares. 
E) is equal to the slope of the regression equation. 
A) measures the explanatory power of the regression equation and lies between 0 and 1. 
B) measures the explained variation in the dependent variable. 
C) measures the unexplained variation in the dependent variable. 
D) is equal to the sum of squared errors minus the total sum of squares. 
E) is equal to the slope of the regression equation.

Question 6

You have taken over your parents' small dry-cleaning shop,and are interested in forecasting demand for your services.Your parents never quite got around to trying to measure demand,but they have kept extensive price and sales records.Using this data,you employ multiple regression techniques and estimate the following equation:
Q = 0.95 − 0.6P + 0.9Y + 0.25Pc,
where Q is the number of shirts laundered per week,P is the price in dollars of a laundered shirt,Y is the per capita income in the local area,and Pc is the price charged by another dry cleaner two blocks away.The number of observations is 39 (i.e. ,nine months of weekly data).The equation's R2 is 0.85,the standard error of the estimate is 200,and the standard errors for the variables are 0.45,0.15,0.39,and 0.18 respectively.
(a)Interpret the demand equation and discuss the associated regression statistics.

Accepted Answer

From the data given,the coefficient is 0

Question 7

Which of the following is true of uncontrolled market data?

Accepted Answer

A) Uncontrolled market data is always more authentic than controlled market data. 
B) Uncontrolled market data shows how changes in various economic variables affect the outcomes in a single market. 
C) Uncontrolled market data has little information value. 
D) Uncontrolled market data reflects changes in multiple factors at the same time. 
E) Valid causal predictions must not be based on uncontrolled data. 
A) Uncontrolled market data is always more authentic than controlled market data. 
B) Uncontrolled market data shows how changes in various economic variables affect the outcomes in a single market. 
C) Uncontrolled market data has little information value. 
D) Uncontrolled market data reflects changes in multiple factors at the same time. 
E) Valid causal predictions must not be based on uncontrolled data.

Question 8

What are the major advantages and drawbacks of using controlled market studies to estimate demand?

Accepted Answer

The major advantage is that a firm can a

Question 9

What role does uncertainty play in forecasting? Explain.

Accepted Answer

The future is uncertain.No model or fore

Question 10

A time-series model attempts to identify:

Accepted Answer

A) patterns of changes in a single variable over time. 
B) possible links between a dependent variable and a single independent variable over time. 
C) possible links between a dependent variable and one or more independent variables over time. 
D) the key factors that help predict future economic events. 
E) patterns of forecast errors over time. 
A) patterns of changes in a single variable over time. 
B) possible links between a dependent variable and a single independent variable over time. 
C) possible links between a dependent variable and one or more independent variables over time. 
D) the key factors that help predict future economic events. 
E) patterns of forecast errors over time.

Question 11

Rail Tours,Inc.sells packaged tours on rail lines,including gourmet meals and a reserved bed.The most popular tours are in the autumn,when foliage colors are at their peak.The overnight package for Saturday and Sunday morning are especially heavily booked.A market survey firm has just completed a study in which they conclude that if the package cost is $200 per couple,then Rail Tours can expect to sell 400 spaces on a typical Saturday.If the price is raised to $225,then unit sales will drop to 390.If the price is raised further to $250,unit sales drop to 380.
(a)From the data given,write down the demand equation and determine its intercepts.Are there any precautions needed when operating at the extreme ends of the demand curve?

Accepted Answer

Tours are normal goo

Question 12

What are the different categories into which a time-series pattern can be broken? Briefly describe each.

Accepted Answer

A time-series can be broken into four co

Question 13

How would a forecaster determine which functional form of an equation to use to predict a variable?

Accepted Answer

A forecaster would most likely use regre

Question 14

Calculate the degrees of freedom in a regression equation if the number of observations is 6 and the number of coefficients in the equation is 2.

Accepted Answer

A) 12 
B) 4 
C) 8 
D) 3 
E) 0.33 
A) 12 
B) 4 
C) 8 
D) 3 
E) 0.33

Question 15

What are the two main categories of forecasting models? How do they differ?

Accepted Answer

Forecasting models often are divided int

Question 16

Liza is a manager of a leading soft drink manufacturing firm.Liza uses 10 months data and estimates the following demand equation:
Q = 10 - 0.25P + 1.5Y + 0.5PR
(2)( 0.50)(0.75)(0.17)
where P is the price of the soft drink manufactured by Liza's firm,Y refers to household per capita income,and PR is the price of a rival soft drink manufacturing firm.The standard errors of the coefficients are given in the parentheses.Which of the explanatory variables have significant effects on the demand for soft drink manufactured by Liza's firm? Explain.
(At 95% confidence level,the relevant t-statistic for 6 degrees of freedom is 1.94)

Accepted Answer

In order to determine the significance o

Question 17

The equation Q = a + bt + ct2 represents:

Accepted Answer

A) a quadratic trend. 
B) a linear trend. 
C) a smooth downward trend. 
D) a harmonic trend. 
E) an exponential trend. 
A) a quadratic trend. 
B) a linear trend. 
C) a smooth downward trend. 
D) a harmonic trend. 
E) an exponential trend.

Question 18

What are the major sources of information that can be used to estimate demand? What are the major benefits and drawbacks of each?

Accepted Answer

Consumer interviews and surveys are a di

Question 19

Why is identification a problem in demand estimation? What management errors might occur if a demand relationship is not properly identified?

Accepted Answer

Identification is the concept that there

Question 20

Heteroscedasticity occurs when:

Accepted Answer

A) the variance of the random error is non-constant over the sample. 
B) the regression coefficient estimates are highly unstable. 
C) the random errors are correlated over time. 
D) two or more explanatory variables are highly correlated. 
E) the dependent and the explanatory variables are highly uncorrelated. 
A) the variance of the random error is non-constant over the sample. 
B) the regression coefficient estimates are highly unstable. 
C) the random errors are correlated over time. 
D) two or more explanatory variables are highly correlated. 
E) the dependent and the explanatory variables are highly uncorrelated.

An equation's root mean squared error is:

Computing the F-statistic allows one to:

How can regression analysis use uncontrolled data to estimate demand?

Business cycles are:

The standard error of the regression:

Which of the following is true of uncontrolled market data?

What are the major advantages and drawbacks of using controlled market studies to estimate demand?

What role does uncertainty play in forecasting? Explain.

A time-series model attempts to identify:

What are the different categories into which a time-series pattern can be broken? Briefly describe each.

How would a forecaster determine which functional form of an equation to use to predict a variable?

Calculate the degrees of freedom in a regression equation if the number of observations is 6 and the number of coefficients in the equation is 2.

What are the two main categories of forecasting models? How do they differ?

The equation Q = a + bt + ct2 represents:

What are the major sources of information that can be used to estimate demand? What are the major benefits and drawbacks of each?

Why is identification a problem in demand estimation? What management errors might occur if a demand relationship is not properly identified?

Heteroscedasticity occurs when:

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

An equation's root mean squared error is:

Computing the F-statistic allows one to:

How can regression analysis use uncontrolled data to estimate demand?

Business cycles are:

The standard error of the regression:

Which of the following is true of uncontrolled market data?

What are the major advantages and drawbacks of using controlled market studies to estimate demand?

What role does uncertainty play in forecasting? Explain.

A time-series model attempts to identify:

What are the different categories into which a time-series pattern can be broken? Briefly describe each.

How would a forecaster determine which functional form of an equation to use to predict a variable?

Calculate the degrees of freedom in a regression equation if the number of observations is 6 and the number of coefficients in the equation is 2.

What are the two main categories of forecasting models? How do they differ?

The equation Q = a + bt + ct2 represents:

What are the major sources of information that can be used to estimate demand? What are the major benefits and drawbacks of each?

Why is identification a problem in demand estimation? What management errors might occur if a demand relationship is not properly identified?

Heteroscedasticity occurs when:

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