Question 1

When R2 = .87, this means that the variation of the independent variables) explains 87% of the total variation in the dependent variable.

Accepted Answer

A) True 
 B)False

Question 2

R2 indicates how the variation in the independent variables caused the variation in the dependent variable.

Accepted Answer

A) True 
 B)False

Question 3

Greater confidence can be placed in market experiments as opposed to surveys because:

Accepted Answer

A)  market experiments are easier to conduct than market surveys. 
B)  market experiments are cheaper to conduct than market surveys. 
C)  market experiments indicate how consumers react while market surveys indicate how consumers think they will react. 
D)  market experiments are inherently risky and expensive 
E)  None of the above 
A)  market experiments are easier to conduct than market surveys. 
B)  market experiments are cheaper to conduct than market surveys. 
C)  market experiments indicate how consumers react while market surveys indicate how consumers think they will react. 
D)  market experiments are inherently risky and expensive 
E)  None of the above

Question 4

Using linear regression analysis, Tim's Home Supply Company estimated its demand function for paint with the following results.

Accepted Answer

Where: Q_P = Gallons of paint sold per yea

Question 5

In market experiments, those variables that are anticipated to be determinants of the quantity sold of a product are changed by the seller.

Accepted Answer

A) True 
 B)False

Question 6

A statistical technique used to "fit" an equation to empirical data in order to estimate the relationship between a dependent variable and more than one independent variable is called multiple regression.

Accepted Answer

A) True 
 B)False

Question 7

Market surveys can be quite useful even when questionnaires require very fine discrimination by the respondents.

Accepted Answer

A) True 
 B)False

Question 8

In a market experiment, consumers fill out questionnaires which ask how they would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product.

Accepted Answer

A) True 
 B)False

Question 9

A market survey is a questionnaire, either filled out by respondents or administered by an interviewer, which tells how consumers think they will react if certain changes in demand variables take place.

Accepted Answer

A) True 
 B)False

Question 10

When the independent variables are expressed in log form and not squared in order to use linear regression to estimate the coefficients, then we are assuming that the elasticity of demand for that variable is constant.

Accepted Answer

A) True 
 B)False

Question 11

Using linear regression analysis, Jack's Boot Company estimated its demand function for a popular riding boot and achieved the following results:
QB = 445 - 6.57PB + 1.35PC + .25A
where
QB = quantity sold per month of the riding boots
PB = price of the riding boot
PC = price of a competing company's boot
A = monthly advertising expenditures
a. How can Jack's use this information to find its price, income and cross price elasticity of demand?
b. What would an R2 of 0.92 indicate?
c. Can you think of a potentially important variable that Jack's has ignored in its demand analysis?

Accepted Answer

a. Jack's can substitute values for its

Question 12

R2, the coefficient of determination:

Accepted Answer

A)  is a statistical technique used to "fit" an equation to empirical data in order to estimate the relationship between a dependent variable and more than one independent variable. 
B)  indicates how the variation in the independent variables) caused the variation in the dependent variable. 
C)  measures the proportion of the total variation in the dependent variable that is "caused" by the variation of the independent variables). 
D)  measures the proportion of the total variation in the independent variables) that is "explained" by the variation of the dependent variable. 
E)  measures the proportion of the total variation in the dependent variable that is "explained" by the variation of the independent variables). 
A)  is a statistical technique used to "fit" an equation to empirical data in order to estimate the relationship between a dependent variable and more than one independent variable. 
B)  indicates how the variation in the independent variables) caused the variation in the dependent variable. 
C)  measures the proportion of the total variation in the dependent variable that is "caused" by the variation of the independent variables). 
D)  measures the proportion of the total variation in the independent variables) that is "explained" by the variation of the dependent variable. 
E)  measures the proportion of the total variation in the dependent variable that is "explained" by the variation of the independent variables).

Question 13

We can have a greater confidence in the predictive accuracy of the regression model, the closer the observed data points lie to the regression line.

Accepted Answer

A) True 
 B)False

Question 14

In demand estimation, when regression analysis is employed, the dependent variable is the quantity of some product purchased or sold per unit of time; and the independent variables usually include such items as price of the product, prices of related goods, consumer income, advertising expenditure and credit terms.

Accepted Answer

A) True 
 B)False

Question 15

A log form demand function for carpet was estimated with the following results:

Accepted Answer

Where Q = square feet of carpet
P = Pric

Question 16

Using linear regression analysis, Empire Roofing Company estimated its demand function for flat rolled roofing and achieved the following results:
QR = 244 - .1057PR + 1.35PC + .025I
where:
QR = quantity in thousands of square feet per year
PR = price in thousands per roofing job
PC = price of a competing company's average bid in thousands)
I = average annual household income
a. How can Empire use this information to find its price, income and cross price elasticity of demand?
b. What would an R2 of 0.72 indicate?
c. Can you think of a potentially important variable that Empire has ignored in its demand analysis?

Accepted Answer

a. Empire can substitute values for its

Question 17

In a market experiment:

Accepted Answer

A)  the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
B)  consumers fill out questionnaires that ask how they would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
C)  interviewers fill out questionnaires that ask how consumers would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
D)  those variables that are anticipated to be determinants of the quantity sold of a product are held constant by the seller while other variables within the demand function are changed. 
E)  non-price variables within the demand function are changed to see how consumers will react. 
A)  the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
B)  consumers fill out questionnaires that ask how they would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
C)  interviewers fill out questionnaires that ask how consumers would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product. 
D)  those variables that are anticipated to be determinants of the quantity sold of a product are held constant by the seller while other variables within the demand function are changed. 
E)  non-price variables within the demand function are changed to see how consumers will react.

When R² = .87, this means that the variation of the independent variables) explains 87% of the total variation in the dependent variable.

R² indicates how the variation in the independent variables caused the variation in the dependent variable.

Greater confidence can be placed in market experiments as opposed to surveys because:

Using linear regression analysis, Tim's Home Supply Company estimated its demand function for paint with the following results.

In market experiments, those variables that are anticipated to be determinants of the quantity sold of a product are changed by the seller.

A statistical technique used to "fit" an equation to empirical data in order to estimate the relationship between a dependent variable and more than one independent variable is called multiple regression.

Market surveys can be quite useful even when questionnaires require very fine discrimination by the respondents.

In a market experiment, consumers fill out questionnaires which ask how they would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product.

A market survey is a questionnaire, either filled out by respondents or administered by an interviewer, which tells how consumers think they will react if certain changes in demand variables take place.

When the independent variables are expressed in log form and not squared in order to use linear regression to estimate the coefficients, then we are assuming that the elasticity of demand for that variable is constant.

R², the coefficient of determination:

We can have a greater confidence in the predictive accuracy of the regression model, the closer the observed data points lie to the regression line.

A log form demand function for carpet was estimated with the following results:

In a market experiment:

Introduction, Basic Principles, and Methodology

Revenue of the Firm

Economic Forecasting

Production Analysis

Cost of Production

Profit Analysis of the Firm

Perfect Competition and Monopoly

Monopolistic Competition and Oligopoly

Games, Information and Strategy

Topics in Pricing and Profit Analysis

Factor Markets

Fundamentals of Project Evaluation

Risk in Project Analysis

Economics of Public Sector Decisions

Legal and Regulatory Environment of the Firm

Filters

Exam 3: Topics in Demand Analysis and Estimation

When R2 = .87, this means that the variation of the independent variables) explains 87% of the total variation in the dependent variable.

R2 indicates how the variation in the independent variables caused the variation in the dependent variable.

Greater confidence can be placed in market experiments as opposed to surveys because:

Using linear regression analysis, Tim's Home Supply Company estimated its demand function for paint with the following results.

In market experiments, those variables that are anticipated to be determinants of the quantity sold of a product are changed by the seller.

A statistical technique used to "fit" an equation to empirical data in order to estimate the relationship between a dependent variable and more than one independent variable is called multiple regression.

Market surveys can be quite useful even when questionnaires require very fine discrimination by the respondents.

In a market experiment, consumers fill out questionnaires which ask how they would react if the seller changes those variables that are anticipated to be determinants of the quantity sold of a product.

A market survey is a questionnaire, either filled out by respondents or administered by an interviewer, which tells how consumers think they will react if certain changes in demand variables take place.

When the independent variables are expressed in log form and not squared in order to use linear regression to estimate the coefficients, then we are assuming that the elasticity of demand for that variable is constant.

R2, the coefficient of determination:

We can have a greater confidence in the predictive accuracy of the regression model, the closer the observed data points lie to the regression line.

A log form demand function for carpet was estimated with the following results:

In a market experiment:

Introduction, Basic Principles, and Methodology

Revenue of the Firm

Economic Forecasting

Production Analysis

Cost of Production

Profit Analysis of the Firm

Perfect Competition and Monopoly

Monopolistic Competition and Oligopoly

Games, Information and Strategy

Topics in Pricing and Profit Analysis

Factor Markets

Fundamentals of Project Evaluation

Risk in Project Analysis

Economics of Public Sector Decisions

Legal and Regulatory Environment of the Firm

Filters

When R² = .87, this means that the variation of the independent variables) explains 87% of the total variation in the dependent variable.

R² indicates how the variation in the independent variables caused the variation in the dependent variable.

R², the coefficient of determination: