Exam 3: Measuring and Using Demand

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 16.23 - (1.85 × ln P). At a price of $35, what is the predicted natural logarithm of the quantity (ln Q )?

A regression analysis estimated using Ordinary Least Squares (OLS)does all of the following except which one?

You are the manager of a local flower shop and you compete with one other flower shop in your area. You estimate the cross- price elasticity of demand between your flowers and your competitor's flowers to be 2.60. If your competitor increases the price of her flowers by 4 percent, you should expect which of the following?

All of the following are true of the error term in a regression equation except which one?

Big Poppa's BBQ Sandwiches is a local restaurant specializing in BBQ sandwiches. Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 1,576.55 - (25.50 × P). If Big Poppa's charges $8 per sandwich, the predicted quantity of sandwiches sold is ________

If a 1 percent decrease in the price of a good leads to a 0.50 percent increase in the quantity demanded, the price elasticity of demand for the good equals________ .

If the cross- price elasticity between Goods X and Y is - 2.0, the goods are _________ _ and an increase in the price of Good X will cause a(n)_________ in the quantity demanded of Good Y.

Because there will always be some random factors of demand that we cannot capture, which of the following is added to the regression equation?

If Excel estimated the 95 percent confidence interval for a slope coefficient for the price to run from - 2.73 to - 1.67, which of the following is true?

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 15.53 - (3.85 × ln P). Which of the following statements is true?

Using Excel, Tough Scrubbers estimates the quarterly demand for their kitchen sponges to be Q^d = 5,600 - (25 × P). If the actual demand for their kitchen sponges is 5,535 when a price of $4 per sponge is charge, what is the estimated residual?

The price elasticity of demand for Best Paints one gallon sized paint cans is 0.79. If Best Paints increased the price of their gallon sized paint cans by 10 percent, which of the following is expected to occur?

You are the owner of a restaurant located in a beach resort in Hawaii and want to use regression analysis to estimate the demand for your fresh seafood dinners. You have collected data on the daily quantity of seafood dinners sold over the last summer season. In order to correctly specify your regression equation, which of the following variables should be considered?

Using Excel, Big Poppa's estimates the weekly demand function for its BBQ sandwiches to be Q^d = 1,576.55 - (25.50 × P). In reference to the estimated slope coefficient for price b^, which of the following standard errors gives you the most confidence that the estimated slope coefficient is close to the true slope coefficient?

Using Excel, Best Paints estimates the log- linear weekly demand function for their gallon sized paints to be ln Q^d = 12.53 - (2.25 × ln P). If Best Paints increases the price of their gallon sized paints by 5 percent, which of the following will occur?

The owner of Mr. Piggy's Bacon estimates that the price elasticity of demand for a package of their bacon to be 3.48. In relation to the price elasticity of demand for the entire bacon market, which of the following is most likely true?

You are the owner of a firm that makes generic paper products. You estimate the income elasticity for your paper towels to be - 1.5. An upcoming economic expansion is expected to increase consumer income by 3 percent. As a result of the economic expansion, you should expect which of the following to occur?

For a given slope coefficient, a 95 percent confidence interval will be larger than a 99 percent confidence interval.

If a 10 percent increase in consumer incomes leads to a 15 percent increase in the quantity demanded for a good, the good is a _________ good with an income elasticity of________ .

Big City Java is a local coffee bar. Using Excel, the manager of Big City Java estimates the weekly demand function for their grand mocha coffees to be Q^d = 650 - (15.25 × P). The estimated regression equation suggests that if Big City Java decreased its price of grana mocha coffees from $7.50 to $6.50, the predicted quantity demanded of coffees would________.