Question 1

The coefficient of determination is equal to the explained variation in the Y variable divided by the unexplained variation in the Y variable.

Accepted Answer

A) True 
 B)False

Question 2

In the linear function Y = a + bX, Y is the intercept and X is the slope of the function.

Accepted Answer

A) True 
 B)False

Question 3

One difference between foreign and domestic demand for a commodity exported by the United States is that

Accepted Answer

A)  foreign demand is unrelated to the dollar price of the commodity. 
B)  foreign demand depends on the exchange rate between domestic and foreign currencies. 
C)  the domestic price elasticity of demand depends on the availability of substitute commodities. 
D)  foreign-made commodities are not good substitutes for U.S.-made commodities. 
A)  foreign demand is unrelated to the dollar price of the commodity. 
B)  foreign demand depends on the exchange rate between domestic and foreign currencies. 
C)  the domestic price elasticity of demand depends on the availability of substitute commodities. 
D)  foreign-made commodities are not good substitutes for U.S.-made commodities.

Question 4

The identification problem would not prevent estimation of a demand curve from price and quantity data if, over the time period sampled, the only thing that varied was the

Accepted Answer

A)  technology of production. 
B)  level of consumer income. 
C)  price(s) of substitutes and complements. 
D)  level of advertising expenditures. 
A)  technology of production. 
B)  level of consumer income. 
C)  price(s) of substitutes and complements. 
D)  level of advertising expenditures.

Question 5

If R2 is equal to 1, then the coefficient of correlation must also be equal to 1.

Accepted Answer

A) True 
 B)False

Question 6

Ordinary least squares maximizes the coefficient of determination.

Accepted Answer

A) True 
 B)False

Question 7

A t test on the slope takes as its alternative hypothesis the position that there is no relationship between the dependent variable and the relevant independent variable.

Accepted Answer

A) True 
 B)False

Question 8

One of the crucial assumptions of regression analysis is that the error term has a normal probability distribution.

Accepted Answer

A) True 
 B)False

Question 9

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and advertising (A) from the data set that follows.
 $$\begin{array} { l l } 
Q & A \
2 & 0 \
3 & 1 \
5 & 4 \
10 & 7
\end{array}$$

Accepted Answer

The answer of Use the method of least squares to...

Question 10

The coefficient of correlation is

Accepted Answer

A)  a measure of the strength and direction of the linear relationship between two variables. 
B)  equal to the size of the change in the Y variable that is caused by a change in the X variable. 
C)  is equal to the proportion of the variation in the Y variable that is due to variations in the X variable. 
D)  All of the above are correct. 
A)  a measure of the strength and direction of the linear relationship between two variables. 
B)  equal to the size of the change in the Y variable that is caused by a change in the X variable. 
C)  is equal to the proportion of the variation in the Y variable that is due to variations in the X variable. 
D)  All of the above are correct.

Question 11

Just the Fax, Inc. (JTF) has hired you as a consultant to analyze the demand for its line of telecommunications devices in 35 different market areas. The available data set includes observations on the number of thousands of units sold by JTF per month (QX), the price per unit charged by JTF (PX), the average unit price of competing brands (PZ), monthly advertising expenditures by JTF (A), and average gross sales (in thousands of dollars) of businesses in the market area (i). The results of a regression analysis (with standard errors in parenthesis) are given below.
 $$Q x = \begin{array} { r r r c c } 
300 & - 6 P _ { X } & + 2 P _ { Z } & + 0.04 A & + 0.01 I \
( 200 ) & ( 1.8 ) & ( 0.8 ) & ( 0.03 ) & ( 0.004 )
\end{array}$$ $$R ^ { 2 } = 0.91 \quad \text { S.E.E. } = 3.6$$ (i)Evaluate the statistical significance of the equation as a whole and of each of its coefficients.
(ii)The average values of the independent variables in the data set used to estimate the equation are PX = $195, PZ = $225, A = $11,000, and I = $200,000. Calculate a point estimate of JTF's average sales and a 95 percent interval estimate of sales based on these values.

Accepted Answer

Question 12

The estimation of consumer demand by monitoring actual purchasing and consumption behavior by a sample of consumers is called the

Accepted Answer

A)  consumer survey approach. 
B)  observational research approach. 
C)  consumer clinic approach. 
D)  market experiment approach. 
A)  consumer survey approach. 
B)  observational research approach. 
C)  consumer clinic approach. 
D)  market experiment approach.

Question 13

Application of simple linear regression analysis to the estimation of a demand equation has yielded the following:
Q = 24 - 2P
If the current product price is P = $6 and the quantity sold per time period is Q = 10, then the error (e) for the current time period is equal to

Accepted Answer

A)  1. 
B)  -1. 
C)  2. 
D)  -2. 
A)  1. 
B)  -1. 
C)  2. 
D)  -2.

Question 14

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and price (P) from the data set that follows.
 $$\begin{array} { l l } 
Q & P \
2 & 6 \
3 & 5 \
5 & 3 \
2 & 7
\end{array}$$

Accepted Answer

The answer of Use the method of least squares to...

Question 15

Omission of an important independent variable from a multiple regression model tends to bias estimates.

Accepted Answer

A) True 
 B)False

Question 16

Heteroscedasticity refers to violation of the assumption that the mean of the error terms is zero.

Accepted Answer

A) True 
 B)False

Question 17

The application of multiple regression analysis to a time-series data set yields a calculated Durbin-Watson statistic that is equal to 2.00. From this result, it is clear that

Accepted Answer

A)  multicollinearity is present. 
B)  multicollinearity is absent. 
C)  autocorrelation is present. 
D)  autocorrelation is absent. 
A)  multicollinearity is present. 
B)  multicollinearity is absent. 
C)  autocorrelation is present. 
D)  autocorrelation is absent.

Question 18

Behavioral economics extends the understanding of economic behavior by considering which of the following factors?

Accepted Answer

A)  Cognitive 
B)  Emotional 
C)  Rational 
D)  Physiological 
A)  Cognitive 
B)  Emotional 
C)  Rational 
D)  Physiological

Question 19

If the t ratio for the slope of a simple linear regression equation is equal to 3.614 and the critical values of the t distribution at the 1 percent and 5 percent levels of significance, respectively, are 3.499 and 2.365, then the slope is

Accepted Answer

A)  not significantly different from zero. 
B)  significantly different from zero at both the 1 percent and the 5 percent levels. 
C)  significantly different from zero at the 1 percent level but not at the 5 percent level. 
D)  significantly different from zero at the 5 percent level but not at the 1 percent level. 
A)  not significantly different from zero. 
B)  significantly different from zero at both the 1 percent and the 5 percent levels. 
C)  significantly different from zero at the 1 percent level but not at the 5 percent level. 
D)  significantly different from zero at the 5 percent level but not at the 1 percent level.

Question 20

If one finds estimate of b to be equal with standard error , using a critical value of 1.96, what is the confidence interval for the true b coefficient?

Accepted Answer

A)  (0.52, 2.48) 
B)  (-0.98, 0.98) 
C)  (-0.46, 3.46) 
D)  (1.00, 2,00) 
A)  (0.52, 2.48) 
B)  (-0.98, 0.98) 
C)  (-0.46, 3.46) 
D)  (1.00, 2,00)

The coefficient of determination is equal to the explained variation in the Y variable divided by the unexplained variation in the Y variable.

In the linear function Y = a + bX, Y is the intercept and X is the slope of the function.

One difference between foreign and domestic demand for a commodity exported by the United States is that

The identification problem would not prevent estimation of a demand curve from price and quantity data if, over the time period sampled, the only thing that varied was the

If R² is equal to 1, then the coefficient of correlation must also be equal to 1.

Ordinary least squares maximizes the coefficient of determination.

A t test on the slope takes as its alternative hypothesis the position that there is no relationship between the dependent variable and the relevant independent variable.

One of the crucial assumptions of regression analysis is that the error term has a normal probability distribution.

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and advertising (A) from the data set that follows. Q A 2 0 3 1 5 4 10 7

The coefficient of correlation is

The estimation of consumer demand by monitoring actual purchasing and consumption behavior by a sample of consumers is called the

Application of simple linear regression analysis to the estimation of a demand equation has yielded the following: Q = 24 - 2P If the current product price is P = $6 and the quantity sold per time period is Q = 10, then the error (e) for the current time period is equal to

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and price (P) from the data set that follows. Q P 2 6 3 5 5 3 2 7

Omission of an important independent variable from a multiple regression model tends to bias estimates.

Heteroscedasticity refers to violation of the assumption that the mean of the error terms is zero.

The application of multiple regression analysis to a time-series data set yields a calculated Durbin-Watson statistic that is equal to 2.00. From this result, it is clear that

Behavioral economics extends the understanding of economic behavior by considering which of the following factors?

If the t ratio for the slope of a simple linear regression equation is equal to 3.614 and the critical values of the t distribution at the 1 percent and 5 percent levels of significance, respectively, are 3.499 and 2.365, then the slope is

If one finds estimate of b to be equal with standard error , using a critical value of 1.96, what is the confidence interval for the true b coefficient?

The Nature and Scope of Managerial Economics

Demand, Supply, and Equilibrium Analysis

Optimization Techniques and New Management Tools

Demand Theory

Demand Forecasting

Production Theory and Estimation

Cost Theory and Estimation

Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition

Oligopoly and Firm Architecture

Game Theory and Strategic Behavior

Pricing Practices

Regulation and Antitrust: The Role of Government in the Economy

Risk Analysis

Long-Run Investment Decisions: Capital Budgeting

Filters

Exam 5: Demand Estimation

The coefficient of determination is equal to the explained variation in the Y variable divided by the unexplained variation in the Y variable.

In the linear function Y = a + bX, Y is the intercept and X is the slope of the function.

One difference between foreign and domestic demand for a commodity exported by the United States is that

The identification problem would not prevent estimation of a demand curve from price and quantity data if, over the time period sampled, the only thing that varied was the

If R2 is equal to 1, then the coefficient of correlation must also be equal to 1.

Ordinary least squares maximizes the coefficient of determination.

A t test on the slope takes as its alternative hypothesis the position that there is no relationship between the dependent variable and the relevant independent variable.

One of the crucial assumptions of regression analysis is that the error term has a normal probability distribution.

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and advertising (A) from the data set that follows. Q A 2 0 3 1 5 4 10 7

The coefficient of correlation is

The estimation of consumer demand by monitoring actual purchasing and consumption behavior by a sample of consumers is called the

Application of simple linear regression analysis to the estimation of a demand equation has yielded the following: Q = 24 - 2P If the current product price is P = $6 and the quantity sold per time period is Q = 10, then the error (e) for the current time period is equal to

Use the method of least squares to calculate the intercept and slope of the linear relationship between quantity demanded (Q) and price (P) from the data set that follows. Q P 2 6 3 5 5 3 2 7

Omission of an important independent variable from a multiple regression model tends to bias estimates.

Heteroscedasticity refers to violation of the assumption that the mean of the error terms is zero.

The application of multiple regression analysis to a time-series data set yields a calculated Durbin-Watson statistic that is equal to 2.00. From this result, it is clear that

Behavioral economics extends the understanding of economic behavior by considering which of the following factors?

If the t ratio for the slope of a simple linear regression equation is equal to 3.614 and the critical values of the t distribution at the 1 percent and 5 percent levels of significance, respectively, are 3.499 and 2.365, then the slope is

If one finds estimate of b to be equal with standard error , using a critical value of 1.96, what is the confidence interval for the true b coefficient?

The Nature and Scope of Managerial Economics

Demand, Supply, and Equilibrium Analysis

Optimization Techniques and New Management Tools

Demand Theory

Demand Forecasting

Production Theory and Estimation

Cost Theory and Estimation

Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition

Oligopoly and Firm Architecture

Game Theory and Strategic Behavior

Pricing Practices

Regulation and Antitrust: The Role of Government in the Economy

Risk Analysis

Long-Run Investment Decisions: Capital Budgeting

Filters

If R² is equal to 1, then the coefficient of correlation must also be equal to 1.