Question 1

Sensitivity analysis shows how sensitive an outcome is to different variables within an equation.

Accepted Answer

A) True 
 B)False  TRUE

Question 2

One of the problems in using questionnaires is that respondents may not give truthful answers.

Accepted Answer

A) True 
 B)False  TRUE

Question 3

If you were to estimate a demand function using econometric methods, what data would you require?

Accepted Answer

The dependent variable would be a time series of product sales. The independent variables could include:
• a time series of product price (this is the minimum data needed)
• a time series of advertising expenditure
• a time series of competitors' prices
• a time series of household income
• and other relevant variables such as the interest rate, distribution of income, unemployment, etc.

Question 4

In a demand function, which of the following would not be an independent variable?

Accepted Answer

A)  Other prices 
B)  Price 
C)  Income 
D)  Demand 
A)  Other prices 
B)  Price 
C)  Income 
D)  Demand

Question 5

The trend, cyclical and seasonal factors can all be extracted from a time series.

Accepted Answer

A) True 
 B)False

Question 6

Which of these three methods suffers from the major drawback that relationships that held in the past will not necessarily hold in the future?

Accepted Answer

A)  Market observations 
B)  Market surveys 
C)  Market experiments 
A)  Market observations 
B)  Market surveys 
C)  Market experiments

Question 7

What are market observations?

Accepted Answer

Firms have masses of actual market data

Question 8

A market experiment might involve asking customers their opinions of different packaging.

Accepted Answer

A) True 
 B)False

Question 9

Regression analysis is a statistical technique which shows how one variable is related to one or more other variables.

Accepted Answer

A) True 
 B)False

Question 10

Barometric forecasting is a statistical technique which shows how one variable is related to one or more other variables.

Accepted Answer

A) True 
 B)False

Question 11

A market survey should only have complex questions.

Accepted Answer

A) True 
 B)False

Question 12

If we are estimating a demand function, we can use sensitivity analysis to

Accepted Answer

A)  forecast future values of the independent variables. 
B)  estimate the coefficients of the independent variables. 
C)  assess how much the dependent variable is affected by each of the independent variables. 
D)  forecast the value of the dependent variable. 
A)  forecast future values of the independent variables. 
B)  estimate the coefficients of the independent variables. 
C)  assess how much the dependent variable is affected by each of the independent variables. 
D)  forecast the value of the dependent variable.

Question 13

The branch of economics which analyses a time series to predict the future values of that series is called econometrics.

Accepted Answer

A) True 
 B)False

Question 14

What are the main components into which a time series may be split?

Accepted Answer

If we have a series of observations over

Question 15

Observations of market behaviour involve information gathered about consumers from the day- to- day activities of the business within the market.

Accepted Answer

A) True 
 B)False

Question 16

What is barometric forecasting?

Accepted Answer

A barometer measures changes in air pres

Question 17

When creating a demand function, demand itself is an independent variable.

Accepted Answer

A) True 
 B)False

Question 18

The major drawback of market experiments is that consumers might behave differently because they are being observed.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would not shift a demand curve?

Accepted Answer

A)  A change in production methods 
B)  A change in income 
C)  A successful period of advertising 
D)  All of the above could shift a demand curve. 
A)  A change in production methods 
B)  A change in income 
C)  A successful period of advertising 
D)  All of the above could shift a demand curve.

Question 20

What are the main drawbacks of making plans using econometric data analysis methods?

Accepted Answer

• The method is reliant upon past data b

Exam 7: Demand and the Firm

Sensitivity analysis shows how sensitive an outcome is to different variables within an equation.

One of the problems in using questionnaires is that respondents may not give truthful answers.

If you were to estimate a demand function using econometric methods, what data would you require?

In a demand function, which of the following would not be an independent variable?

The trend, cyclical and seasonal factors can all be extracted from a time series.

Which of these three methods suffers from the major drawback that relationships that held in the past will not necessarily hold in the future?

What are market observations?

A market experiment might involve asking customers their opinions of different packaging.

Regression analysis is a statistical technique which shows how one variable is related to one or more other variables.

Barometric forecasting is a statistical technique which shows how one variable is related to one or more other variables.

A market survey should only have complex questions.

If we are estimating a demand function, we can use sensitivity analysis to

The branch of economics which analyses a time series to predict the future values of that series is called econometrics.

What are the main components into which a time series may be split?

Observations of market behaviour involve information gathered about consumers from the day- to- day activities of the business within the market.

What is barometric forecasting?

When creating a demand function, demand itself is an independent variable.

The major drawback of market experiments is that consumers might behave differently because they are being observed.

Which of the following would not shift a demand curve?

What are the main drawbacks of making plans using econometric data analysis methods?

The Business Environment and Business Economics

Economics and the World of Business

Business Organisations

The Working of Competitive Markets

Business in a Market Environment

Demand and the Consumer

Products, Marketing and Advertising

Costs of Production

Revenue and Profit

Profit Maximisation Under Perfect Competition and Monopoly

Profit Maximisation Under Imperfect Competition

An Introduction to Business Strategy

Alternative Theories of the Firm

Growth Strategy

The Small-Firm Sector

Pricing Strategy

Labour Markets, Wages and Industrial Relations

Investment and the Employment of Capital

Reasons for Government Intervention in the Market

Government and the Firm

Government and the Market

Globalisation and Multinational Business

International Trade

Trading Blocs

The Macroeconomic Environment of Business

The Balance of Payments and Exchange Rates

Banking, Money and Interest Rates

Business Activity, Employment and Inflation

Demand-Side Policy

Supply-Side Policy

International Economic Policy

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