Question 1

If there is a causal relationship between two variables X and Y

Accepted Answer

A) both should be used as explanatory variables. 
B) then the causal variable should be used as the explanatory variable. 
C) then they must be positively correlated. 
D) one of them can be omitted from the analysis. 
A) both should be used as explanatory variables. 
B) then the causal variable should be used as the explanatory variable. 
C) then they must be positively correlated. 
D) one of them can be omitted from the analysis. B

Question 2

Which of the following is most likely to be TRUE?

Accepted Answer

A) Income elasticity of demand for fur coats exceeds that of oatmeal. 
B) Income elasticity of demand for oatmeal exceeds that of fur coats. 
C) Income elasticity of demand for fur coats equals that of oatmeal. 
D) It is not possible to make any prediction about relative income elasticities. 
A) Income elasticity of demand for fur coats exceeds that of oatmeal. 
B) Income elasticity of demand for oatmeal exceeds that of fur coats. 
C) Income elasticity of demand for fur coats equals that of oatmeal. 
D) It is not possible to make any prediction about relative income elasticities. A

Question 3

Two variables are said to be ________ if they move together.

Accepted Answer

A) procyclical 
B) spurious 
C) correlated 
D) co-dependent 
A) procyclical 
B) spurious 
C) correlated 
D) co-dependent C

Question 4

-If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

Accepted Answer

A) only when p = 10,000. 
B) only when p = 100. 
C) always. 
D) never. 
A) only when p = 10,000. 
B) only when p = 100. 
C) always. 
D) never.

Question 5

Forecasts are

Accepted Answer

A) generally incorrect. 
B) predictions about the future. 
C) explanations of past occurrences. 
D) limited to short time periods. 
A) generally incorrect. 
B) predictions about the future. 
C) explanations of past occurrences. 
D) limited to short time periods.

Question 6

A normal good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

Accepted Answer

A) negative; increases 
B) negative; decreases 
C) positive; increases 
D) positive; decreases 
A) negative; increases 
B) negative; decreases 
C) positive; increases 
D) positive; decreases

Question 7

When selecting explanatory variables to include in a regression

Accepted Answer

A) you should pick all observable variables available. 
B) you should pick all observable variables that are likely to have a meaningful impact on the dependent variable. 
C) ignore all variables that have t-statistics less than the critical value. 
D) ignore variables that have an R2 less than 1. 
A) you should pick all observable variables available. 
B) you should pick all observable variables that are likely to have a meaningful impact on the dependent variable. 
C) ignore all variables that have t-statistics less than the critical value. 
D) ignore variables that have an R2 less than 1.

Question 8

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. The cross price elasticity of demand for wheat with respect to barley

Accepted Answer

A) cannot be calculated from just the information provided. 
B) is negative. 
C) suggests that wheat and barley are complements. 
D) equals 1. 
A) cannot be calculated from just the information provided. 
B) is negative. 
C) suggests that wheat and barley are complements. 
D) equals 1.

Question 9

If R2 is less than 1

Accepted Answer

A) the regression analysis is incorrect. 
B) the observation data is suspect. 
C) some observations do not lie on the regression line. 
D) the probability of having the correct fit is very low. 
A) the regression analysis is incorrect. 
B) the observation data is suspect. 
C) some observations do not lie on the regression line. 
D) the probability of having the correct fit is very low.

Question 10

Elasticity along a downward sloping linear demand curve

Accepted Answer

A) is constant and equal to the slope of the curve. 
B) is constant and equal to the slope times the ratio of price to quantity. 
C) changes along the curve. 
D) does not vary with price unless the good is expensive. 
A) is constant and equal to the slope of the curve. 
B) is constant and equal to the slope times the ratio of price to quantity. 
C) changes along the curve. 
D) does not vary with price unless the good is expensive.

Question 11

To calculate the point elasticity of demand, a manager must know

Accepted Answer

A) where the supply curve intersects the demand curve. 
B) two points on the demand curve. 
C) information about the entire demand curve. 
D) whether or not the demand curve is linear. 
A) where the supply curve intersects the demand curve. 
B) two points on the demand curve. 
C) information about the entire demand curve. 
D) whether or not the demand curve is linear.

Question 12

The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat is

Accepted Answer

A) 2 ∗ (1000/2099). 
B) 2. 
C) 1/2 ∗ (1000/2099). 
D) Cannot be calculated from the information provided. 
A) 2 ∗ (1000/2099). 
B) 2. 
C) 1/2 ∗ (1000/2099). 
D) Cannot be calculated from the information provided.

Question 13

An estimation method is unbiased if it produces a(n)________ that equals the ________ on average.

Accepted Answer

A) R2; t-statistic 
B) estimated coefficient; true coefficient 
C) error term; standard error 
D) estimated coefficient; residual 
A) R2; t-statistic 
B) estimated coefficient; true coefficient 
C) error term; standard error 
D) estimated coefficient; residual

Question 14

The cross price elasticity of demand between two goods will be positive if

Accepted Answer

A) the two goods are complements. 
B) the two goods are substitutes. 
C) the two goods are luxuries. 
D) one of the goods is a luxury and the other is a necessity. 
A) the two goods are complements. 
B) the two goods are substitutes. 
C) the two goods are luxuries. 
D) one of the goods is a luxury and the other is a necessity.

Question 15

As prices change, the elasticity of supply describes the movement

Accepted Answer

A) of a shift in the supply curve. 
B) of the equilibrium price. 
C) along the supply curve. 
D) from a necessity to a luxury good. 
A) of a shift in the supply curve. 
B) of the equilibrium price. 
C) along the supply curve. 
D) from a necessity to a luxury good.

Question 16

If demand is inelastic

Accepted Answer

A) then a 1% increase in price leads to a fall in quantity of greater than 1%. 
B) then a 1% increase in price leads to a fall in quantity of less than 1%. 
C) then a 1% increase in price leads to a fall in quantity of 1%. 
D) then a 1% increase in price leads to a rise in quantity of less than 1%. 
A) then a 1% increase in price leads to a fall in quantity of greater than 1%. 
B) then a 1% increase in price leads to a fall in quantity of less than 1%. 
C) then a 1% increase in price leads to a fall in quantity of 1%. 
D) then a 1% increase in price leads to a rise in quantity of less than 1%.

Question 17

The gap between the actual and predicted values of a dependent variable is called

Accepted Answer

A) the error term. 
B) an exogenous factor. 
C) the residual. 
D) an endogenous factor. 
A) the error term. 
B) an exogenous factor. 
C) the residual. 
D) an endogenous factor.

Question 18

Premium beer is likely considered

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) to have inelastic demand. 
D) to have perfectly elastic demand. 
A) a normal good. 
B) an inferior good. 
C) to have inelastic demand. 
D) to have perfectly elastic demand.

Question 19

If the cross price elasticity of two goods is -3.5, then

Accepted Answer

A) these two products are relatively elastic substitutes. 
B) these two products are relatively inelastic substitutes. 
C) these two products are relatively elastic complements. 
D) these two products are relatively inelastic complements. 
A) these two products are relatively elastic substitutes. 
B) these two products are relatively inelastic substitutes. 
C) these two products are relatively elastic complements. 
D) these two products are relatively inelastic complements.

Question 20

In regression analysis, the dependent variable

Accepted Answer

A) is always quantity demanded. 
B) is the variable whose variation is to be explained. 
C) is one of the factors that explains what is happening with demand. 
D) is represented by the inverse demand function. 
A) is always quantity demanded. 
B) is the variable whose variation is to be explained. 
C) is one of the factors that explains what is happening with demand. 
D) is represented by the inverse demand function.

If there is a causal relationship between two variables X and Y

Which of the following is most likely to be TRUE?

Two variables are said to be ________ if they move together.

-If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

Forecasts are

A normal good has a income elasticity of demand and quantity demanded as income rises.

When selecting explanatory variables to include in a regression

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. The cross price elasticity of demand for wheat with respect to barley

If R2 is less than 1

Elasticity along a downward sloping linear demand curve

To calculate the point elasticity of demand, a manager must know

The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat is

An estimation method is unbiased if it produces a(n) that equals the on average.

The cross price elasticity of demand between two goods will be positive if

As prices change, the elasticity of supply describes the movement

If demand is inelastic

The gap between the actual and predicted values of a dependent variable is called

Premium beer is likely considered

If the cross price elasticity of two goods is -3.5, then

In regression analysis, the dependent variable

Introduction

Supply and Demand

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 3: Empirical Methods for Demand Analysis

If there is a causal relationship between two variables X and Y

Which of the following is most likely to be TRUE?

Two variables are said to be ________ if they move together.

-If the demand curve for comic books is expressed as Q = 10,000 * p-1, then demand has a unitary elasticity

Forecasts are

A normal good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

When selecting explanatory variables to include in a regression

The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. The cross price elasticity of demand for wheat with respect to barley

If R2 is less than 1

Elasticity along a downward sloping linear demand curve

To calculate the point elasticity of demand, a manager must know

The market demand for wheat is Q = 100 - 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat is

An estimation method is unbiased if it produces a(n)________ that equals the ________ on average.

The cross price elasticity of demand between two goods will be positive if

As prices change, the elasticity of supply describes the movement

If demand is inelastic

The gap between the actual and predicted values of a dependent variable is called

Premium beer is likely considered

If the cross price elasticity of two goods is -3.5, then

In regression analysis, the dependent variable

Introduction

Supply and Demand

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

A normal good has a income elasticity of demand and quantity demanded as income rises.

An estimation method is unbiased if it produces a(n) that equals the on average.