Question 1

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

Accepted Answer

A)  -1.25. 
B)  inelastic. 
C)  Both A and B above. 
D)  Neither A nor B above. 
A)  -1.25. 
B)  inelastic. 
C)  Both A and B above. 
D)  Neither A nor B above.

Question 2

A vertical demand curve

Accepted Answer

A)  is impossible. 
B)  reasonably represents demand for essential goods. 
C)  has a price elasticity of negative infinity since people will pay an infinite amount for the good. 
D)  represents a normal good. 
A)  is impossible. 
B)  reasonably represents demand for essential goods. 
C)  has a price elasticity of negative infinity since people will pay an infinite amount for the good. 
D)  represents a normal good.

Question 3

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 4

If the price of a slice of pizza rises from $2.50 to $3,and quantity demanded falls from 10,000 slices to 7,400 slices,calculate the arc price elasticity.

Accepted Answer

A)  -1.92 
B)  -1.64 
C)  -4 
D)  -2 
A)  -1.92 
B)  -1.64 
C)  -4 
D)  -2

Question 5

On a linear demand curve,the lower the price

Accepted Answer

A)  the less elastic is demand. 
B)  the more elastic is demand. 
C)  the elasticity equals -1. 
D)  the elasticity equals zero. 
A)  the less elastic is demand. 
B)  the more elastic is demand. 
C)  the elasticity equals -1. 
D)  the elasticity equals zero.

Question 6

If the demand curve is given by Q = a + bp,then b is

Accepted Answer

A)  positive. 
B)  the quantity demanded when price is zero. 
C)  the change in quantity demanded if price changes by 1. 
D)  different at different points on the demand curve. 
A)  positive. 
B)  the quantity demanded when price is zero. 
C)  the change in quantity demanded if price changes by 1. 
D)  different at different points on the demand curve.

Question 7

Horizontal and vertical demand curves

Accepted Answer

A)  have constant elasticities. 
B)  are not possible in the real world. 
C)  have elasticities that change with price. 
D)  cannot have their elasticities computed using the point method. 
A)  have constant elasticities. 
B)  are not possible in the real world. 
C)  have elasticities that change with price. 
D)  cannot have their elasticities computed using the point method.

Question 8

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 9

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 10

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

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

If we have a small standard error,then

Accepted Answer

A)  the estimated coefficient is small. 
B)  the true demand function has imprecise coefficients. 
C)  the expected variation of the estimated coefficient is small. 
D)  the estimated coefficients are imprecise indicators of the true values. 
A)  the estimated coefficient is small. 
B)  the true demand function has imprecise coefficients. 
C)  the expected variation of the estimated coefficient is small. 
D)  the estimated coefficients are imprecise indicators of the true values.

Question 13

An inferior 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 14

The elasticity of demand is

Accepted Answer

A)  measured in money (e.g. dollars). 
B)  measured in units of the good (e.g. slices of pizza). 
C)  unitless. 
D)  measured in money/unit (e.g. 1.50 $/slice of pizza). 
A)  measured in money (e.g. dollars). 
B)  measured in units of the good (e.g. slices of pizza). 
C)  unitless. 
D)  measured in money/unit (e.g. 1.50 $/slice of pizza).

Question 15

If you are testing the null hypothesis,you are testing

Accepted Answer

A)  the hypothesis that the coefficient for an explanatory variable is zero and therefore has no impact on your results. 
B)  whether or not price should be set to 0. 
C)  the relationship between the t-statistic and the standard error. 
D)  the hypothesis that setting a given price will yield no increase in profits. 
A)  the hypothesis that the coefficient for an explanatory variable is zero and therefore has no impact on your results. 
B)  whether or not price should be set to 0. 
C)  the relationship between the t-statistic and the standard error. 
D)  the hypothesis that setting a given price will yield no increase in profits.

Question 16

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

Accepted Answer

A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information. 
A)  equals (-4/46). 
B)  equals (-46). 
C)  equals (-1). 
D)  cannot be calculated without more information.

Question 17

A 95% confidence interval

Accepted Answer

A)  indicates that there is 95% confidence that the value of the estimated coefficient is correct. 
B)  indicates that there is 95% confidence that the degrees of freedom explain the data correctly. 
C)  is a range of of values that gives a 95% probability that the true value of the coefficient is within the specified interval. 
D)  is the probability that we have obtained the true value of the coefficient with 95% accuracy. 
A)  indicates that there is 95% confidence that the value of the estimated coefficient is correct. 
B)  indicates that there is 95% confidence that the degrees of freedom explain the data correctly. 
C)  is a range of of values that gives a 95% probability that the true value of the coefficient is within the specified interval. 
D)  is the probability that we have obtained the true value of the coefficient with 95% accuracy.

Question 18

If two variables B and V are positively correlated,B ________ when V ________.

Accepted Answer

A)  goes up; goes down 
B)  goes up; goes up 
C)  goes down; goes up 
D)  remains unchanged; goes up 
A)  goes up; goes down 
B)  goes up; goes up 
C)  goes down; goes up 
D)  remains unchanged; goes up

Question 19

In regression analysis,the explanatory variables

Accepted Answer

A)  are always price and income. 
B)  are the variables whose variations are to be explained. 
C)  are the factors that are thought to affect the dependent variable. 
D)  are used to explain the random error term. 
A)  are always price and income. 
B)  are the variables whose variations are to be explained. 
C)  are the factors that are thought to affect the dependent variable. 
D)  are used to explain the random error term.

Question 20

If it is difficult to substitute for a good in the short run,but easy in the long run,then

Accepted Answer

A)  the elasticity of demand is more elastic in the short run. 
B)  the elasticity of demand is more elastic in the long run. 
C)  the good is an inferior good. 
D)  elasticity changes along the demand curve. 
A)  the elasticity of demand is more elastic in the short run. 
B)  the elasticity of demand is more elastic in the long run. 
C)  the good is an inferior good. 
D)  elasticity changes along the demand curve.

If the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

A vertical demand curve

Premium beer is likely considered

If the price of a slice of pizza rises from $2.50 to $3,and quantity demanded falls from 10,000 slices to 7,400 slices,calculate the arc price elasticity.

On a linear demand curve,the lower the price

If the demand curve is given by Q = a + bp,then b is

Horizontal and vertical demand curves

When selecting explanatory variables to include in a regression

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

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

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

If we have a small standard error,then

An inferior good has a income elasticity of demand and quantity demanded as income rises.

The elasticity of demand is

If you are testing the null hypothesis,you are testing

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

A 95% confidence interval

If two variables B and V are positively correlated,B when V .

In regression analysis,the explanatory variables

If it is difficult to substitute for a good in the short run,but easy in the long run,then

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 the price of orange juice rises 10%,and as a result the quantity demanded falls by 8%,the price elasticity of demand for orange juice is

A vertical demand curve

Premium beer is likely considered

If the price of a slice of pizza rises from $2.50 to $3,and quantity demanded falls from 10,000 slices to 7,400 slices,calculate the arc price elasticity.

On a linear demand curve,the lower the price

If the demand curve is given by Q = a + bp,then b is

Horizontal and vertical demand curves

When selecting explanatory variables to include in a regression

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

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

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

If we have a small standard error,then

An inferior good has a ________ income elasticity of demand and quantity demanded ________ as income rises.

The elasticity of demand is

If you are testing the null hypothesis,you are testing

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

A 95% confidence interval

If two variables B and V are positively correlated,B ________ when V ________.

In regression analysis,the explanatory variables

If it is difficult to substitute for a good in the short run,but easy in the long run,then

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

An inferior good has a income elasticity of demand and quantity demanded as income rises.

If two variables B and V are positively correlated,B when V .