Question 1

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

Accepted Answer

A)  negative. 
B)  the quantity demanded when price is zero. 
C)  the slope of the demand curve. 
D)  measured in money. 
A)  negative. 
B)  the quantity demanded when price is zero. 
C)  the slope of the demand curve. 
D)  measured in money.

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.

Question 3

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

Accepted Answer

A)  slope of the supply curve. 
B)  excess supply. 
C)  price elasticity of supply. 
D)  All of the above. 
A)  slope of the supply curve. 
B)  excess supply. 
C)  price elasticity of supply. 
D)  All of the above.

Question 4

The random error term ________ the effects of ________ influences on the dependent variable that are not included as explanatory variables.

Accepted Answer

A)  captures; observed 
B)  ignores; unobserved 
C)  ignores; observed 
D)  captures; unobserved 
A)  captures; observed 
B)  ignores; unobserved 
C)  ignores; observed 
D)  captures; unobserved

Question 5

An R² close to 1

Accepted Answer

A)  does not happen with real data. 
B)  indicates that almost all of the variation in the dependent variable is explained by the regression. 
C)  does not explain variation as well as an R² that is above 2. 
D)  means that the regression line does not fit the data very well. 
A)  does not happen with real data. 
B)  indicates that almost all of the variation in the dependent variable is explained by the regression. 
C)  does not explain variation as well as an R² that is above 2. 
D)  means that the regression line does not fit the data very well.

Question 6

A regression specification must include

Accepted Answer

A)  the choice of the dependent variable. 
B)  the explanatory variable(s). 
C)  the functional relationship. 
D)  All of the above. 
A)  the choice of the dependent variable. 
B)  the explanatory variable(s). 
C)  the functional relationship. 
D)  All of the above.

Question 7

Demand curves and other economic relationships

Accepted Answer

A)  are always linear. 
B)  produce linear regression equations. 
C)  can take many different functional forms. 
D)  are dependent upon the type of advertising done. 
A)  are always linear. 
B)  produce linear regression equations. 
C)  can take many different functional forms. 
D)  are dependent upon the type of advertising done.

Question 8

In Ordinary Least Squares Regression,the gap between the value of the dependent variable and the predicted value is called

Accepted Answer

A)  the error term. 
B)  the minimizing coefficient. 
C)  the residual. 
D)  the explanatory variable. 
A)  the error term. 
B)  the minimizing coefficient. 
C)  the residual. 
D)  the explanatory variable.

Question 9

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.

Question 10

If the elasticity of demand is -2.3 when calculated using the point elasticity method and -3.4 using the arc elasticity method,then

Accepted Answer

A)  you should use the point elasticity. 
B)  it is OK to use either one. 
C)  there must be a mistake in the calculations. 
D)  you should use the arc elasticity. 
A)  you should use the point elasticity. 
B)  it is OK to use either one. 
C)  there must be a mistake in the calculations. 
D)  you should use the arc elasticity.

Question 11

If an estimated regression explains none of the variation,R² will be

Accepted Answer

A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  unable to determine with the information given. 
A)  0. 
B)  between 0 and 1. 
C)  1. 
D)  unable to determine with the information given.

Question 12

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

Accepted Answer

A)  income. 
B)  the price of that good. 
C)  the price of another good. 
D)  the quantity demanded of another good. 
A)  income. 
B)  the price of that good. 
C)  the price of another good. 
D)  the quantity demanded of another good.

Question 13

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 14

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,using the formula for arc price elasticity what is the percentage change in price?

Accepted Answer

A)  18.18% 
B)  29.89% 
C)  20% 
D)  16.67% 
A)  18.18% 
B)  29.89% 
C)  20% 
D)  16.67%

Question 15

If demand is elastic

Accepted Answer

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

Question 16

Suppose the demand function for a good is expressed as Q = 100 - 4p.If the good currently sells for $10,then the point price elasticity of demand equals

Accepted Answer

A)  -1.5. 
B)  -0.67. 
C)  -4. 
D)  -2.5. 
A)  -1.5. 
B)  -0.67. 
C)  -4. 
D)  -2.5.

Question 17

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 18

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)  -80.0. 
C)  -0.80. 
D)  -10.0. 
A)  -1.25. 
B)  -80.0. 
C)  -0.80. 
D)  -10.0.

Question 19

Ramen noodles are 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 20

Ordinary Least Squares Regression analysis attempts to

Accepted Answer

A)  maximize the distance of each point from a regression line. 
B)  select a line that fits the data well. 
C)  maximize the residual. 
D)  change a multivariate problem into a single dimension. 
A)  maximize the distance of each point from a regression line. 
B)  select a line that fits the data well. 
C)  maximize the residual. 
D)  change a multivariate problem into a single dimension.

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

Which of the following is most likely to be TRUE?

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

The random error term the effects of influences on the dependent variable that are not included as explanatory variables.

An R² close to 1

A regression specification must include

Demand curves and other economic relationships

In Ordinary Least Squares Regression,the gap between the value of the dependent variable and the predicted value is called

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

If the elasticity of demand is -2.3 when calculated using the point elasticity method and -3.4 using the arc elasticity method,then

If an estimated regression explains none of the variation,R² will be

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

Forecasts are

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,using the formula for arc price elasticity what is the percentage change in price?

If demand is elastic

Suppose the demand function for a good is expressed as Q = 100 - 4p.If the good currently sells for $10,then the point price elasticity of demand equals

If R² is less than 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

Ramen noodles are likely considered

Ordinary Least Squares Regression analysis attempts to

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

Which of the following is most likely to be TRUE?

The percentage change in the quantity supplied in response to a percentage change in the price is known as the

The random error term ________ the effects of ________ influences on the dependent variable that are not included as explanatory variables.

An R² close to 1

A regression specification must include

Demand curves and other economic relationships

In Ordinary Least Squares Regression,the gap between the value of the dependent variable and the predicted value is called

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

If the elasticity of demand is -2.3 when calculated using the point elasticity method and -3.4 using the arc elasticity method,then

If an estimated regression explains none of the variation,R² will be

The cross price elasticity of demand for a good is the percentage change in the quantity demanded in response to a given percentage change in

Forecasts are

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,using the formula for arc price elasticity what is the percentage change in price?

If demand is elastic

Suppose the demand function for a good is expressed as Q = 100 - 4p.If the good currently sells for $10,then the point price elasticity of demand equals

If R² is less than 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

Ramen noodles are likely considered

Ordinary Least Squares Regression analysis attempts to

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

The random error term the effects of influences on the dependent variable that are not included as explanatory variables.