Question 1

Suppose a regression with 51 observations returns a regression sum of squares of 56,000 and a total sum of squares of 250,000.The corresponding R2 is:

Accepted Answer

A)  0.776. 
B)  0.224. 
C)  0.345. 
D)  0.671. 
A)  0.776. 
B)  0.224. 
C)  0.345. 
D)  0.671. B

Question 2

From the regression output,the predicted regression line is:
RY

$\begin{array}{l}
\hline \text { gression Statistics }\
\begin{array}{lr}
\hline\text { R } & 0.971 \
\text { e} & \mathbf{A} \
\text { R-Square }& \mathbf{B} \
\text { Error } &30.462\
\text { ions } & 51\
\hline
\end{array}\end{array}$

$\begin{array}{rrrrrr}
\hline&\text { df } &  {\text { SS }} & {\text { MS }} & \boldsymbol{F} & {\text { Signiticance  F}} \
\hline\text { on }& \text { C } & 747851.57 & 373925.79 & 402.98 & 9.89 \mathrm{E}-31 \
&48 & \text { D } & 927.91 & & \
&50 & 792391.11 & & & \
\hline
\end{array}$

$\begin{array}{lrrrrrr}
\hline &\text { Coefficients } & \begin{array}{c}
\text { Standard } \
\text { Error }
\end{array} &{\text { t Stat }} & \text { P-value } & \text { Lower 95\% } & \text { Upper 95\% } \
\hline &\mathbf{E} & 62.13 & 26.79 & 1.60 \mathrm{E}-30 & 1539.66 & 1789.51 \
\text { Roses }&-6.68 & \mathbf{F} & -1.41 & 1.64 \mathrm{E}-01 & -16.16 & 2.81 \
\text { le Income }&9.73 & 0.34 & \mathbf{G} & 1.23 \mathrm{E}-31 & 9.04 & 10.42\
\hline
\end{array}$

Accepted Answer

A)  QRd = 1664.46 ? 6.68PR + 9.73M. 
B)  PR = 1664.46 ? 6.68QR + 9.73M. 
C)  QRd = 2.32 ? 6.68PR + 9.73M. 
D)  There is not sufficient information to answer the question. 
A)  QRd = 1664.46 ? 6.68PR + 9.73M. 
B)  PR = 1664.46 ? 6.68QR + 9.73M. 
C)  QRd = 2.32 ? 6.68PR + 9.73M. 
D)  There is not sufficient information to answer the question. A

Question 3

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits.Explain why this would be expected.

Accepted Answer

a.Since the coefficient associated with income is negative,an increase in income leads to a reduction in demand for DVD players.Hence,DVD players are inferior goods.
b.Movies are substitutes for DVD players,since the coefficient associated with the price of a movie is positive.
c.The actual values of prices and income are needed to calculate the price elasticity of demand for DVD players.

Question 4

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

Accepted Answer

A)  t-statistic 
B)  R-square 
C)  Adjusted R-square 
D)  Neither the t-statistic, the R-square, nor the adjusted R-square 
A)  t-statistic 
B)  R-square 
C)  Adjusted R-square 
D)  Neither the t-statistic, the R-square, nor the adjusted R-square

Question 5

The cross-price elasticity of demand for textbooks and copies of old exams is −3.5.If the price of copies of old exams increases by 10 percent,the quantity demanded of textbooks will:

Accepted Answer

A)  fall by 3.5 percent. 
B)  rise by 3.5 percent. 
C)  fall by 35 percent. 
D)  rise by 35 percent. 
A)  fall by 3.5 percent. 
B)  rise by 3.5 percent. 
C)  fall by 35 percent. 
D)  rise by 35 percent.

Question 6

If the demand function for a particular good is Q = 20 − 8P,then the price elasticity of demand (in absolute value)at a price of $1 is:

Accepted Answer

A)  8. 
B)  2. 
C)  2/3. 
D)  1/8. 
A)  8. 
B)  2. 
C)  2/3. 
D)  1/8.

Question 7

The demand for good X has been estimated to be ln Qxd = 100 − 2.5 ln PX + 4 ln PY + ln M.The income elasticity of good X is:

Accepted Answer

A)  4.0. 
B)  1.0. 
C)  2.0. 
D)  −2.5. 
A)  4.0. 
B)  1.0. 
C)  2.0. 
D)  −2.5.

Question 8

If quantity demanded for sneakers falls by 10 percent when price increases 25 percent,we know that the absolute value of the own price elasticity of sneakers is:

Accepted Answer

A)  2.5. 
B)  0.4. 
C)  2.0. 
D)  0.27. 
A)  2.5. 
B)  0.4. 
C)  2.0. 
D)  0.27.

Question 9

As the manager of a local hotel chain,you have hired an econometrician to estimate the demand for one of your hotels (H).The estimation has resulted in the following demand function:
 QH = 2,000 - PH - 1.5PC - 2.25PSE + 0.8POH + 0.01M,where PH is the price of a room at your hotel,PC is the price of concerts in your area,PSE is the price of sporting events in your area,POH is the average room price at other hotels in your area,and M is the average income in the United States.What would be the impact on your firm of:
a.A $500 increase in income?
b.A $10 reduction in the price charged by other hotels?
c.A $7 increase in the price of tickets to local sporting events?
d.A $5 increase in the price of concert tickets,accompanied by an $8 increase in income?

Accepted Answer

a.ΔQ_H = (0.01)ΔM = (0.01)(500)= 5.Thus,th

Question 10

The management of Local Cinema has estimated the monthly demand for tickets to be ln Q = 22,328 − 0.41 ln P + 0.5 ln M − 0.33 ln A + 100 ln PDVD,where Q = quantity of tickets demanded,P = price per ticket,M = income,A = advertising outlay,and PDVD = price of a DVD rental.It is known that P = $5.50,M = $9,000,A = $900,and PDVD = $3.00.Determine the own price elasticity of demand for movie tickets.

Accepted Answer

A)  −0.29 
B)  −0.32 
C)  −0.39 
D)  −0.41 
A)  −0.29 
B)  −0.32 
C)  −0.39 
D)  −0.41

Question 11

Demand is more inelastic in the short term because consumers:

Accepted Answer

A)  are impatient. 
B)  have no time to find available substitutes. 
C)  are present-oriented. 
D)  None of the preceding statements is correct. 
A)  are impatient. 
B)  have no time to find available substitutes. 
C)  are present-oriented. 
D)  None of the preceding statements is correct.

Question 12

If the short-term own price elasticity for food is estimated to be −0.4,then long-term own price elasticity is expected to be:

Accepted Answer

A)  −0.4. 
B)  greater than −0.4. 
C)  less than −0.4. 
D)  neither greater than, less than, nor equal to −0.4. 
A)  −0.4. 
B)  greater than −0.4. 
C)  less than −0.4. 
D)  neither greater than, less than, nor equal to −0.4.

Question 13

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100,what is the absolute value of the own price elasticity at a price of $7?

Accepted Answer

A)  0.57 
B)  1.75 
C)  0.02 
D)  1.24 
A)  0.57 
B)  1.75 
C)  0.02 
D)  1.24

Question 14

As we move up along a linear demand curve,the price elasticity of demand becomes more:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  log-linear. 
D)  variable. 
A)  elastic. 
B)  inelastic. 
C)  log-linear. 
D)  variable.

Question 15

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

Accepted Answer

A)  elastic. 
B)  unitary. 
C)  falling. 
D)  inelastic. 
A)  elastic. 
B)  unitary. 
C)  falling. 
D)  inelastic.

Question 16

Suppose demand is given by Q xd = 50 − 4Px + 6Py + Ax,where Px = $4,Py = $2,and Ax = $50.What is the quantity demanded of good x?

Accepted Answer

A)  96 
B)  50 
C)  46 
D)  72 
A)  96 
B)  50 
C)  46 
D)  72

Question 17

The price elasticity of demand is −2.0 for a certain firm's product.If the firm raises price,the firm manager can expect total revenue to:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or remain constant, depending upon the size of the price increase. 
A)  decrease. 
B)  increase. 
C)  remain constant. 
D)  either increase or remain constant, depending upon the size of the price increase.

Question 18

Which of the following factors would NOT affect the own price elasticity of a good?

Accepted Answer

A)  Time 
B)  Price of an input 
C)  Available substitutes 
D)  Expenditure share 
A)  Time 
B)  Price of an input 
C)  Available substitutes 
D)  Expenditure share

Question 19

When the price of corn was "low," consumers in the United States spent a total of $8 billion annually on its consumption.When the price halved,consumer expenditures actually DECREASED to $6 billion annually.This indicates that:

Accepted Answer

A)  the demand for corn is elastic. 
B)  the demand curve for corn is upward sloping. 
C)  corn is a Giffen good. 
D)  the demand for corn is inelastic. 
A)  the demand for corn is elastic. 
B)  the demand curve for corn is upward sloping. 
C)  corn is a Giffen good. 
D)  the demand for corn is inelastic.

Question 20

Which of the following is used to determine the statistical significance of a regression coefficient?

Accepted Answer

A)  t-statistic 
B)  F-statistic 
C)  R-square 
D)  Adjusted R-square 
A)  t-statistic 
B)  F-statistic 
C)  R-square 
D)  Adjusted R-square

Suppose a regression with 51 observations returns a regression sum of squares of 56,000 and a total sum of squares of 250,000.The corresponding R² is:

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits.Explain why this would be expected.

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

The cross-price elasticity of demand for textbooks and copies of old exams is −3.5.If the price of copies of old exams increases by 10 percent,the quantity demanded of textbooks will:

If the demand function for a particular good is Q = 20 − 8P,then the price elasticity of demand (in absolute value)at a price of $1 is:

The demand for good X has been estimated to be ln Q_x^d = 100 − 2.5 ln P_X + 4 ln P_Y + ln M.The income elasticity of good X is:

If quantity demanded for sneakers falls by 10 percent when price increases 25 percent,we know that the absolute value of the own price elasticity of sneakers is:

Demand is more inelastic in the short term because consumers:

If the short-term own price elasticity for food is estimated to be −0.4,then long-term own price elasticity is expected to be:

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100,what is the absolute value of the own price elasticity at a price of $7?

As we move up along a linear demand curve,the price elasticity of demand becomes more:

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

Suppose demand is given by Q _x^d = 50 − 4P_x + 6P_y + A_x,where P_x = $4,P_y = $2,and A_x = $50.What is the quantity demanded of good x?

The price elasticity of demand is −2.0 for a certain firm's product.If the firm raises price,the firm manager can expect total revenue to:

Which of the following factors would NOT affect the own price elasticity of a good?

When the price of corn was "low," consumers in the United States spent a total of $8 billion annually on its consumption.When the price halved,consumer expenditures actually DECREASED to $6 billion annually.This indicates that:

Which of the following is used to determine the statistical significance of a regression coefficient?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 3: Quantitative Demand Analysis

Suppose a regression with 51 observations returns a regression sum of squares of 56,000 and a total sum of squares of 250,000.The corresponding R2 is:

A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits.Explain why this would be expected.

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?

The cross-price elasticity of demand for textbooks and copies of old exams is −3.5.If the price of copies of old exams increases by 10 percent,the quantity demanded of textbooks will:

If the demand function for a particular good is Q = 20 − 8P,then the price elasticity of demand (in absolute value)at a price of $1 is:

The demand for good X has been estimated to be ln Qxd = 100 − 2.5 ln PX + 4 ln PY + ln M.The income elasticity of good X is:

If quantity demanded for sneakers falls by 10 percent when price increases 25 percent,we know that the absolute value of the own price elasticity of sneakers is:

Demand is more inelastic in the short term because consumers:

If the short-term own price elasticity for food is estimated to be −0.4,then long-term own price elasticity is expected to be:

If a price increase from $5 to $7 causes quantity demanded to fall from 150 to 100,what is the absolute value of the own price elasticity at a price of $7?

As we move up along a linear demand curve,the price elasticity of demand becomes more:

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

Suppose demand is given by Q xd = 50 − 4Px + 6Py + Ax,where Px = $4,Py = $2,and Ax = $50.What is the quantity demanded of good x?

The price elasticity of demand is −2.0 for a certain firm's product.If the firm raises price,the firm manager can expect total revenue to:

Which of the following factors would NOT affect the own price elasticity of a good?

When the price of corn was "low," consumers in the United States spent a total of $8 billion annually on its consumption.When the price halved,consumer expenditures actually DECREASED to $6 billion annually.This indicates that:

Which of the following is used to determine the statistical significance of a regression coefficient?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Suppose a regression with 51 observations returns a regression sum of squares of 56,000 and a total sum of squares of 250,000.The corresponding R² is:

The demand for good X has been estimated to be ln Q_x^d = 100 − 2.5 ln P_X + 4 ln P_Y + ln M.The income elasticity of good X is:

Suppose demand is given by Q _x^d = 50 − 4P_x + 6P_y + A_x,where P_x = $4,P_y = $2,and A_x = $50.What is the quantity demanded of good x?