Question 1

Manager-determined prices are

Accepted Answer

A) not determined by the forces of demand and supply. 
B) exogenous variables in a demand equations. 
C) associated with price-taking firms. 
D) both a and b 
E) both b and c 
A) not determined by the forces of demand and supply. 
B) exogenous variables in a demand equations. 
C) associated with price-taking firms. 
D) both a and b 
E) both b and c

Question 2

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm:   where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and   is the price of a related product.The results of the estimation are presented below:   Given the above,at the 1% level of significance,the critical value of the t-statistic used by Conlan to test for statistical significance has _____ degrees of freedom and is equal to ________.

Accepted Answer

A) 32; 0.7984 
B) 32; 36.14 
C) 32; 4.57 
D) 30; 2.750 
E) 28; 2.763 
A) 32; 0.7984 
B) 32; 36.14 
C) 32; 4.57 
D) 30; 2.750 
E) 28; 2.763

Question 3

A forecaster used the regression equation   and quarterly sales data for 1996I-2013IV t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and   and   are dummy variables for quarters I,II,and III.   Using the estimation results given above,the predicted level of sales in 2014III is _______ units.

Accepted Answer

A) 141.5 
B) 156 
C) 172 
D) 173.5 
E) none of the above 
A) 141.5 
B) 156 
C) 172 
D) 173.5 
E) none of the above

Question 4

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm:   where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and   is the price of a related product.The results of the estimation are presented below:   Given the above,based upon the parameter estimates in the above table

Accepted Answer

A) this good is a normal good. 
B) the related good is a substitute. 
C) the related good is a complement. 
D) a and b 
E) a and c 
A) this good is a normal good. 
B) the related good is a substitute. 
C) the related good is a complement. 
D) a and b 
E) a and c

Question 5

a.complements since the coefficient on M is positive.
b.substitutes since the coefficient on M is positive.
c.complements since the coefficient on   is positive.
d.substitutes since the coefficient on   is positive.
-estimated demand for a good is   where Q is the quantity demanded of the good,P is the price of the good,M is income,and   is the price of related good R.The coefficient on P

Accepted Answer

A) violates the law of demand. 
B) is negative as dictated by the law of demand. 
C) should not be greater than one in absolute value). 
D) should have the same sign as the coefficient on   . 
E) both c and d 
A) violates the law of demand. 
B) is negative as dictated by the law of demand. 
C) should not be greater than one in absolute value). 
D) should have the same sign as the coefficient on   . 
E) both c and d

Question 6

Build-Right Concrete Products produces specialty cement used in construction of highways.Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form:   where Q = yards of cement demanded monthly,P = the price of Build-Right's cement per yard,M = state tax revenues per capita,and   = the price of asphalt per yard.The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation.The estimation results are presented below:   Given the above,if tax revenue per capita M)increases 5%,the estimated quantity of cement demanded will

Accepted Answer

A) increase by less than 1%. 
B) increase more than 1% but less than 5%. 
C) increase more than 5% but less than 10%. 
D) increase more than 10%. 
A) increase by less than 1%. 
B) increase more than 1% but less than 5%. 
C) increase more than 5% but less than 10%. 
D) increase more than 10%.

Question 7

A forecaster used the regression equation   and quarterly sales data for 1996I-2013IV t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and   and   are dummy variables for quarters I,II,and III.   Using a 5 percent significance level,these estimation results indicate that sales in

Accepted Answer

A) the first quarter are greater than sales in any other quarter. 
B) the second quarter are greater than sales in any other quarter. 
C) the third quarter are greater than sales in any other quarter. 
D) the fourth quarter are greater than sales in any other quarter. 
A) the first quarter are greater than sales in any other quarter. 
B) the second quarter are greater than sales in any other quarter. 
C) the third quarter are greater than sales in any other quarter. 
D) the fourth quarter are greater than sales in any other quarter.

Question 8

A consulting firm estimates the following quarterly sales forecasting model:   The equation is estimated using quarterly data from 2005I-2015III t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise.
The results of the estimation are:
  Give the above,at the 1 percent level of significance,is there a statistically significant trend in sales?

Accepted Answer

A) No,since 1.86  0.55 
E) Yes,since 3.38 > 2.704 
A) No,since 1.86  0.55 
E) Yes,since 3.38 > 2.704

Question 9

A forecaster used the regression equation   and quarterly sales data for 1996I-2013IV t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and   and   are dummy variables for quarters I,II,and III.   The estimated QUARTERLY increase in sales is ______ units,and the estimated ANNUAL increase in sales is ______ units.

Accepted Answer

A) 1.5; 6 
B) 1.4; 4 
C) 30; 4 
D) 1.5; 40 
E) none of the above 
A) 1.5; 6 
B) 1.4; 4 
C) 30; 4 
D) 1.5; 40 
E) none of the above

Question 10

a.complements since the coefficient on M is positive.
b.substitutes since the coefficient on M is positive.
c.complements since the coefficient on   is positive.
d.substitutes since the coefficient on   is positive.
-The estimated demand for a good is   where Q is the quantity demanded of the good,P is the price of the good,M is income,and   is the price of related good R.The good is

Accepted Answer

A) an inferior good since the coefficient on   is negative. 
B) a normal good since the coefficient on   is negative. 
C) a normal good since the coefficient on M is greater than one in absolute value). 
D) an inferior good since the coefficient on M is negative. 
E) none of the above 
A) an inferior good since the coefficient on   is negative. 
B) a normal good since the coefficient on   is negative. 
C) a normal good since the coefficient on M is greater than one in absolute value). 
D) an inferior good since the coefficient on M is negative. 
E) none of the above

Question 11

a.complements since the coefficient on M is positive.
b.substitutes since the coefficient on M is positive.
c.complements since the coefficient on   is positive.
d.substitutes since the coefficient on   is positive.
-The estimated demand for a good is   where Q is the quantity demanded of the good,P is the price of the good,M is income,and   is the price of related good R.If income decreases by $2,000,all else constant,quantity demanded will ________ by _________ units.

Accepted Answer

A) increase; 1.30 units 
B) decrease; 6.5 units 
C) increase; 1,300 units 
D) decrease; 65 units 
A) increase; 1.30 units 
B) decrease; 6.5 units 
C) increase; 1,300 units 
D) decrease; 65 units

Question 12

A forecaster used the regression equation   and quarterly sales data for 1996I-2013IV t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and   and   are dummy variables for quarters I,II,and III.   Using the estimation results given above,the predicted level of sales in 2014I is _______ units.

Accepted Answer

A) 137.5 
B) 139 
C) 133.5 
D) 132 
E) none of the above 
A) 137.5 
B) 139 
C) 133.5 
D) 132 
E) none of the above

Question 13

A consulting firm estimates the following quarterly sales forecasting model:   The equation is estimated using quarterly data from 2005I-2015III t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise.
The results of the estimation are:
  Using the estimated trend line above,what is the predicted level of sales in 2016I ?

Accepted Answer

A) 110.06 
B) 106.20 
C) 104.34 
D) 102.2 
E) none of the above 
A) 110.06 
B) 106.20 
C) 104.34 
D) 102.2 
E) none of the above

Question 14

representative sample

Accepted Answer

A) eliminates the problem of response bias. 
B) reflects the characteristics of the population. 
C) is frequently a random sample. 
D) both b and c 
E) all of the above 
A) eliminates the problem of response bias. 
B) reflects the characteristics of the population. 
C) is frequently a random sample. 
D) both b and c 
E) all of the above

Question 15

Build-Right Concrete Products produces specialty cement used in construction of highways.Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form:   where Q = yards of cement demanded monthly,P = the price of Build-Right's cement per yard,M = state tax revenues per capita,and   = the price of asphalt per yard.The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation.The estimation results are presented below:   Given the above,at the 1 percent level of significance,the number of degrees of freedom for a t-test is _____,and the critical value of the t-statistic is ________.0Only parameter estimates)________ is are)NOT statistically significant at the 1 percent level of significance.

Accepted Answer

A) 30; 2.457;   
B) 30; 2.750;   
C) 34; 2.042;   
D) 34; 2.042,   and
  
A) 30; 2.457;   
B) 30; 2.750;   
C) 34; 2.042;   
D) 34; 2.042,   and

Question 16

Time-series data

Accepted Answer

A) show the behavior of a particular variable over time. 
B) may exhibit trend or cyclical variation,but not both at the same time. 
C) may exhibit trend and cyclical variation at the same time. 
D) both a and b 
E) both a and c 
A) show the behavior of a particular variable over time. 
B) may exhibit trend or cyclical variation,but not both at the same time. 
C) may exhibit trend and cyclical variation at the same time. 
D) both a and b 
E) both a and c

Question 17

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm:   where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and   is the price of a related product.The results of the estimation are presented below:   Assume that the income is $10,000,the price of the related good is $40,and Conlan chooses to set the price of this product at $30.At the prices and income given above,what is the income elasticity?

Accepted Answer

A) -1.62 
B) -0.87 
C) 0.21 
D) 0.31 
E) 1.50 
A) -1.62 
B) -0.87 
C) 0.21 
D) 0.31 
E) 1.50

Question 18

Possible problems with consumer interviews include:

Accepted Answer

A) a non-random sample 
B) the identification problem 
C) response bias 
D) both a and b 
E) both a and c 
A) a non-random sample 
B) the identification problem 
C) response bias 
D) both a and b 
E) both a and c

Question 19

a.complements since the coefficient on M is positive.
b.substitutes since the coefficient on M is positive.
c.complements since the coefficient on   is positive.
d.substitutes since the coefficient on   is positive.
-The estimated demand for a good is   where Q is the quantity demanded of the good,P is the price of the good,M is income,and   is the price of related good R.If the price of the good rises by $10,all else constant,the quantity demanded will ________ by ________ units.

Accepted Answer

A) increase; 16 units 
B) decrease; 160 units 
C) decrease; 1.5 units 
D) increase; 150 units 
A) increase; 16 units 
B) decrease; 160 units 
C) decrease; 1.5 units 
D) increase; 150 units

Question 20

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm:   where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and   is the price of a related product.The results of the estimation are presented below:   Assume that the income is $10,000,the price of the related good is $40,and Conlan chooses to set the price of this product at $30.At the prices and income given above,what is the price elasticity of demand?

Accepted Answer

A) -0.43 
B) -0.86 
C) -1.00 
D) -1.43 
E) -2.40 
A) -0.43 
B) -0.86 
C) -1.00 
D) -1.43 
E) -2.40

Manager-determined prices are

representative sample

Time-series data

Possible problems with consumer interviews include:

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 7: Demand Estimation and Forecasting

Manager-determined prices are

representative sample

Time-series data

Possible problems with consumer interviews include:

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters