Question 1

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 D

Question 2

A linear trend equation for sales of the form  was estimated using annual sales data for the period 2000 - 2007 (i.e., t = 2000, 2001, ..., 2007). The results of the regression are as follows: 
 
-The statistical estimates indicate a(n) ___________ (upward, downward) trend in sales of _________ units per year.

Accepted Answer

upward; 12,045

Question 3

The empirical demand function is estimated in log-linear form as  where  is the estimated number of units of good X demanded, P is the price of X, M is income, and  is the price of related good Y. (All parameters estimates are significantly different from zero at the 5 percent level.)
-Express the empirical demand function in the alternative (non-logarithmic) form: 
  =_________________________.

Accepted Answer

‪

Question 4

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method:
  The estimation results are presented below:
‪ 
-Good X is a(n) ______________ good and goods X and R are _________________.

Accepted Answer

The answer of The following log-linear demand curve for a...

Question 5

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method:
  The estimation results are presented below:
‪ 
-Find estimates for the following elasticities:
(1) Price elasticity: __________.
(2) Cross-price elasticity: __________.
(3) Income elasticity: __________.

Accepted Answer

The answer of The following log-linear demand curve for a...

Question 6

A linear trend equation for sales of the form  was estimated using annual sales data for the period 2000 - 2007 (i.e., t = 2000, 2001, ..., 2007). The results of the regression are as follows: 
 
-At the 10 percent level of significance, the critical value of the t-statistic is _______. The parameter estimate of a ________ (is, is not) statistically significant. The parameter estimate of b ________ (is, is not) statistically significant.

Accepted Answer

The answer of A linear trend equation for sales of...

Question 7

Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department estimated a linear demand function for Border's picante sauce:  where  is the number of jars of picante sauce sold per month,  is the price of picante sauce,  is the price of a bag of nacho chips,  is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations:
‪ 
-The estimates indicate that picante sauce and nacho chips are _______. The estimates indicate that picante sauce and queso dip are _________. The estimates indicate that picante sauce is a(n) _________ good.

Accepted Answer

The answer of Border Snacks Inc. produces and sells picante...

Question 8

refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2002I - 2010IV (t = 1, ..., 36) and the regression equation

to forecast doll prices in the year 2011. PS1U1B1tS1U1B0 is the quarterly price of dolls, and D1S1U1B1tS1U1B0 , D2S1U1B1tS1U1B0 and D3S1U1B1tS1U1B0 are dummy variables for quarters I, II, and III, respectively.
 
-The estimated QUARTERLY increase in price is ______, and the estimated ANNUAL increase in price is ______ .

Accepted Answer

A)   $1.50; $6.00
B)   $1.40; $4.00
C)   $0.60; $2.40
D)   $0.80; $3.20
E)   none of the above

Question 9

refer to the following:
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 positive.
B)   a normal good since the coefficient on  Is positive.
C)   an inferior good since the coefficient on M is greater than one.
D)   a normal good since the coefficient on M is positive.
E)   none of the above

Question 10

The empirical demand function is estimated in log-linear form as  where  is the estimated number of units of good X demanded, P is the price of X, M is income, and  is the price of related good Y. (All parameters estimates are significantly different from zero at the 5 percent level.)
-Good X is a(n) ______________ good and goods X and Y are ____________________.

Accepted Answer

The answer of The empirical demand function is estimated in...

Question 11

refer to the following:
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.
-This good and the related good R are

Accepted Answer

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.

Question 12

refer to the following:
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:
‪ 
-The estimated demand for cement is

Accepted Answer

A)   elastic because =  4.0.
B)   elastic because =  2.0.
C)   elastic because =  1.5.
D)   inelastic because =  0.32.
E)   inelastic because =  0.8.

Question 13

You decide to estimate the following quarterly sales forecasting model for new boat sales in your local county: The equation is estimated using quarterly data on new boat sales in the county from 2001III -2007IV ( t = 1,..., 26). The variable D is a dummy variable for the second quarter, which is the "season" for selling new boats: D = 1 in the second quarter, and 0 otherwise. The results of the estimation are: -The forecasted sales for the 3^rd quarter of 2008 are ___________ units.

Accepted Answer

The answer of You decide to estimate the following quarterly...

Question 14

refer to the following:
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.
-This good and good R are

Accepted Answer

A)   complements since the coefficient on M is negative.
B)   substitutes since the coefficient on M is negative.
C)   complements since the coefficient on  Is negative.
D)   substitutes since the coefficient on  Is negative.
E)   none of the above

Question 15

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

Question 16

You decide to estimate the following quarterly sales forecasting model for new boat sales in your local county: The equation is estimated using quarterly data on new boat sales in the county from 2001III -2007IV ( t = 1,..., 26). The variable D is a dummy variable for the second quarter, which is the "season" for selling new boats: D = 1 in the second quarter, and 0 otherwise. The results of the estimation are: -The forecasted sales for the 1^st quarter of 2008 are ___________ units.

Accepted Answer

The answer of You decide to estimate the following quarterly...

Question 17

refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
 ‪  
The equation is estimated using quarterly data from 2000I-2010III (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:
 ‪ 
-What is the estimated intercept of the trend line in the second quarter?

Accepted Answer

A)   22.50
B)   24.50
C)   24.36
D)   2.00
E)   none of the above

Question 18

A forecaster used the following regression equation  and quarterly sales data during 1999II - 2007IV (t = 1, ..., 35) for an appliance manufacturer to obtain the estimation results shown below. Q is quarterly sales, and  ,and  are seasonal dummy variables for quarters I, II, and III.
 
-The estimated intercepts for each of the four quarters are:
Intercept for quarter 1 is __________.
Intercept for quarter 2 is __________.
Intercept for quarter 3 is __________.
Intercept for quarter 4 is __________.

Accepted Answer

The answer of A forecaster used the following regression equation...

Question 19

If demand is estimated using the empirical specification

, then an equivalent expression for demand is

Accepted Answer

A)    
B)    
C)    
D)    
E)   none of the above

Question 20

A forecaster used the following regression equation  and quarterly sales data during 1999II - 2007IV (t = 1, ..., 35) for an appliance manufacturer to obtain the estimation results shown below. Q is quarterly sales, and  ,and  are seasonal dummy variables for quarters I, II, and III.
 
-The statistical estimates indicate a(n) ___________ (upward, downward) trend in sales of _________ units per quarter year.

Accepted Answer

The answer of A forecaster used the following regression equation...

Exam 7: Demand Estimation and Forecasting

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?

A linear trend equation for sales of the form was estimated using annual sales data for the period 2000 - 2007 (i.e., t = 2000, 2001, ..., 2007). The results of the regression are as follows: -The statistical estimates indicate a(n) ___ (upward, downward) trend in sales of _ units per year.

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method: The estimation results are presented below: ‪ -Good X is a(n) good and goods X and R are ___.

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method: The estimation results are presented below: ‪ -Find estimates for the following elasticities: (1) Price elasticity: . (2) Cross-price elasticity: . (3) Income elasticity: __.

refer to the following: 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

refer to the following: 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. -This good and the related good R are

refer to the following: 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. -This good and good R are

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?

If demand is estimated using the empirical specification , then an equivalent expression for demand is