Question 1

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.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 2

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,the estimated cross-price elasticity of demand for cement relative to the price of asphalt is

Accepted Answer

A) 0.3 
B) 0.6 
C) 1.2 
D) 3.0 
E) none of the above

Question 3

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:
 Given the above,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 4

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.  At the 5 percent level of significance,is there a statistically significant trend in sales?

Accepted Answer

A) No,because 1.5  2.00. 
E) none of the above

Question 5

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,which estimates are statistically significant?

Accepted Answer

A) All are statistically significant 
B) All but  are statistically significant 
C) Only  are statistically significant 
D) Only  is statistically significant 
E) All but  are statistically significant

Question 6

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 7

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:
 Given the above,these estimates indicate that the second quarter change in sales is

Accepted Answer

A) 22.5 units higher in the second quarter than in the other three quarters. 
B) 1.86 units higher in the second quarter than in the other three quarters. 
C) 2.00 units higher in the second quarter than in the other three quarters. 
D) 24.5 units higher in the second quarter than in the other three quarters.

Question 8

The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV t = 1,...,36)and the regression equation  to forecast doll prices in the year 2014.  is the quarterly price of dolls,and  and  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

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.If the price of the good falls by $4,the quantity demanded will ________ by ________ units.

Accepted Answer

A) increase; 5 units 
B) increase; 20 units 
C) increase; 50 units 
D) increase; 48 units 
E) decrease; 12 units

Question 10

Problems in forecasting include:

Accepted Answer

A) estimates becoming more reliable the further you forecast into the future 
B) specification error 
C) cyclical variation 
D) both b and c 
E) all of the above

Question 11

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:  For the next 2 questions suppose income remains at $10,000 but the price of the related good increases to $60 and Conlan decides to raise the price of its product to $50.What is the new own price elasticity of demand?

Accepted Answer

A) -0.24 
B) -0.43 
C) -0.87 
D) -1.00 
E) -1.26

Question 12

Dummy variables are used in time-series forecasting models

Accepted Answer

A) to change the intercept of a regression in selected periods. 
B) to account for random variation in the data. 
C) to account for seasonal variation in the data. 
D) both a and b 
E) both a and c

Question 13

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) 	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 14

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:
 Given the above,what is the estimated intercept of the trend line in the third quarter?

Accepted Answer

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

Question 15

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 2014II is _______ units.

Accepted Answer

A) 127.5 
B) 137.5 
C) 154 
D) 155.5 
E) none of the above

Question 16

The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV t = 1,...,36)and the regression equation  to forecast doll prices in the year 2014.  is the quarterly price of dolls,and  and  are dummy variables for quarters I,II,and III,respectively.  What is the estimated intercept of the trend line in the 4th quarter?

Accepted Answer

A) 22.8 
B) 16 
C) 18 
D) 20 
E) none of the above

Question 17

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:
 Given the above,at the 1 percent level of significance,is there a statistically significant trend in sales?

Accepted Answer

A) Yes,because 0.0016  0.01. 
D) Yes,because 1.86 > 0.01. 
E) both c and d

Question 18

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 Build-Right decides to charge the State Highway Department $55 per yard for its cement when tax revenues per capita are $3,200 and the price of asphalt is $35 per yard,the expected quantity demanded is

Accepted Answer

A) 1,000 yards of cement. 
B) 2,000 yards of cement. 
C) 4,000 yards of cement. 
D) 6,000 yards of cement. 
E) 8,000 yards of cement.

Question 19

problem with consumer interviews is that

Accepted Answer

A) the sample may not be a representative sample. 
B) response bias. 
C) interviews allow for rapid turnaround. 
D) both a and b 
E) all of the above

Question 20

A market-determined price

Accepted Answer

A) is determined by the manager of a firm. 
B) is determined by the intersection of demand and supply curves. 
C) is an endogenous variable 
D) both a and b 
E) both b and c

Exam 7: Demand Estimation and Forecasting

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

Problems in forecasting include:

Dummy variables are used in time-series forecasting models

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

problem with consumer interviews is that

A market-determined price