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| 1 | |
Which of the following provides an indication of the total variation explained by the regression relative to the total unexplained variation? |
| | A) | P-value. |
| | B) | Adjusted R-square. |
| | C) | t-statistic. |
| | D) | F-statistic. |
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| 2 | |
Suppose the demand for a product is ln Q = ln 4 - 0.5 ln P. The demand for this product is: |
| | A) | unitary elastic. |
| | B) | elastic. |
| | C) | inelastic. |
| | D) | Cannot be determined without more information. |
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| 3 | |
Given a linear demand curve, we know that demand |
| | A) | is elastic at relatively low prices. |
| | B) | is inelastic at relatively low prices. |
| | C) | is unitary elastic at prices where revenues are increasing. |
| | D) | has a constant elasticity at all prices. |
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| 4 | |
The demand for good X has been estimated to be Qx = 11 - 0.5Px + 5Py. Suppose that good X sells at $4 per unit and good Y sells for $1 per unit. Calculate the own price elasticity. |
| | A) | -0.14. |
| | B) | -0.3. |
| | C) | -0.4. |
| | D) | -0.6. |
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| 5 | |
The own-price elasticity of demand for oranges is -4.5. If the price of oranges decreases by 2%, what will happen to the quantity of oranges demanded? |
| | A) | It will rise 9%. |
| | B) | It will rise 2.25%. |
| | C) | It will fall 9%. |
| | D) | It will fall 2.25%. |
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| 6 | |
If quantity demanded for athletic shoes rises by 10% when price decreases 2%, we know that the absolute value of the own-price elasticity of athletic shoes is |
| | A) | 0.2. |
| | B) | 0.05. |
| | C) | 5.0. |
| | D) | 20. |
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| 7 | |
If the cross-price elasticity between cognac and cigars is -3, a 3% decrease in the price of cognac will lead to a |
| | A) | 9% drop in the demand for cigars. |
| | B) | 0.09% drop in the quantity demanded of cognac. |
| | C) | 9% rise in the demand for cigars. |
| | D) | 0.09% rise in quantity demanded of cognac. |
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| 8 | |
If the income elasticity for designer jeans is 1.5, a 10% increase in income will lead to a |
| | A) | 15% rise in demand for designer jeans. |
| | B) | 0.15% drop in the demand for designer jeans. |
| | C) | 0.15% rise in demand for designer jeans. |
| | D) | None of the responses are correct. |
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| 9 | |
You are the manager of a popular hand bag company. You know that the advertising elasticity of demand for your product is 2.5. How much will you have to increase spending on advertising in order to increase demand by 4%? |
| | A) | 0.16%. |
| | B) | 1.6%. |
| | C) | 2%. |
| | D) | 10%. |
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| 10 | |
The t-statistics is |
| | A) | the ratio of a parameter estimate to the standard error of the parameter estimate. |
| | B) | a measure of the interval around the parameter estimate that indicates with 95% accuracy the "true" parameter estimate. |
| | C) | the ratio of the total variation explained by the regression to the total unexplained variation. |
| | D) | the ratio of total variation explained by the regression to total variation. |
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| 11 | |
If the own price elasticity of demand is equal to infinity, then |
| | A) | demand is perfectly elastic. |
| | B) | the demand curve is vertical. |
| | C) | consumers do not respond at all to changes in price. |
| | D) | the demand curve is vertical and consumers do not respond at all to changes in price. |
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| 12 | |
The demand for Bounty brand paper towels is |
| | A) | less elastic than the demand for paper towels in general. |
| | B) | more elastic than the demand for paper towels in general. |
| | C) | equally elastic to the demand for paper towels in general. |
| | D) | none of the responses are correct. |
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| 13 | |
Assume that the price elasticity of demand is -0.25 for a certain firm's product. If the firm increases price, the firm's managers can expect total revenue to |
| | A) | decrease. |
| | B) | increase. |
| | C) | remain constant. |
| | D) | either increase or remain constant depending upon the size of the price increase. |
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| 14 | |
Which of the following is an incorrect statement about the own-price elasticity of demand? |
| | A) | Demand tends to be more elastic in the short-term than in the long-term. |
| | B) | Demand tends to be more inelastic for goods that comprise a larger share of a consumer's budget. |
| | C) | Demand tends to be more inelastic as more substitutes are available. |
| | D) | All of the responses are correct. |
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| 15 | |
Consider a least squares regression line given by Y = 5.25 + 2.3X, where  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073523224/986795/Chap03_img.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (1.0K)</a>]]> = 2 and  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073523224/986795/Chap03_img2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (1.0K)</a>]]> = 1.25. As a general rule-of-thumb, a manager can be 95 percent confident that the true value of the underlying parameter estimate, â , is contained in which of the following intervals? |
| | A) | [5.25-2x1.25, 5.25+2x1.25]. |
| | B) | [5.25-2x2, 5.25+2x2]. |
| | C) | [2.3-2x1.25, 2.3+2x1.25]. |
| | D) | [2.3-2x2, 2.3+2x2]. |
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