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1 | |
One problem in the estimation of market demand equations is that... |
| | A) | demand and supply determine both price and quantity. |
| | B) | exogenous variables are sometimes determined outside the system of equations. |
| | C) | two-stage least squares is a complicated technique. |
| | D) | both a and b |
| | E) | all of the above |
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2 | |
The next 4 questions refer to the following:
The estimated demand for a good is
Q = 3,600 − 12P + 0.6M − 2.5PR
where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R.
The coefficient on P |
| | A) | violates the law of demand. |
| | B) | is negative as dictated by the law of demand. |
| | C) | should not have the same sign as the coefficient on PR. |
| | D) | should not be greater than one (in absolute value). |
| | E) | both c and d |
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3 | |
The good is... |
| | A) | an inferior good since the coefficient on PR is negative. |
| | B) | a normal good since the coefficient on PR is negative. |
| | C) | a normal good since the coefficient on M is positive. |
| | D) | an inferior good since the coefficient on M is less than one (1). |
| | E) | none of the above |
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4 | |
This good and good R are... |
| | A) | complements since the coefficient on M is positive. |
| | B) | substitutes since the coefficient on M is positive. |
| | C) | substitues since the coefficient on PR is negative. |
| | D) | complements since the coefficient on PR is negative. |
| | E) | none of the above |
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5 | |
If income decreases by $1,000, all else constant, quantity demanded will ________ by _________ units. |
| | A) | increase; 60 units |
| | B) | decrease; 60 units |
| | C) | decrease; 1600 units |
| | D) | decrease; 600 units |
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6 | |
For a nonlinear demand function of the form Q = aPbMcPRd the estimated income elasticity is... |
| | A) | c. |
| | B) | -c. |
| | C) | c(M/P). |
| | D) | c(M/Q). |
| | E) | c(Q/M ). |
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7 | |
A demand function is identified if... |
| | A) | the supply function contains at least one exogenous variable that is not in the demand function. |
| | B) | the supply function contains at least one endogenous variable that is not in the demand function. |
| | C) | the demand function contains at least one exogenous variable that is not in the supply function. |
| | D) | the demand function contains at least one endogenous variable that is not in the supply function. |
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8 | |
The next 6 questions refer to the following:
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The estimated demand for cement is... |
| | A) | elastic because Ê = 8.2. |
| | B) | elastic because Ê = -3.54. |
| | C) | elastic because Ê = -2.16. |
| | D) | inelastic because Ê = -0.357. |
| | E) | inelastic because Ê = -0.461. |
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9 | |
At the 5% level of significance, the number of degrees of freedom for a t-test is _____, and the critical value of the t-statistic is ________. |
| | A) | 63; 1.671 |
| | B) | 64; 2.000 |
| | C) | 60; 1.671 |
| | D) | 60; 2.000 |
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10 | |
At the 5% level of significance, which parameter estimates are statistically significant? |
| | A) |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124368/chap7_13a.gif','popWin', 'width=90,height=86,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (0.0K)</a>]]> |
| | B) |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124368/chap7_13b.gif','popWin', 'width=130,height=89,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (0.0K)</a>]]> |
| | C) | none are statistically significant |
| | D) | all are statistically significant |
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11 | |
If tax revenue per capita (M) increases 10%, the estimated quantity of cement demanded will |
| | 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%. |
| | E) | none of the above |
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12 | |
If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will: |
| | A) | increase 11.8%. |
| | B) | decrease 11.8%. |
| | C) | increase 5.2%. |
| | D) | decrease 5.2%. |
| | E) | increase 1.18%. |
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13 | |
Why can we estimate the demand for a price-setting firm using ordinary least squares whereas market demand estimation requires the more complicated two-stage least squares? |
| | A) | The manager of the firm sets the price, so there is no simultaneity problem. |
| | B) | For a firm, there are always exogenous variables in the demand function but not the supply function. |
| | C) | For a firm, there are always exogenous variables that are in the supply function but not the demand function. |
| | D) | both a and c |
| | E) | none of the above |
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14 | |
A manager-determined price is... |
| | A) | associated with price-taking firms. |
| | B) | an exogenous variable in a demand equation. |
| | C) | not determined by the forces of demand and supply. |
| | D) | both a and b |
| | E) | both b and c |
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15 | |
Time-series models... |
| | A) | cannot be replicated by another researcher. |
| | B) | often use dummy variables to control for the time trend. |
| | C) | often use dummy variables to control for cyclical variation. |
| | D) | both a and b |
| | E) | both b and c |
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16 | |
The next 5 questions refer to the following:
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At the 5 percent level of significance, is there a statistically significant trend in sales? |
| | A) | No, because 2.50 < 2.66. |
| | B) | No, because 2.50 < 2.91. |
| | C) | No, because 2.14 < 2.66. |
| | D) | Yes, because 2.91 > 2.50. |
| | E) | Yes, because 2.91 > 2.00. |
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17 | |
At the 5 percent level of significance, is there a statistically significant trend in sales? |
| | A) | No, because 0.0049 < 2.00. |
| | B) | No, because 0.0049 < 0.05. |
| | C) | Yes, because 0.0049 < 0.05. |
| | D) | Yes, because 2.14 >0.05. |
| | E) | Yes, because 0.86 > 0.05. |
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18 | |
The estimated QUARTERLY increase in sales is ______ units, and the estimated ANNUAL increase in sales is ______ units. |
| | A) | 2.5; 10 |
| | B) | 2.5; 36 |
| | C) | 36; 2.5 |
| | D) | 9; 36 |
| | E) | none of the above |
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19 | |
Using a 5% significance level, these estimation results indicate that |
| | A) | sales in the first quarter are significantly greater than sales in any other quarter. |
| | B) | sales in the second quarter are significantly greater than sales in any other quarter. |
| | C) | sales in the third quarter are significantly greater than sales in any other quarter. |
| | D) | sales in the fourth quarter are significantly greater than sales in any other quarter. |
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20 | |
Using the estimation results given above, _______ units. |
| | A) | 240.5 |
| | B) | 230.5 |
| | C) | 218.5 |
| | D) | 194.5 |
| | E) | none of the above |
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