1			One problem with consumer interviews is that…
			A)	the sample might not be a representative sample.
			B)	interview techniques are not scientific.
			C)	response bias can occur.
			D)	both a and c
			E)	none of the above

The next 5 questions refer to the following:

The estimated demand for a good is

Q = 3,600 - 12P + 0.6M - 2.5P_R

where Q is the quantity demanded of the good, P is the price of the good, M is income, and P_R is the price of related good R.

2			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
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).
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)	substitutes since the coefficient on PR is negative.
			D)	complements since the coefficient on PR is negative.
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
6			If the price of the good decreases by $10, all else constant, the quantity demanded will ________ by ________ units.
			A)	increase; 12 units
			B)	increase; 120 units
			C)	increase; 250 units
			D)	decrease; 1.2 units
7			For a linear demand function, Q = a + bP + cM + dPR, the cross-price elasticity is…
			A)	d
			B)	d(Q/PR)
			C)	d(PR/Q)
			D)	-d
			E)	-d(Q/P)
8			For a nonlinear demand function of the form Q = aPb Mc PRd, the estimated income elasticity is…
			A)	c
			B)	-c
			C)	c(M/P)
			D)	c(M/Q.)
			E)	c(Q/M)

The next 4 questions refer to the following:

Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form:

Q = a P^b M^c P^d_R

where Q = yards of cement demanded monthly, P = the price of Stonebuilt's cement per yard, M = state tax revenues per capita, and P_R = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below:

DEPENDENT VARIABLE	LNQ	R-SQUARE	F-RATIO	P-VALUE ON F
OBSERVATIONS	64	0.8093	84.872	0.0001
VARIABLE		PARAMETER ESTIMATE	STANDARD ERROR	T-RATIO	P-VALUE
INTERCEPT		8.20	4.01	2.04	0.0461
LNP		-3.54	1.64	-2.16	0.0357
LNM		0.64287	0.19	3.38	0.0014
LNPR		0.7854	0.38	2.07	0.0439

9			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.
10			At the 5% level of significance, which parameter estimates are statistically significant?
			A)	only ĉ
			B)	all except b
			C)	none are statistically significant
			D)	all are statistically significant
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%.
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%.
13			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
14			Seasonal or cyclical variation in a time-series model…
			A)	exhibits irregular variation that can be accounted for by dummy variables.
			B)	is regular in nature but can be accounted for by dummy variables.
			C)	can decrease the accuracy of a forecast if not accounted for by dummy variables.
			D)	both a and b
			E)	both b and c

The next 6 questions refer to the following:

A forecaster used the regression equation

Q_t = a + bt + c₁D₁ + c₂D₂ + c₃D₃

and quarterly sales data for 1988I-2006IV (t = 1, ...,72) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and D₁, D₂, and D₃ are dummy variables for quarters I, II, and III.

DEPENDENT VARIABLE:	QT	R-SQUARE	F-RATIO	P-VALUE ON F
OBSERVATIONS:	72	0.8798	122.547	0.0001
VARIABLE		PARAMETER ESTIMATE	STANDARD ERROR	T-RATIO	P-VALUE
INTERCEPT		36	12.54	2.87	0.055
T		2.5	0.860	2.91	0.0049
D1		12.0	3.26	3.68	0.0005
D2		30.0	10.68	2.81	0.0066
D3		45.0	18.45	2.44	0.0174

15			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.
16			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.
17			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
18			In any given year, quarterly sales tend to vary as follows:
			A)	QIV > QIII > QII > QI
			B)	QIII > QII > QI > QIV
			C)	QII > QIII > QIV > QI
			D)	QI > QII > QIV > QIII
			E)	QI > QII > QIII > QIV
19			Using the estimation results given above, the predicted level of sales in 2007I is _______ units.
			A)	240.5
			B)	230.5
			C)	218.5
			D)	194.5
			E)	none of the above
20			Using the estimation results given above, the predicted level of sales in 2007III is _______ units.
			A)	158.5
			B)	177
			C)	232.5
			D)	268.5
			E)	none of the above