Question 1

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 coefficient on P
A) does not have the expected sign.
B) is negative as expected.
C) should have the same sign as the coefficient on  .
D) should not be greater than one (in absolute value).
E) both b and d

Accepted Answer

B

Question 2

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
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

Accepted Answer

D

Question 3

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
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.

Accepted Answer

D

Question 4

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 coefficient on P
A) violates the law of demand.
B) is negative as dictated by the law of demand.
C) should not be greater than one (in absolute value).
D) should have the same sign as the coefficient on

E) both c and d

Accepted Answer

The answer of refer to the following:
The estimated demand for...

Question 5

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
A) an inferior good since the coefficient on 
 
Is negative.
B) a normal good since the coefficient on 
 
Is negative.
C) a normal good since the coefficient on M is greater than one (in absolute value).
D) an inferior good since the coefficient on M is negative.
E) none of the above

Accepted Answer

The answer of refer to the following:
The estimated demand for...

Question 6

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
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

Accepted Answer

The answer of refer to the following:
The estimated demand for...

Question 7

If demand is estimated using the empirical specification

, then an equivalent expression for demand is
A)

B)

C)

D)

E) none of the above

Accepted Answer

The answer of If demand is estimated using the empirical...

Question 8

For a linear demand function,

, the income elasticity is
A) c.
B) c(M/Q).
C) c(Q/M).
D) -c.
E)

Accepted Answer

The answer of For a linear demand function,

, the income...

Question 9

For a nonlinear demand function of the form ,

, the estimated cross-price elasticity of demand is
A) d.
B) -d.
C) d( 
 
/P))
D) -d(P/ 
 
))
E) d(Q/  ).

Accepted Answer

The answer of For a nonlinear demand function of the...

Question 10

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
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.

Accepted Answer

The answer of refer to the following:
Build-Right Concrete Products produces...

Question 11

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:
‪ 
-At the 1 percent level of significance, the number of degrees of freedom for a t-test is _____, and the critical value of the t-statistic is ________. Only parameter estimate(s) ________ is (are) NOT statistically significant at the 1 percent level of significance.
A) 30; 2.457; 
 
B) 30; 2.750; 
C) 34; 2.042; 
 
D) 34; 2.042, 
 
And

Accepted Answer

The answer of refer to the following:
Build-Right Concrete Products produces...

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:
‪ 
-If the price of asphalt (

) decreases 20%, the estimated quantity of cement demanded will:
A) increase 12%
B) increase 6%
C) increase 1.2%
D) decrease 12%.
E) decrease 1.2%.

Accepted Answer

The answer of refer to the following:
Build-Right Concrete Products produces...

Question 13

The estimated demand for a good is

, where

= units of the good, P = price of the good, M = income, and

= price of related good Z. All parameter estimates are statistically significant. Which of the following statements are correct?
A) X is a normal good.
B) X is an inferior good.
C) X and Z are substitutes.
D) X and Z are complements.
E) both b and c

Accepted Answer

The answer of The estimated demand for a good is

,...

Question 14

refer to the following:
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 PS1U1B1RS1U1B0 is the price of a related product. The results of the estimation are presented below:
 
-At the 1% level of significance, the critical value of the F-statistic is equal to __________.
A) 0.7984
B) 4.57
C) 36.14
D) 2.763
E) -3.50

Accepted Answer

The critical value of an F-statistic depends on the degrees of freedom for the numerator and the denominator as well as the level of significance. At the 1% level of significance, common critical values are often above 4, making option B (4.57) a plausible critical value for certain degrees of freedom. Options like 0.7984, 2.763, and 3.50 are more typical of critical values at higher levels of significance (e.g., 5% or 10%). The notation for the F-statistic and its critical values does not include options like "F1F1F1S1?F1F1F10" or "F1F1F1S1?F1F1F103.50," making option B the most reasonable choice given standard statistical tables and practices.

Question 15

refer to the following:
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 PS1U1B1RS1U1B0 is the price of a related product. The results of the estimation are presented below:
 
-At the 1% level of significance, which estimates are statistically significant?
A) All are statistically significant
B) All but  are statistically significant
C) Only  ,  are statistically significant
D) Only  is statistically significant
E) All but   and  are statistically significant

Accepted Answer

The answer of refer to the following:
The following linear demand...

Question 16

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?
A) -0.43
B) -0.86
C) -1.00
D) -1.43
E) -2.40

Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. In this case, the price decreases from $40 to $30, a 25% decrease. The quantity demanded increases from 250 to 333.33, a 33.33% increase. Therefore, the price elasticity of demand is -1.3333 / 0.25 = -5.3333. The closest answer choice is -1.43, which is choice A.

Question 17

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) -1.62
B) -0.87
C) 0.21
D) 0.31
E) 1.50

Accepted Answer

The answer of assume that the income is $10,000, the...

Question 18

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

Accepted Answer

The answer of suppose income remains at $10,000 but the...

Question 19

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

Accepted Answer

The answer of refer to the following:
A consulting firm estimates...

Question 20

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

Accepted Answer

The answer of refer to the following:
A consulting firm estimates...

Quiz 7: Demand Estimation and Forecasting

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 coefficient on P

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. -The coefficient on P

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 good R are

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

For a linear demand function, , the income elasticity is

For a nonlinear demand function of the form , , the estimated cross-price elasticity of demand is

The estimated demand for a good is , where = units of the good, P = price of the good, M = income, and = price of related good Z. All parameter estimates are statistically significant. Which of the following statements are correct?

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?

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?

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?