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The demand for good X is estimated to be QXd = 10,000 – 4PX + 5PY + 2M + AX where PX is the price of X, PY is the price of good Y, M is income and AX is the amount ofadvertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, andAX = 1,000 units. What is the demand curve for good X?
Correct answer(s):
- 61,500 - 4PX
If demand is perfectly inelastic, then
Correct answer(s):
- The demand curve is vertical
If the own price elasticity of demand is infinite in absolute value, then
Correct answer(s):
- The demand curve is horizontal
Suppose the own-price elasticity of demand for good X is -0.5, and that the price of goodX increases by 10%. What would you expect to happen to the total expenditures on good X?
Correct answer(s):
- Increase
Suppose the own-price elasticity of demand for good X is -0.5, and that the price of goodX increases by 10%. We would expect the quantity demanded of good X to ____
Correct answer(s):
- Decrease by 5%
If the absolute value of the own price elasticity of demand is greater than one, then demand is said to be
Correct answer(s):
- Elastic
The elasticity of variable G with respect to variable S is defined as
Correct answer(s):
- The percentage change in variable G that results from a given percentage change in variable S
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: lnM = 14.666 +.021 lnC – 0.036 lnr, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5% increase in interest rates will cause the demand for money to:
Correct answer(s):
- Drop by.18%
A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: lnM = 14.666 +.021 lnC – 0.036 lnr, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study we know that the interest elasticity is:
Correct answer(s):
- Very inelastic
As a rule-of-thumb, a parameter estimate is statistically different from zero when the absolute value of the t-statistic is:
Correct answer(s):
- Greater than or equal to two
Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?
Correct answer(s):
- Adjusted R-square
Which of the following can be used to quantify the overall statistical significance of a regression?
Correct answer(s):
- F-statistic
Which of the following provides a measure of the overall fit of a regression?
Correct answer(s):
- The F-statistic and R-square
Which of the following is used to determine the statistical significance of a regression coefficient?
Correct answer(s):
- T-statistic
The demand for video recorders has been estimated to be QV = 134 – 1.07PF + 46PM -2.1PV – 5I, where QV is the quantity of video recorders, PF denotes the price of video recorder film, PM is the price of attending a movie, PV is the price of video recorders, and I is income. Based on the estimated demand equation we can conclude:
Correct answer(s):
- Video recorders are inferior goods
The statistical analysis of economic phenomenon is defined as:
Correct answer(s):
- Econometrics
Suppose the demand function is given by QX d = 8PX 0.5 PY 0.25 M0.12 H. Then the demand for good X is:
Correct answer(s):
- Inelastic
Suppose the demand function is given by QX d = 8PX 0.5 PY 0.25 M0.12 H. Then good X is:
Correct answer(s):
- A normal good
Suppose the demand function is given by QX d = 8PX 0.5 PY 0.25 M0.12 H. Then the cross-price elasticity between goods X and Y is:
Correct answer(s):
- 0.25
Suppose the demand for good X is lnQX d = 21 – 0.8 lnPX – 1.6 lnPY + 6.2 lnM + 0.4 lnAX. Then we know that the own-price elasticity for good X is:
Correct answer(s):
- Inelastic cannot be calculated from the existing information