Studying demand relationships
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ECO 550 MIDTERM PART 2. LATEST MAY 2015 AND OTHER 3 VERSIONS ANSWER POSTED AS A BONUS
Question 1
For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to use?
Answer
ordinary least squares regression on historical data
market experiments, where the price is set differently in two markets
consumer surveys, where potential customers hear about the product and are asked their opinions
double log functional form regression model
Question 2
Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast.
Answer
opinion polling
barometric forecasting
econometric forecasting
time-series forecasting
Question 3
Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example?
Answer
time-series forecasting techniques
barometric techniques
survey techniques and opinion polling
econometric techniques
input-output analysis
Question 4
If two alternative economic models are offered, other things equal, we would
Answer
tend to pick the one with the lowest R2.
select the model that is the most expensive to estimate.
pick the model that was the most complex.
select the model that gave the most accurate forecasts
Question 5
Time-series forecasting models:
Answer
are useful whenever changes occur rapidly and wildly
are more effective in making long-run forecasts than short-run forecasts
are based solely on historical observations of the values of the variable being forecasted
attempt to explain the underlying causal relationships which produce the observed outcome
Question 6
The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:
Answer
secular trend
cyclical variation
seasonal effect
unpredictable random factor
Question 7
If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?
Answer
The value of the dollar falls when US interest rates rise.
The value of the dollar rises when US interest rates rise.
The value of the dollar is not related to US interest rates.
This is known as Purchasing Power Parity or PPP
Question 8
The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time
Answer
increase exports
reduce the competitive pressure on prices
lower the value of the currency in the country with the higher inflation rate
increase foreign aid
increase the speculative demand for the currency
Question 9
Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
Answer
out-of-pocket costs of production decline
free trade areas protect infant industries
economies of scale are present
manufacturers face diminishing returns
more goods are available for consumption
Question 10
An appreciation of the U.S. dollar has what impact on Harley-Davidson (HD), a U.S. manufacturer of motorcycles?
Answer
domestic sales of HD motorcycles increase and foreign sales of HD motorcycles increase
domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles increase
domestic sales of HD motorcycles increase and foreign sales of HD motorcycles decrease
domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles decrease
Question 11
In a recession, the trade balance often improves because
Answer
service exports exceed manufactured good exports
banks sell depressed assets
fewer households can afford luxury imports
direct investment abroad declines
the capital account exceeds the current account
Question 12
European Union labor costs exceed U.S. and British labor costs primarily because
Answer
worker productivity is lower in the EU
union wages are higher in the EU
layoffs and plant closings are more restrictive in the U.S. and Britain
the amount of paid time off is higher in the EU
labor-management relations are better in the EU
Question 13
Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES would
Answer
Decrease the demand for yen and decrease the supply of the yen.
Increase the demand for yen and decrease the supply of the yen.
Increase the demand and increase the supply of yen.
Decrease both the supply and the demand of yen.
Have no impact on the demand or supply of the yen.
Question 14
The isoquants for inputs that are perfect substitutes for one another consist of a series of:
Answer
right angles
parallel lines
concentric circles
right triangles
Question 15
The marginal product is defined as:
Answer
The ratio of total output to the amount of the variable input used in producing the output
The incremental change in total output that can be produced by the use of one more unit of the variable input in the production process
The percentage change in output resulting from a given percentage change in the amount
The amount of fixed cost involved
Question 16
If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is $30, then what should the firm?
Answer
The firm should use relatively more capital
The firm should use relatively more labor
The firm should not make any changes they are currently efficient
Using the Equimarginal Criterion, we cant determine the firms efficiency level
Question 17
Given a Cobb-Douglas production function estimate of Q = 1.19L.72K.18 for a given industry, this industry would have:
Answer
increasing returns to scale
constant returns to scale
decreasing returns to scale
negative returns to scale
Question 18
In a production process, an excessive amount of the variable input relative to the fixed input is being used to produce the desired output. This statement is true for:
Answer
stage II
stages I and II
when Ep = 1
stage III
Question 19
The marginal rate of technical substitution may be defined as all of the following except:
Answer
the rate at which one input may be substituted for another input in the production process, while total output remains constant
equal to the negative slope of the isoquant at any point on the isoquant
the rate at which all combinations of inputs have equal total costs
equal to the ratio of the marginal products of X and Y
Question 20
The cost function is:
Answer
a means for expressing output as a function of cost
a schedule or mathematical relationship showing the total cost of producing various quantities of output
similar to a profit and loss statement
incapable in being developed from statistical regression analysis
Question 21
Economies of Scope refers to situations where per unit costs are:
Answer
Unaffected when two or more products are produced
Reduced when two or more products are produced
Increased when two or more products are produced
Demonstrating constant returns to scale
Demonstrating decreasing returns to scale
Question 22
Economies of scale exist whenever long-run average costs:
Answer
Increase as output is increased
Remain constant as output is increased
Decrease as output is increased
Decline and then rise as output is increased
Question 23
The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
Answer
transportation costs
imperfections in the labor market
imperfections in the capital markets
problems of coordination and control encountered by management
Question 24
What method of inventory valuation should be used for economic decision-making problems?
Answer
book value
original cost
current replacement cost
cost or market, whichever is lower
historical cost
Question 25
____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem.
Answer
Opportunity costs
Marginal costs
Relevant costs
Sunk costs
LINK TO PART 1
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