Econ - toets 1
If the level significance for testing is specified to be 5%, then the parameter estimate for b is statistically significant if its p-value is... A) 0.048. B) 0.48. C) greater than 0.05. D) equal to the true value of b.
A) 0.048.
In the regression above, which of the following statements is correct at the 5% level of significance? A) Both â and b are statistically significant. B) Neither â nor b is statistically significant. C) â is statistically significant, but b is not. D) b is statistically significant, but â is not.
A) Both â and b are statistically significant.
Which of the following statements is true? A) Implicit costs are the opportunity cost of the owner's resources. B) When economic profit is zero, the firm could have done better putting their resources in some other industry of comparable risk. C) If accounting profit is positive, economic profit must be negative. D) If economic profit is negative, accounting profit must also be negative. E) None of the above statements is true.
A) Implicit costs are the opportunity cost of the owner's resources.
Use the following general linear demand relation to answer the next four questions: Qd= 100 - 5P+ 0.004M- 5PR where P is the price of good X, M is income and PR is the price of a related good, R. From the demand function it is apparent that related good R is A) a complement for good X. B) a substitute for good X. C) a normal good. D) an inferior good.
A) a complement for good X.
MB = 100 - 0.05A MC = 80 + 0.05A adding the 50th unit of activity A will... A) increase net benefits by 15. B) reduce net benefits by 15. C) increase net benefits by 97.5. D) decrease net benefits by 97.5. E) decrease net benefits by 82.5.
A) increase net benefits by 15.
If the p-value is 0.01 for the parameter estimate for b, the A) probability of finding statistical significance when the true value of b is zero is exactly 1%. B) probability of finding significance for the estimate of b when none exists is exactly 0.01%. C) level of confidence is 99.99%. D) probability that the parameter estimate equals the true value of b is 1%. E) probability that the parameter estimate equals the true value of b is 0.01%.
A) probability of finding statistical significance when the true value of b is zero is exactly 1%
Use the following demand and supply functions to answer the next three questions. Demand: Qd = 600 - 30P Supply: Qs = -300 + 120P If the price is currently $4, there is a A) shortage of 300 units. B) shortage of 480 units. C) surplus of 180 units. D) shortage of 180 units. E) none of the above
A) shortage of 300 units.
To test the hypothesis that a particular parameter equals zero, one uses the... A) t-statistic. B) R2-statistic. C) F-statistic. D) standard error statistic. E) none of the above
A) t-statistic.
A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1200 extra patients in a year, while the last nurse hired treated 600 extra patients in a year. If doctors make $70,000 per year and nurses make $30,000 per year, then for the limited annual payroll, A) the clinic could serve more patients by hiring fewer doctors and more nurses. B) the clinic could serve more patients by hiring more doctors and fewer nurses. C) the clinic is not making the correct decision because the additional patients per dollar spent on doctors is greater than the additional patients per dollar spent on nurses. D) the clinic is making the correct decision because doctors are more productive than nurses. E) both b and c
A) the clinic could serve more patients by hiring fewer doctors and more nurses.
When Sonoma Vineyards increases the price of its Chardonnay from $15 per bottle to $20 per bottle, the result is a decrease in... A) the quantity of this wine demanded. B) the quantity of this wine supplied. C) the demand for this wine. D) the supply of this wine.
A) the quantity of this wine demanded.
(image) If the decision maker is choosing 300 units of activity A, A) this level maximizes net benefits. B)i f the activity is increased by one unit, net benefits will increase by $20. C) if the activity is decreased by one unit, net benefits will decrease by $20. D) both b and c. E) none of the above.
A) this level maximizes net benefits.
If a supply curve goes through the point P = $15 and Qs = 400, then A) $15 is the highest price that will induce firms to supply 400 units. B) $15 is the lowest price that will induce firms to supply 400 units. C) at a price higher than $15 there will be a surplus. D) at a price lower than $15 there will be a shortage. E) both a and d
B) $15 is the lowest price that will induce firms to supply 400 units.
Qs = 60 + 8P - 4PI + 20F whereQsis the quantity supplied of the good,Pis the price of the good,PIis the price of an input, andFis the number of firms producing the good. Again suppose Pi = $20 and F = 60, what is the lowest price that will induce firms to supply 1,500 units of output? A) $335 B) $40 C) $320 D) $60
B) $40
A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1200 extra patients in a year, while the last nurse hired treated 600 extra patients in a year. f doctors make $90,000 per year, what do nurses make per year? A) $50,000 per year B) $45,000 per year C) $40,000 per year D) $35,000 per year
B) $45,000 per year
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm want to minimize the net cost of warehouse thefts. If the cost of a stolen radio is $25, what is the MOST the firm would be willing to pay to hire the first security guard? A) $700 B) $500 C) $250 D) $200 E) none of the above
B) $500
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm want to minimize the net cost of warehouse thefts. If each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire? A) 5 B) 4 C) 3 D) 2 E) 1
B) 4
In the regression above, the value of the R2 statistic indicates that A) 60.10% of the total variation in X is explained by the regression equation. B) 60.10% of the total variation in Y is explained by the regression equation. C) 0.6010% of the total variation in Y is explained by the regression equation. D) 0.6010% of the total variation in X is explained by the regression equation.
B) 60.10% of the total variation in Y is explained by the regression equation.
Which of the following is a characteristic of a perfectly-competitive market? A) The firms are price-setters. B) All firms produce and sell a standardized or undifferentiated product. C) It is difficult for new firms to enter the market due to barriers to entry. D) The output sold by a particular firm may be quite different from the output sold by the other firms in the market.
B) All firms produce and sell a standardized or undifferentiated product.
Qs = 60 + 8P - 4PI + 20F whereQsis the quantity supplied of the good,Pis the price of the good,PIis the price of an input, andFis the number of firms producing the good. When Pi = $20 and F = 60, the INVERSE supply function is A) P = 132.5 + 0.125Qs. B) P = -147.5 + 0.125Qs. C) P = 147.5 + 8Qs. D) P = 260 + 8Qs
B) P = -147.5 + 0.125Qs.
Use the following general linear demand relation to answer the next four questions: Qd= 100 - 5P+ 0.004M- 5PR where P is the price of good X, M is income and PR is the price of a related good, R. What is the demand function when M = $40,000 and PR = $20? A) Qd = 360 - 5P B) Qd = 160 - 5P C) Qd = 260 - 5P D) Qd = 160 - 100P E) none of the above
B) Qd = 160 - 5P
Which of the following is a characteristic of a monopoly market structure? A) Close substitutes for the product are available. B) There are barriers to entry. C) The entire market output is produced by only a few firms. D) The greater the ability of consumers to find imperfect substitutes for the firm's product, the lower will be the firm's market power.
B) There are barriers to entry.
A risk premium is... A) subtracted from the discount rate when calculating the present value of a future stream of risky profits. B) a measure calculated to reflect the riskiness of future profits. C) lower the more risky the future stream of profits. D) an additional compensation paid to the workers of a business enterprise.
B) a measure calculated to reflect the riskiness of future profits.
(Image) A ceiling price of $15 would cause... A) a surplus of 800. B) a shortage of 800. C) a surplus of 600. D) a shortage of 600
B) a shortage of 800.
Consider a firm that employs some resources that are owned by the firm. When economic profit is zero, accounting profit is A) positive and equal to the opportunity cost of all the resources used in production. B) equal to the implicit costs of using owner-supplied resources C) negative. D) also zero.
B) equal to the implicit costs of using owner-supplied resources.
Moral hazard... A) occurs when managers pursue profit maximization without regard to the interests of society in general. B) is the cause of principal-agent problems. C) occurs only rarely in modern corporations. D) exists when either party to a contract has an incentive to cancel the contract. E) both a and b
B) is the cause of principal-agent problems.
The sample regression line... A) is the same as the population regression line. B) is used to estimate the population regression line. C) connects the sample data points. D) shows the true relation between the dependent and independent variables. E) none of the above
B) is used to estimate the population regression line.
The value of a firm is... A) smaller the lower is the risk premium used to compute the firm's value. B) larger the lower is the risk premium used to compute the firm's value. C) the price for which the firm can be sold minus the present value of the expected future profits. D) both b and c
B) larger the lower is the risk premium used to compute the firm's value.
If the t-statistic exceeds the critical value of t , then one can... A) not reject the hypothesis that the true value of the parameter equals zero. B) reject the hypothesis that the true value of the parameter equals zero. C) accept the hypothesis that the estimated value of the parameter equals the true value. D) reject the hypothesis that the estimated value of the parameter exceeds the true value. E) reject the hypothesis that the estimated value of the parameter equals the true value.
B) reject the hypothesis that the true value of the parameter equals zero.
For an unconstrained maximization problem the decision maker... A) seeks to maximize total benefits. B) seeks to maximize net benefits. C) does not take the objective function into account because there is no constraint. D) does not take all costs into account because there is no constraint. E) none of the above
B) seeks to maximize net benefits.
If the marginal benefits of increasing study time are greater than the marginal costs, then A) study time should be decreased to zero. B) study time should be increased. C) no conclusion about the relative merits of more or less study time is possible given this scenario. D) there is plenty of time left to study. E) study time should be decreased.
B) study time should be increased.
In the regression above, the parameter estimate of a indicates... A) that when X is zero, Y is 102.54. B) that when X is zero, Y is 412.18. C) ΔY /ΔaD)ΔY / ΔX E) both a and c
B) that when X is zero, Y is 412.18.
(image) If the decision maker is choosing 100 units of activity A, A this level maximizes net benefits. B) the activity could be increased by one unit and net benefits will increase by $20. C) the activity could be increased by one unit and net benefits will decrease by $20. D) the activity could be reduced by one unit and net benefits will increase by $30. E) the activity could be reduced by one unit and net benefits will decrease by $30.
B) the activity could be increased by one unit and net benefits will increase by $20.
(image) If the decision maker is choosing 400 units of activity A, A) this level maximizes net benefits. B) the activity could be reduced by one unit and net benefits will increase by $10. C) the activity could be reduced by one unit and net benefits will decrease by $10. D) the activity could be increased by one unit and net benefits will increase by $15. E) the activity could be increased by one unit and net benefits would decrease by $15.
B) the activity could be reduced by one unit and net benefits will increase by $10.
Economic profit is... A) the difference between total revenue and explicit costs. B) the difference between total revenue and the opportunity cost of all the resources used in production. C) the difference between accounting profit and explicit costs. D) the difference between accounting profit and the opportunity cost of the market-supplied resources used by the firm.
B) the difference between total revenue and the opportunity cost of all the resources used in production.
Which of the following is NOT a feature characterizing market structures? A) the number and size of firms B) the level of capital investment in research and development C) likelihood of new firm's entering a market. D) the degree of product differentiation. E) all of the above characterize market structures.
B) the level of capital investment in research and development
The optimal level of pollution reduction is that level at which... A) the marginal benefit of pollution reduction exceeds the marginal cost of pollution reduction by the greatest amount. B) the total benefit of pollution reduction exceeds the total cost of pollution reduction by the greatest amount. C) pollution is eliminated entirely. D )the total cost of pollution equals the total cost of pollution reduction. E) both b and d.
B) the total benefit of pollution reduction exceeds the total cost of pollution reduction by the greatest amount.
In the regression above, what is the critical value of t at the 5% level of significance? A) 2.131 B) 1.771 C) 2.160 D) 2.145 E) none of the above
C) 2.160
Which of the following will cause a change in quantity supplied? A) Technological change. B) A change in input prices. C) A change in the market price of the good. D) A change in the number of firms in the market. E) all of the above.
C) A change in the market price of the good.
In which of the following cases will the effect on equilibrium output be indeterminate (i.e., depend on the magnitudes of the shifts in supply and demand)? A) Demand decreases and supply decreases. B) Demand remains constant and supply increases. C) Demand decreases and supply increases. D) Demand increases and supply increases. E) none of the above.
C) Demand decreases and supply increases.
Which of the following statements is true? A) Shareholders have little or no ability to force managers to pursue maximization of the firm's value. B) The effectiveness of a board of directors in monitoring managers will be enhanced by appointing members from the firm who are well-informed about the management problems facing the firm. C) Equity ownership by managers is thought to be one of the most effective corporate control mechanisms. D) Reducing the amount of debt financing can reduce the divergence between the shareholders' interests and the owner's interests. E) none of the above are true
C) Equity ownership by managers is thought to be one of the most effective corporate control mechanisms.
To test whether the overall regression equation is statistically significant, one uses the... A) t-statistic. B) R2-statistic. C) F-statistic. D) standard error statistic. E) all of the above
C) F-statistic.
Use the following demand and supply functions to answer the next three questions. Demand: Qd = 600 - 30P Supply: Qs = -300 + 120P Equilibrium price and output are A) P = $2 and Q = 540. B) P = $10 and Q = 300. C) P = $6 and Q = 420. D) P = $3.33 and Q = 500. E) none of the above
C) P = $6 and Q = 420. 600 - 30P = -300 + 120P p = 6 600 - 30(6) = 420
Use the following general linear demand relation to answer the next four questions: Qd= 100 - 5P+ 0.004M- 5PR where P is the price of good X, M is income and PR is the price of a related good, R. From the demand function it is apparent that good X is A) a complement good. B) a substitute good. C) a normal good. D) an inferior good.
C) a normal good.
(Image) A floor price of $30 would cause... A) a surplus of 150. B) a shortage of 150. C) a surplus of 400. D) a shortage of 400.
C) a surplus of 400.
When economic profit is negative, A) total economic cost exceeds total revenue. B) the firm's owners experience the principal-agent problem. C) the firm's owners experience a decrease in wealth. D) both a and b E) both a and c
E) both a and c
In a multiple regression model, the coefficients on the independent variables measure the... A) percent of the variation in the dependent variable explained by a change in that independent variable, all other influences held constant. B) change in the independent variable from a 1-unit change in the dependent variable, all other influences held constant. C) change in the dependent variable from a 1-unit change in that independent variable, all other influences held constant. D) none of the above
C) change in the dependent variable from a 1-unit change in that independent variable, all other influences held constant.
An estimator is unbiased if it produces... A) a parameter from the sample that equals the true parameter. B) estimates of a parameter that are close to the true parameter. C) estimates of a parameter that are, on average, equal to the true parameter. D) estimates of a parameter that are statistically significant. E) both b and d
C) estimates of a parameter that are, on average, equal to the true parameter.
Use the following demand and supply functions to answer the next three questions. Demand: Qd = 600 - 30P Supply: Qs = -300 + 120P If the price is currently $8, there is a A) surplus of 360 units. B) shortage of 360 units. C) surplus of 300 units. D) shortage of 660 units. E) none of the above
C) surplus of 300 units.
Economic profit is the best measure of a firm's performance because... A) economic profit fully accounts for all sources of revenue. B) implicit costs are generally too difficult to measure accurately. C) the opportunity cost of using ALL resources is subtracted from total revenue. D) only explicit costs influence managerial decisions since, in general, only explicit costs can be subtracted from revenue for the purposes of computing taxable profit.
C) the opportunity cost of using ALL resources is subtracted from total revenue.
In making a decision about its newspaper advertising budget, a manager of a firm should NOT consider... A) the impact of the decision on the net benefits of newspaper advertising. B) the additional revenue from increased advertising. C) the sunk costs of developing the newspaper ad. D) the cost of the additional advertising.
C) the sunk costs of developing the newspaper ad.
In a linear regression equation of the form Y = a + bX, the intercept parameter a shows... A) the amount that Y changes when X changes by one unit. B) the amount that X changes when Y changes by one unit. C) the value of Y when X is zero. D) the value of X when Y is zero.
C) the value of Y when X is zero.
A parameter is said to be statistically significant if there is sufficient evidence that the A) sample regression line is equal to the population regression. B) parameter estimated from the sample equals the true value of the parameter. C) true value of the parameter does not equal zero. D) value of the t-ratio equals the critical value. E) both b and c
C) true value of the parameter does not equal zero.
In a linear regression equation of the form Y = a + bX, the slope parameter b shows... A) ΔY / Δb. B) ΔX / Δb C) ΔY / ΔX. D) ΔX / ΔY. E) none of the above
C) ΔY / ΔX.
If input prices increase, all else equal, A) quantity supplied will decrease. B) supply will increase. C) supply will decrease. D) demand will decrease.
C)supply will decrease.
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm want to minimize the net cost of warehouse thefts. If each security guard is paid $200 a week and the cost of a stolen radio is $25, how many security guards should the firm hire? A) 5 B) 4 C) 3 D) 2 E) 1
D) 2
MB = 100 - 0.05A MC = 80 + 0.05A The optimal level of A is... A) 2000 B) 1000 C) 600 D) 200 E) 100
D) 200
In the regression above, if X equals 35, what is the predicted value of Y? A) 593.24 B) 634.71 C) 389.93 D) 434.43
D) 434.43
Which of the following would lead to an INCREASE in the demand for golf balls? A) An decrease in the price of golf balls. B) An increase in the price of golf clubs. C) A decrease in the cost of producing golf balls. D) An increase in average household income when golf balls are a normal good. E) none of the above
D) An increase in average household income when golf balls are a normal good.
Which of the following would decrease the supply of wheat? A) A decrease in the price of pesticides. B) An increase in the demand for wheat. C) A rise in the price of wheat. D) An increase in the price of corn. E) none of the above
D) An increase in the price of corn.
Use the following general linear demand relation to answer the next four questions: Qd= 100 - 5P+ 0.004M- 5PR where P is the price of good X, M is income and PR is the price of a related good, R. If M = $40,000 and PR= $20 and the supply function is Qs = 85 + 10P, market price and output are, respectively, A) P = $15 and Q = 85. B) P = $5 and Q = 185. C) P = $10 and Q = 185. D) P = $5 and Q = 135. E) P = $15 and Q = 235.
D) P = $5 and Q = 135.
In the regression above, the parameter estimate of b indicates that... A) X increases by 0.1765 units when Y increases by one unit. B) X increases by 0.6358 units when Y increases by one unit. C) Y increases by 0.1765 units when X decreases by one unit. D) Y increases by 0.6358 units when X increases by one unit. E) Y increases by 3.60 units when X increases by one unit.
D) Y increases by 0.6358 units when X increases by one unit.
Consumer surplus... A) is always positive. B) for a particular unit of consumption is computed by taking the difference between quantity demand and quantity supplied. C) for all units consumed is the area below demand and below market price over all the units consumed. D) added to producer surplus provides a measure of the net gain to society from the production and consumption of the good. E) all of the above
D) added to producer surplus provides a measure of the net gain to society from the production and consumption of the good.
When a firm is a price-taking firm, A) the price of the product it sells is determined by the intersection of the industry demand and supply curves for the product. B) raising the price of the product above the market-determined price will cause the firm to lose all of its sales. C) many other firms produce a product that is identical to the output produced by the rest of the firms in the industry. D) all of the above
D) all of the above
The principal-agent problem arises when... A) the principal and the agent have different objectives B) the principal cannot decide whether the firm should seek to maximize the expected future profits of the firm or maximize the price for which the firm can be sold. C) the principal cannot enforce the contract with the agent or finds it too costly to monitor the agent. D) both a and c E) none of the above
D) both a and c
When the choice variable is a continuous variable, the decision rule for an unconstrained maximization problem is: A) If MB > MC, increase the activity. B) If MB > MC, decrease the activity. C) Choose the activity so that MB = MC. D) both a and c E) both b and c
D) both a and c
Owners of a firm want the managers to make business decisions that will... A) maximize the value of the firm. B) maximize the market share of the firm. C) maximize expected profit in each period of operation. D) both a and c are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods. E) both a and b are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods.
D) both a and c are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods.
If the price of a complement increases, all else equal, A) quantity demanded will increase. B) quantity supplied will increase. C) demand will increase. D) demand will decrease. E) supply will decrease.
D) demand will decrease.
Economic profit is... A) calculated by subtracting implicit costs of using owner-supplied resources from the firm's total revenue. B) a theoretical measure of a firm's performance and has little value in real world decision-making. C) generally larger than accounting profit. D) negative when costs exceed revenues.
D) negative when costs exceed revenues.
A firm can maximize profit (net benefit) by choosing to produce that level of output at which... A) the additional revenue from the last unit sold is maximized. B) total revenue equals total cost. C) the difference between the additional revenue from the last unit sold and the additional cost of that unit is maximized. D) the additional revenue from the last unit sold equals the additional cost of that unit
D) the additional revenue from the last unit sold equals the additional cost of that unit.
For a constrained maximization problem, the decision maker... A) seeks to maximize the objective function. B) seeks to minimize costs. C) is constrained by the choice set of values for the activities. D) is constrained by a lack of information about the objective function. E) both a and c
E) both a and c
In a linear regression equation Y = a + bX, the fitted or predicted value of Y is... A) the value of X associated with a particular value of Y. B) the value of X predicted by the regression equation. C) the values of the parameters predicted by the estimators. D) the value of Y obtained by substituting specific values of X into the estimated sample regression equation.
D) the value of Y obtained by substituting specific values of X into the estimated sample regression equation.
A price-taking firm can exert no control over price because... A) of a lack of substitutes for the product. B) the firm's individual production is insignificant relative to production in the industry. C) many other firms produce a product that is nearly identical to its product. D) both b and c E) both a and b
D)both b and c
In the nonlinear function Y = aXbZc, the parameter c measures A) ΔY / ΔZ. B) the percent change in Y for a 1 percent change in Z. C) the elasticity of Y with respect to Z. D) both b and c E) all of the above
D)both b and c
Which of the following statements represents poor decision making? A) I've already spent more than 3 years in college so I can't drop out and take a job now. B) I paid for the movie ticket so I might as well stay until the end. C) I've put in so much time on these golf lessons, I can't quit now. D) My stock has dropped $15 a share so I can't afford to sell it now. E) all of the above.
E) all of the above.
A market... A) lowers the transaction costs of doing business. B) is any arrangement that brings buyers and sellers together to exchange goods or services. C) is an institution used exclusively by capitalist nations. D) both b and c E) both a and b
E) both a and b
A firm will maximize profit by producing that level of output at which... A) the additional revenue from the last unit sold equals the additional cost of the last unit. B) total revenue equals total cost. C) total revenue exceeds total cost by the largest amount. D) both a and b E) both a and c
E) both a and c
Brenda consumes only shoes and sushi. In order to maximize her happiness subject to a limited income, Brenda should purchase the amounts of shoes and sushi at which... A) the addition to happiness per dollar spent on shoes is the same as the addition to happiness per dollar spent on sushi. B) the addition to happiness of the last pair of shoes is the same as the addition to happiness of the last meal of sushi. C) she spends all her income. D) both b and c E) both a and c
E) both a and c
A price-setting firm... A) can lower the price of its product and sell more units. B) cannot raise the price of its product without losing nearly all of its sales. C) does not possess market power. D) sells a product that is somehow differentiated from the product sold by its rivals or sells in a limited geographic market area with only one or a few sellers. E) both a and d
E) both a and d
Suppose Dave, the owner-manager of Dave's Golf Academy, earned $200,000 in revenue last year. Dave's explicit costs of operation totaled $130,000. Dave has a Bachelor of Science degree in civil engineering and could be earning $60,000 annually as a civil engineer. A) Dave's implicit cost of using owner-supplied resources is $130,000. B) Dave's economic profit is $70,000. C) Dave's implicit cost of using owner-supplied resources is $60,000. D) Dave's economic profit is $10,000. E) both c and d.
E) both c and d. EP = TR - IP - oppertunity cost = 200000-(130000+60000) = 10000
The quadratic equation, Y = a + bX + cX2, can be estimated using linear regression by estimating... A) Y = a + ZX where Z = (b + c)2 B) Y = a + bZ where Z = X2 C) Y = a + ZX where Z = (b + c) D) Y = a + bX + ZX where Z = c2E)none of the above will work
E) none of the above will work
