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Midterm exam




Question;Below is data on weekly Quantity demanded of pizza in a small;town in South Georgia, prices and average household incomes.;Use the data to perform a regression analysis of price and income on quantity;demanded. (20 points) a.) How well does the regression fit the;data. b.) What is the income elasticity of demand for pizza?;Quantity;Price;Income;1;183;29.25;30.72;2;207;30.1;37.57;3;183;30.54;29.43;4;192;28.67;37.2;5;182;30.23;35.87;6;217;29.76;35.16;7;180;31.77;27.7;8;195;31.01;32.96;9;200;29.21;32.3;10;198;30.79;36.1;11;195;29.75;32.68;12;205;29.98;37.49;13;182;30.06;31.32;14;218;28.94;38.67;15;231;29.76;34.82;16;212;27.94;42.27;17;222;30.75;40.03;18;150;28.96;30.02;19;183;30.96;34.3;20;158;29.03;29.89;21;199;30.83;35.27;22;196;30.6;33.55;23;234;29.98;40.03;24;171;29.27;29.91;25;171;31.42;33.69;26;170;29.24;31.51;27;210;27.61;30.6;28;184;30.64;34.36;29;223;29.97;37.59;30;177;31.87;31.78;31;168;30.06;27.47;32;192;28.83;40.64;33;201;30.91;36.2;34;207;29.84;38.05;35;241;29.94;39.55;36;216;30.67;35.38;37;193;31.03;40.42;38;187;28.45;37.29;39;194;30.02;29.68;40;212;30.85;40.61;41;141;30.46;28.23;42;217;28.85;36.87;43;194;29.34;36.59;44;182;30.1;29.56;45;225;28.88;36.26;46;214;30.2;34.29;47;198;28.56;41.7;48;183;29.51;30.92;49;206;29.86;31.22;50;198;30.83;32.39;a.) How well does the regression fit the data;b.) What;is the income elasticity of demand for pizza?;4.;1.A bond pays $1,000 at the end of each year;for 5 years plus an additional $5,000 when the bond matures at the end of 5;years. What is the most you would be willing to pay for this bond if your;opportunity cost of capital is 5%?;2. Suppose the own price elasticity of demand;for good X is -3, its income elasticity is 2, and the cross price elasticity of;demand between good X and Y is -5.;Determine how much the consumption of this good will change if;a) The price;of good X increases by 5%;b)The price of;good Y increases by 12%;by 12%;quantity demanded of good X decrease by 60%.;3. An;accountant for a car rental company was recently asked to report the firm?s;cost of producing various levels of output. The accountant knows that the;most recent estimate available of the firm?s cost function is C(Q) = 100 + 10Q;+ Q2, where costs are measured in thousands of hours rented;a)What is the average fixed cost of producing 2;units of output?;b)What is the average total cost of producing 2;units of output?;c)What is the marginal cost of producing 2;units of output?;6. Provide an intuitive explanation for why a;?buy one, get one free? deal is not the same as a ?half price? sale


Paper#54367 | Written in 18-Jul-2015

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