Question;1.;Mr. Smart still has money in;pocket to spend. If only two products are available to him, apple (A) and beef;(B), the current marginal utility (MU) and unit price (P) are as the following;MUA=3, MUB=10, PA=$1, PB=$4. In;order to maximize his total utility, Mr. Smart should;purchase more beef because its marginal utility is greater than apple?s.;purchase;more apples because the marginal utility per dollar is greater than beef?s.;purchase more beef because he likes it.;purchase;more apples because the price is very low.;2. ?I like ice cream, but after eating;homemade ice cream last night, I want to have something else for desert today.?;This statement most clearly reflects;the law of demand.;the law of diminishing returns.;the law of diminishing marginal;utility.;the law of increasing costs.;3.;Consider;the following linear demand function where QD = quantity demanded, P;= selling price, M= disposable income, PR= price of related good;QD = 60 ? 4P;Assume that the current market price is P=10. In order to increase the total;revenue, the sales manager should _______ the price.;raise;maintain;cut;freeze;4.;A;market demand curve;is the horizontal summation of the;demand curves of all consumers in the market.;is the sum of the prices consumers;are willing to pay at each quantity.;is more unpredictable compared;with a consumer?s individual demand.;Both a and c;Economic profit is defined as the;difference between total revenue and ________________.;explicit cost;total economic cost;implicit cost;shareholder wealth;Which of the following is the;correct procedure order to obtain a better linear regression function for;estimation after Excel operation?;Check r2;(Good fit or not)? F test? t test;F test? t test? Check;r2 (Good fit or not);Check r2;(Good fit or not)? t test? F test;t test? F test? Check;r2 (Good fit or not);Consider the following linear;demand function where QD = quantity demanded, P = selling price.;QD = 60 ? 4P;The price elasticity of demand associated with P=10;?4.00;?2.00;?1.33;?0.67;If the current price elasticity of;demand for product X is?1.2, a 10% price cut will result in;12%;decrease of quantity demanded.;0.8%;increase of total revenue.;12%;increase of total revenue.;0.8%;increase of quantity demanded.;Assume a country?s personal annual;income is estimated by the following regression equation: Y= 33,000 +;1,200X? 4,000DG, where X = Working Experience (Years), DG=1;if male, DG=0, if female. Which of the following statement is;incorrect?;DGis a dummy variable;for gender.;A female with 10 years working;experience is supposed to earn $45,000 per year.;A male with 10 years working;experience is supposed to earn $41,000 per year.;The regression equation indicates;that male dominates in personal annual income.;Which of the following are likely;to increase the value of the firm, based on the shareholders;wealth-maximization model?;The;interest rate increases substantially.;A;previously nonunion workforce votes to unionize.;The government;implements strict pollution control requirements.;A;technological breakthrough allows the firm to reduce its cost of;production.;Assume that a product has the;market demand function QD = 10? P and the market supply function;QS = 2 + P. If a price ceiling (i.e. maximum price) is set at $5;then you will predict which of the following would as a result?;Nothing will happen.;There will be a surplus.;There will be a shortage.;Quantity demanded will be zero.;Which of the following is NOT the;factor affecting how elastic a demand is?;Time;of adjustment;Availability;of close substitutes;Share;in budget;Price;of the good;A price elasticity (ED);of ?0.50 indicates that for a ____________ increase in price, quantity;demanded will ____________ by ______________.;one;percent, increase, 0.50 units;one;unit, increase, 0.50 units;one;percent, decrease, 0.50 percent;one;unit, decrease, 0.50 percent;Which of the following would;increase the supply of corn?;An increase in the price of;pesticides.;A decrease in the demand for corn.;A fall in the price of corn.;A decrease in the price of wheat.;Which of the following is an example;of an implicit cost for a firm?;The value of time worked by the;owner.;Any wages and salaries paid to;employed.;Rent on property not owned by;firm.;Both b and c.;In general, which of the following;methods is the most costly and risky in estimating market demand?;Consumer surveys;Market experiments;Statistical demand analysis;Consumer focus group;Your demand on the 10th;edition textbook in this course is quite price-inelastic because;it has no close substitute.;it is expensive.;it is not important.;it takes a whole semester to;consume.;A simple linear regression function;Y = 20? 0.05X, where Y denotes the sales of gas (x 1,000;gallons) and X denotes the gas price ($ per gallon). We can estimate;that one-dollar increases in gas price will decrease the sales by;5,000 gallons;50 gallons;0.05 gallons;15,000 gallons;The next 2 questions (19~20) refer;to the following;Assume that an individual consumes two goods X and Y. The;total utility (assumed measurable) of each good is independent of the rate of;consumption of other goods. The prices of X and Y are;respectively, $2 and $4.;Units of the Good;Total Utility of X;Total Utility of Y;1;2;3;4;5;6;7;8;20;38;54;68;80;90;98;104;32;60;84;104;120;132;140;144;If the consumer buys the fourth unit;of X;the marginal utility of the fourth;unit is 68 units of satisfaction.;the marginal utility per dollar;spent on X is 39.;the marginal utility per dollar;spent on X is 7.;the total utility from X is;180.;Assume that an individual consumes;two goods X and Y. The total utility (assumed measurable);of each good is independent of the rate of consumption of other goods.;The prices of X and Y are, respectively, $2 and $4.;Units of the Good;Total Utility of X;Total Utility of Y;1;2;3;4;5;6;7;8;20;38;54;68;80;90;98;104;32;60;84;104;120;132;140;144;If the consumer has $22 to spend on X;and Y, the utility-maximizing bundle is;3X and 4Y.;5X and 3Y.;7X and 2Y.;1X and 5Y.;When we construct a regression;function of demand on a product, which of the following should not be;considered as an appropriate independent variable?;Unit production cost;Consumers? income;Price of substitutes;Price of the product;Honda Accord and Toyota Camry;are substitutes. If Toyota Camry?s price rises, then Honda Accord?s;market equilibrium price will be likely to ____ and market equilibrium;quantity will be likely to ____.;increase;increase;increase;decrease;decrease;decrease;decrease;increase;Suppose a company incurs the;following costs;Labor;$9,000;Equipment;(Capital) $6,000;Materials;$7,000;The company owns the building;so it doesn?t have to pay the usual $2,000 in rent. The total economic cost is;the total accounting cost is _______.;$17,000, $15,000;$24,000, $17,000;$24,000, $22,000;$17,000, $22,000;When the accounting profit equals;the implicit costs, the firm earns;a;normal profit.;a;positive economic profit.;a zero;accounting profit.;a;negative accounting profit.;The next 4 questions (25~28) refer;to the following;The estimated regression function of demand for a good is Q = 20? 0.5P + 0.02M? 0.1PR;where Q is the quantity demanded of the good, P is the price of;the good, M is income, PR is the price of related;good.;The coefficient of P implies that;the function violates the law of;demand.;the price elasticity of demand is;? 0.5.;if the good?s price increases by 1;then quantity demanded will decrease by 0.5.;the good is an inferior good.;The estimated regression function of;demand for a good is Q = 20? 0.5P + 0.02M? 0.1PR;where Q is the quantity demanded of the good, P is the price of;the good, M is income, PR is the price of related;good.;The coefficient of M implies that;the income elasticity is 0.02.;the good is a normal good.;income is not an important;determinant for demand.;if income declines by 1 then;quantity demanded will increase by 0.02.;The estimated regression function of;demand for a good is;Q = 20? 0.5P + 0.02M? 0.1PR;where Q is the quantity demanded of the good, P is the price of;the good, M is income, PR is the price of related;good.;The coefficient of PR;implies that;the good is an inferior good.;the good and the related good are;substitutes.;the good and the related good are;complements.;the demand on the related good is;inelastic.;The estimated regression function of;demand for a good is Q = 20? 0.5P + 0.02M? 0.1PR;where Q is the quantity demanded of the good, P is the price of;the good, M is income, PR is the price of related;good.;The price elasticity of demand, given P=10, M=100, PR;=20, should be;?1.33.;?0.66.;?0.50.;?0.33.;For a firm?s decision-making, the;principal-agent problem arises when;the principal and the agent have;different objectives.;the agent cannot enforce the;principal to manage well.;there are too many principals but;only few agents.;the agent considers to maximize;the firm?s wealth.;Which of the following is most unlikely;to be an appropriate independent variable to construct the market demand on;DVD movie rental?;Movie;theater box office ticket price.;Number;of movie theaters.;Household;income level.;Population;of movie goers;Moving along a downward sloping;linear demand curve from top to bottom, the point elasticity of demand;is constant everywhere.;becomes more inelastic.;becomes more elastic.;changes randomly.;A simple linear regression model has;the coefficient of determination, r2=0.81. We can conclude that;the model is not a good fit.;only 19% variation of the;dependent variable are determined by other factors not considered in the;model.;about 81% of the independent;variables can determine the dependent variable.;the independent variable and the;dependent variable are not related.;The ABC Company developed the;following quarterly sales forecasting model;Yt= 5.8 + 0.03t;where Yt = predicted sales ($million) in quarter t, t = 1 (First;quarter of 2005), 2 (Second quarter of 2005), 3 (Third quarter of 2005), and so;on. Given the model, the sales for the fourth quarter of 2012 are forecasted;as.;$6.76 million.;$7.00 million.;$14.20 million.;$15.40 million;Which of the following will never be;negative in economic theory?;Cross-price elasticity;Marginal utility;Income elasticity of demand;Marginal cost;When the price of Washington apples;increases, which of the following change is most unlikely, if all the other;factors remain?;Quantity demanded of Washington;apples decreases.;Demand on Fuji apples increases.;Supply on apple juice increases.;Quantity supplied of Washington;apple increases.;The next 3 questions (36~38) refer;to the following;The linear regression equation, Y = a + bX, was estimated.;The following computer printout was obtained;when X;is zero, Y is 7.85.;when X;is zero, Y is 3.19.;when Y;is zero, X is 0.36.;when Y;is zero, X is 6.88.;The linear regression equation, Y;= a + bX, was estimated. The following computer printout;was;obtained;The parameter estimate of b;indicates;X;increases by 0.36 units when Y increases by one unit.;X;decreases by 1 units when Y increases by 0.36 units.;a 10-unit decrease in X;results in a 3.6 units decrease in Y.;a 10-unit increase in X;results in a 78.5 units increase in Y.;The linear regression equation, Y;= a + bX, was estimated. The following computer printout;was;obtained;DEPENDENT;VARIABLE;Y;R-SQUARE;F-RATIO;P-VALUE ON F;OBSERVATIONS;21;0.8662;6.1798;0.0274;VARIABLE;PARAMETER;ESTIMATE;STANDARD;ERROR;RATIO;P-VALUE;INTERCEPT;7.85;3.19;2.94;0.0008;X;0.36;6.88;-2.46;0.0274;Assume the default level of significance is at 0.05. The regression equation is;considered as ______ for sample and (but) ______ applied significantly for;population estimation.;a good fit, can be;not a good fit, can be;a good fit, cannot be;not a good fit, cannot be;In the cost-benefit analysis, the;maximum net benefit (NB) occurs in which;the total benefit (TB) is;maximized.;the marginal cost (MC) is;minimized.;the marginal benefit (MB) and the;marginal cost (MC) are equal.;the total cost (TC) is minimized.;If consumers foresee the price of;electric car will drop significantly in the near future, then the current;market _______ of electric car will _______.;demand, increase;demand, decrease;supply, decrease;price, increase;If both demand and supply were to;increase, then the market equilibrium;quantity would;fall and price might rise or fall.;quantity would;rise and price might fall or rise.;price would;fall and quantity might rise or fall.;price would be;unchanged and quantity might fall.;The following figure shows two;demand curves at price = P*. Which of the following is most likely to explain;the shapes of demand curve correctly?;Demand on A is;more elastic.;If both A and B;represent the same product, then A is for short-run demand and B is for long-run;demand.;A has more;substitutes.;B has a smaller;share in consumers? expenditure (budget).;Diamonds are more expensive than;water because;diamonds yield higher total;utility.;market does not really reflect;water?s value.;diamonds are rare.;diamonds yield higher marginal;utility.;Assume that the following log-linear;regression model represents the demand on vacation travel in the United States;lnQ = 2.05?1.64 lnP + 1.13 lnY;where (Q) is the annual household vacation travel mileage, (P) is the price per;mile, (Y) is the disposable household annual income.;Which of the following statements;for vacation travel is incorrect?;The price elasticity of demand is?1.64.;It is a necessity because the;income elasticity is positive.;It is a luxury good because the;income elasticity is greater than 1.;The demand is elastic.;The next 2 questions (45~46) refer;to the following;Level of Activity;Total Benefit;Total;Cost;Marginal Benefit;Marginal Cost;Net;Benefit;0;1;2;3;0;75;0;60;xx;65;xx;70;0;25;10;The marginal benefit for the 3rd activity should be;70.;65.;60.;55.;Level of Activity;Total Benefit;Total;Cost;Marginal Benefit;Marginal Cost;Net;Benefit;0;1;2;3;0;75;0;60;xx;65;xx;70;0;25;10;The optimal level of activity should be;0.;1.;2.;3.
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