Quiz1

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School

Laurentian University *

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OPER5001

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Economics

Date

Feb 20, 2024

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docx

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Uploaded by ChiefCrownDugong35

n 1 1 Heteroscedasticity occurs when: 1) the variance of the random error is non-constant over the sample. 2) the regression coefficient estimates are highly unstable. 3) the random errors are correlated over time. 4) two or more explanatory variables are highly correlated. 5) the dependent and the explanatory variables are highly uncorrelated. Questi on 2 1 / 1 point Which of the following is true of economic models? 1) Models are too theoretical to be applicable in real world decisions. 2) Models are not useful because uncertainty prevents accurate forecasts. 3) Models are simplified descriptions of processes, relationships, or other phenomena. 4) Models describe real world situations in complete detail. 5) Models are not useful because they do not take into account complicating and less important feature Questi on 3 1 / 1 point A profit-maximizing firm will hire the variable input, labor, until the point where: 1) marginal product of labor is equal to the marginal revenue product of capital. 2) marginal revenue from each unit of output is equal to the wage rate. 3) marginal revenue product of labor is equal to the marginal cost of labor.

4) marginal revenue product of labor is equal to zero. 5) marginal product of labor equals the marginal revenue from each unit of output. Questi on 4 1 / 1 point An equation's root mean squared error is: 1) a measure of how closely its predictions match actual outcomes. 2) a measure of how closely the equation explains past data. 3) inversely proportional to the difference between the actual value and the predicted value. 4) derived from the R2 statistic. 5) equal to the square root of the sum of squared errors. Questi on 5 1 / 1 point A cosmetics company is conducting a second-year review of one of its newest products. The marketing department expects that the firm will continue to earn profits from the sale of the product in the third year as it did in the past two years. Senior management, however, feels that the profit projections would vary based on other factors such as the price of the competitor's products, the actual level of sales, and the possibility of cost reductions. In other words, the senior management is undertaking _____. 1) a sensitivity analysis 2) an enumeration study 3) a benefit-cost analysis 4) a contingent valuation study

5) a strategic analysis Questi on 6 0 / 1 point When Rita was a student, she consumed beer with her dinner. Over the years, as her income increased, she substituted beer for a glass of wine. From this information, one can imply that: 1) the law of demand does not hold for beer. 2) wine and beer are complementary goods. 3) Rita considers beer an inferior good. 4) the price elasticity of demand for beer is high. 5) Rita gets more utility from beer than from wine. Question 7 1 / 1 point A regression coefficient measures: 1) the change in the dependent variable due to a unit change in a particular independent variable. 2) the correlation between the dependent and independent variables. 3) the correlation between the explanatory variables. 4) the intercept of the regression line. 5) the value of the predicted variable when the explanatory variables remain unchanged. Questi on 8 1 / 1 point Which of the following identifies the optimal usage of inputs by a profit-maximizing firm? 1) Marginal product of labor = marginal product of capital = 0

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2) Marginal product of labor/price of labor = marginal product of capital/price of capital 3) Marginal revenue product of labor = marginal revenue product of capital 4) Marginal cost of labor = marginal cost of capital 5) Marginal product of labor/marginal product of capital = price of capital/price of labor Questi on 9 1 / 1 point The short-run is best defined as the time period in which: 1) all inputs to production can be varied 2) the amount of output cannot be varied 3) one or more inputs to production are fixed 4) the marginal cost of production is low 5) all inputs to production remain fixed Questio n 10 1 / 1 point The equation Q = a + bt + ct 2 represents: 1) a quadratic trend. 2) a linear trend. 3) a smooth downward trend. 4) a harmonic trend. 5) an exponential trend. Questio 1 / 1

n 11 point A firm’s demand curve is estimated to be Q = 400 – 5P, where Q is quantity and P is the price of the good. At P = $20, the point elasticity of demand is _____. 1) –0.25 2) –0.067 3) –0.33 4) –0.67 5) –1.33 Questio n 12 1 / 1 point Business cycles are: 1) short-term patterns of increases and decreases in economic activity around a general trend. 2) irregular fluctuations in the level of economic activity, which rarely occur anymore. 3) predictable economic expansions above the long-term trend. 4) abrupt and unexpected departures from the current economic trend. 5) periodic fluctuations in aggregate demand that depend on the time of the year. Questio n 13 1 / 1 point When a firm faces constant returns to scale, a proportionate increase in all inputs: 1) will keep output constant. 2) will increase output by the same proportion as the increase in inputs. 3) will lead to a decline in the cost of production.

4) will result in a higher-than-proportionate increase in output. 5) will not change the total costs of production. Questio n 14 1 / 1 point Is it always worthwhile gathering more information about customer needs and preferences? 1) Yes, the cost of gathering information is always negligible. 2) Yes, provided that this information is relevant to the firm's decisions. 3) No, a good rule of thumb is not to spend on information more than 2% of what is at stake in the dec 4) No, the value of additional information must be compared to its additional cost. 5) Yes, gathering more information enables the firm to forecast demand more accurately. Questio n 15 1 / 1 point According to the satisficing model of management behavior, the goal of a firm is to: 1) satisfy customers, employees, and shareholders. 2) maximize the gain to society and not just to shareholders. 3) achieve a satisfactory level of performance against a benchmark. 4) maximize sales revenue and not necessarily the value of the firm. 5) maximize its market share even at the cost of profit. Questio n 16 0 / 1 point Maximizing profit by enumerating the profit outcomes of different courses of action

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1) Is only applicable to problems with a small number of alternatives. 2) Becomes increasingly costly as the number of choices increase. 3) Always discovers the best possible choice. 4) Provides a useful shortcut to finding the optimal choice. 5) Answers becomes increasingly costly as the number of choices increase and always discovers the b correct. Questio n 17 1 / 1 point If a study examines several different markets at the same time, and compares outcomes with conditions in each market, it is specifically using: 1) time series data. 2) censored data. 3) controlled data. 4) truncated data. 5) cross-sectional data. Questio n 18 1 / 1 point Given that the market share of a firm depends on many unpredictable factors, a firm will use a _____ economic model to estimate the market share for one of its products. 1) deterministic 2) dynamic 3) qualitative

4) probabilistic 5) comparative statics Questio n 19 1 / 1 point A regression analysis is said to suffer from multicollinearity when: 1) the dependent and independent variables move in the same direction. 2) two or more explanatory variables tend to move together. 3) the degrees of freedom in the regression is equal to zero. 4) the explanatory variables vary independently of one another. 5) the correlation coefficient between the predicted and the explanatory variables is equal to zero. Questio n 20 1 / 1 point The slope of an isocost line shows: 1) the ratio of the marginal revenue product of the inputs. 2) the ratio of marginal product of the inputs. 3) the marginal rate of technical substitution. 4) the ratio of the input prices. 5) the output elasticity of production. Questio n 21 1 / 1 point Suppose a firm's inverse demand function is P = 40 – 8Q. What is the firm's revenue function?

1) R = 40Q – 8Q 2 2) R = 40 – 16Q 3) R = –8Q 4) R = 40/Q – 8 5) R = 40Q – 4Q 2 Questio n 22 0 / 1 point The following table shows the total output produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $32. Number of Workers Total Output 1 8 2 18 3 30 4 41 5 50 6 56 7 60 8 61 9 62 Table 5.1 Refer to Table 5-1. What is the marginal profit of the 2nd worker? 1) $24 2) $20

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3) $12 4) $8 5) $0 Questio n 23 1 / 1 point Calculate the standard error of a regression equation if the sum of squared errors of the observations is 625 and the degrees of freedom in the regression is 25. 1) 5 2) 10 3) 7.5 4) 2.5 5) 25 Questio n 24 1 / 1 point The following table shows the total revenue (in dollars) and total cost (in dollars) from the production and sale of different units of a product. Price Quantity Total Revenue Total Cost 15 1 15 3 14 2 28 7 13 3 39 12 12 4 48 18 11 5 55 25 10 6 60 33 Table 2.1

Refer to Table 2-1. What is the marginal revenue associated with the sale of the 5th unit of the good? 1) $55 2) $8 3) $7 4) $48 5) $4 Questio n 25 1 / 1 point The following table shows the total output produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $32. Number of Workers Total Output 1 8 2 18 3 30 4 41 5 50 6 56 7 60 8 61 9 62 Table 5.1 Refer to Table 5-1. What is the marginal product of the 5th worker?

1) 9 units 2) 2 units 3) 8 units 4) 6 units 5) 11 units Questio n 26 0 / 1 point If a firm’s profit is given by π = -150 + 360Q - 36Q 2 , then its optimal output is: 1) 12 units. 2) 5 units. 3) 2 units. 4) 20 units. 5) 36 units. Questio n 27 1 / 1 point The following table shows the total output produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $32. Number of Workers Total Output 1 8 2 18 3 30

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4 41 5 50 6 56 7 60 8 61 9 62 Table 5.1 Refer to Table 5-1. What is the total revenue that accrues to the firm when it employs 4 workers? 1) $36 2) $112 3) $100 4) $60 5) $82 Questio n 28 0 / 1 point The following table shows the total output produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $32. Number of Workers Total Output 1 8 2 18 3 30 4 41 5 50

6 56 7 60 8 61 9 62 Table 5.1 Refer to Table 5-1. Diminishing returns occurs beyond: 1) 2 workers. 2) 3 workers. 3) 4 workers. 4) 5 workers. 5) 6 workers. Questio n 29 1 / 1 point Given that a firm's inverse demand function is P = 100 – 5Q and total cost is given by C = 550 + 10Q, what is the firm's profit-maximizing level of output? 1) 10 units 2) 15 units 3) 9 units 4) 8 units 5) 5 units Questio n 30 1 / 1 point

The following table shows the predicted and the actual sales of a firm in the quarters of a year. Quarter Predicated Sales (in dollars) Actual Sales (in dollars) 1 20 19 2 22 20 3 24 21 4 28 26 Table 4.1 Calculate the sum of squared errors of the observations from Table 4- 1. 1) 20 2) 34 3) 18 4) 22 5) 15

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