customer and business buyer
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customer and business buyer

Course: BUS 102, Spring 2011

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CHAPTER 6 CONSUMER AND BUSINESS BUYER BEHAVIOR MULTIPLE CHOICE QUESTIONS 1. _________________ refers to the buying behavior of final consumers. a. Consumer buyer behavior b. Target market buying c. Market segment buying d. Business buying behavior Answer: (a) Difficulty: (1) Page: 191 2. ____________ is individuals and households who buy goods and services for personal consumption. a. The target market b. A market...

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6 CONSUMER CHAPTER AND BUSINESS BUYER BEHAVIOR MULTIPLE CHOICE QUESTIONS 1. _________________ refers to the buying behavior of final consumers. a. Consumer buyer behavior b. Target market buying c. Market segment buying d. Business buying behavior Answer: (a) Difficulty: (1) Page: 191 2. ____________ is individuals and households who buy goods and services for personal consumption. a. The target market b. A market segment c. The consumer market d. The ethnographic market Answer: (c) Difficulty: (1) Page: 191, 192 3. According to the text, the American consumer market consists of: a. 189 million consumers. b. 284 million consumers. c. 375 million consumers. d. 438 million consumers. Answer: (b) Difficulty: (3) Page: 191 4. Understanding consumer buying behavior is not easy. The answers are often locked deep within the consumers head. The central question for marketers is: a. how much money is the consumer willing to spend? b. how much does the consumer need the product being offered for sale? c. how much does a discount or a coupon affect the purchase rate? d. how do consumers respond to various marketing efforts the company might use? Answer: (d) Difficulty: (3) Page: 192 1 5. The starting point in understanding how consumers respond to various marketing efforts the company might use is the: a. Lipinski model of buying behavior. b. stimulus-response model of buyer behavior. c. Freudian model of buying behavior. d. Maslows model of life-cycle changes. Answer: (b) Difficulty: (2) Page: 192, Figure 6-1 6. According to the stimulus-response model of buyer behavior (as presented in your text), the place where consumers process marketing stimuli prior to making a purchase decision is called the: a. consumers value chain. b. consumers cognitive schema. c. consumers black box. d. consumers thoughts-emotions network. Answer: (c) Difficulty: (2) Page: 192, Figure 6-1 7. Consumer purchases are influenced strongly by cultural, social, personal, and: a. psychographic characteristics. b. psychological characteristics. c. psychometric characteristics. d. supply and demand characteristics. Answer: (b) Difficulty: (2) Page: 192, 193, Figure 6-2 8. ______________ is the most basic cause of a persons wants and behaviors. a. Culture b. Social class c. Personality d. Lifestyle Answer: (a) Difficulty: (1) Page: 193 9. A child in the United States is normally exposed to all of the following values EXCEPT: a. achievement and success. b. activity and involvement. c. material comfort. d. collectivism. Answer: (d) Difficulty: (3) Page: 193 2 10. Marketers are always trying to spot ____________ in order to discover new products that might be wanted. a. opinion graphers b. dissonant groups c. cultural shifts d. benchmarks Answer: (c) Difficulty: (2) Page: 193 11. The cultural shift toward _____________ has resulted in more demand for casual clothing and simpler home furnishings. a. liberal political causes b. conservative political causes c. informality d. downsizing Answer: (c) Difficulty: (2) Page: 193 12. A ________________ is a group of people with shared value systems based on common life experiences and situations. a. culture b. subculture c. lifestyle composite d. social class Answer: (b) Difficulty: (2) Page: 193 13. Hispanics are often called an emerging market. Which of the following general product categories do not sell well to Hispanics? a. automobiles b. computers c. photography equipment d. generics Answer: (d) Difficulty: (3) Page: 194 14. African American consumers are strongly motivated by: a. quality and ability to return merchandise. b. quality and selection. c. stores who honor their cultural traditions. d. stores who have store credit. Answer: (b) Difficulty: (3) Page: 194 3 15. The fastest growing and most affluent U.S. demographic segment is the: a. Hispanic American consumers. b. African American consumers. c. Middle Eastern-American consumers. d. Asian American consumers. Answer: (d) Difficulty: (3) Page: 195 16. The greatest barrier to effectively marketing to the Asian American market is thought to be: a. reluctance to grant credit to this group. b. language and cultural traditions. c. the urban nature of their neighborhoods. d. lack of a mass media that reaches this group. Answer: (b) Difficulty: (2) Page: 196 17. Mature consumers are becoming a very attractive market. Currently, the 50 and older population is estimated to be about ___________ strong. a. 75 million b. 85 million c. 95 million d. 115 million Answer: (a) Difficulty: (3) Page: 196 18. Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors are called: a. cultures. b. subcultures. c. social classes. d. social factors. Answer: (c) Difficulty: (1) Page: 196 19. Which of the following is most true about social class in America? a. Social class is not determined by a single factor. b. Social class is determined by income. c. Social class lines are fixed. d. Social class lines are rigid. Answer: (a) Difficulty: (2) Page: 196 4 20. According to the characteristics of the major American social classes, the _________________ are the social elite who live on inherited wealth and have well-known family backgrounds. a. upper-uppers b. lower-uppers c. upper-middles d. upper-lowers Answer: (a) Difficulty: (1) Page: 197, Table 6-1 21. According to the characteristics of the major American social classes, the _________________ are primarily concerned with attaining the better things in life. They have attained positions as professionals, independent businesspersons, and corporate managers. a. upper-uppers b. lower-uppers c. upper-middles d. upper-lowers Answer: (c) Difficulty: (2) Page: 197, Table 6-1 22. According to the characteristics of the major American social classes, the _________________ are the class who leads a working-class lifestyle. They depend heavily on relatives for economic and emotional support. a. upper-uppers b. lower-uppers c. upper-middles d. working class Answer: (d) Difficulty: (2) Page: 197, Table 6-1 23. Sybil, Sara, and Janice are all on the school tennis team. They are very proud of the fact that the team pulled together to accomplish the goal of winning a state championship for their school. Which is the best characterization of the relationship between these three girls and the rest of their school tennis team? a. group b. trend setters c. VALS pattern d. lifestyle concept Answer: (a) Difficulty: (2) Page: 196 5 24. Groups which have a direct influence and to which a person belongs are called: a. membership groups. b. facilitative groups. c. bonding groups. d. social groups. Answer: (a) Difficulty: (1) Page: 196 25. As a form of a reference group, the _______________ are ones to which the individual wishes to belong. a. secondary groups b. facilitative groups c. primary groups d. aspirational groups Answer: (d) Difficulty: (2) Page: 196 26. The __________________ is a person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. a. facilitator b. referent actor c. opinion leader d. social role player Answer: (c) Difficulty: (1) Page: 197 27. Even though buying roles in the family change constantly, the ___________ has traditionally been the main purchasing agent for the family. a. wife b. husband c. teenage children d. grandparent Answer: (a) Difficulty: (1) Page: 198 28. A major reason for the changing traditional purchasing roles for families is that: a. the economic conditions are forcing more teens to work. b. more women than ever hold jobs outside the home. c. children are spending more time on the Web. d. men and women now shop together or shop until you drop for entertainment purposes. Answer: (b) Difficulty: (3) Page: 198 6 29. A(n) ________________ consists of the activities people are expected to perform according to the persons around them. a. behavior b. attitude c. role d. status Answer: (c) Difficulty: (1) Page: 199 30. The stages through which families might pass as they mature over time is a description of what is called the: a. adoption process. b. lifestyle cycle. c. Values and Lifestyle (VALS) topology. d. family life cycle. Answer: (d) Difficulty: (2) Page: 199 31. A ______________ is a persons pattern of living as expressed in his or her activities, interests, and opinions. a. role b. status c. position d. lifestyle Answer: (d) Difficulty: (2) Page: 199 32. According to the SRI Consultings Values and Lifestyles (VALS) typology, _____________________ consumers are those that buy based upon their desire for activity, variety, and risk taking. a. principle-oriented b. status-oriented c. action-oriented d. value-oriented Answer: (c) Difficulty: (2) Page: 200 33. According to Forresters Technographics scheme for segmenting Internet customers according to motivation, desire, and ability to invest in technology, __________ are the biggest spenders on computer technology. They adopt new technology for home, office, and personal use before most others. a. New Age Nurturers b. Fast Forwards c. Techno-Strivers d. Mouse Potatoes 7 Answer: (b) Difficulty: (3) Page: 201 34. ______________ is(are) a persons unique psychological characteristics that lead to relatively consistent and lasting responses to his or her own environment. a. Psychographics b. Personality c. Demographics d. Lifestyle Answer: (b) Difficulty: (2) Page: 201 35. The basic premise of the _____________ is that peoples possessions contribute to and reflect their identities; that is, we are what we have. a. lifestyle concept b. self-concept c. personality concept d. cognitive concept Answer: (b) Difficulty: (2) Page: 201 36. A _____________ is a need that is sufficiently pressing to direct the person to seek satisfaction of the need. a. motive b. want c. demand d. requirement Answer: (a) Difficulty: (2) Page: 202 37. A good synonym for motive is a(n) _____________. a. omen b. need c. drive d. cue Answer: (c) Difficulty: (2) Page: 202 38. The theory of motivation that views people as responding to urges that are repressed but never fully under control was developed by: a. Marshall. b. Kant. c. Freud. d. Maslow. Answer: (c) Difficulty: (3) Page: 202 8 39. Dr. Ken Kaser designs qualitative research to probe consumers hidden, subconscious motivations. He specializes in using nondirective and projective techniques to uncover underlying emotions and attitudes towards brands and buying situations. Which of the following terms would most appropriately describe what Dr. Kaser is doing? a. market segment research b. cohort research c. psychodemographic research d. motivation research Answer: (d) Difficulty: (2) Page: 203, Marketing at Work 6-1 40. According to Maslows Hierarchy of Needs, the lowest order of needs are called: a. self-actualization needs. b. social needs. c. safety needs. d. physiological needs. Answer: (d) Difficulty: (1) Page: 204, Figure 6-3 41. According to Maslows Hierarchy of Needs, the highest order of needs are called: a. self-actualization needs. b. social needs. c. safety needs. d. physiological needs. Answer: (a) Difficulty: (2) Page: 204, Figure 6-3 42. __________________ is the process by which people select, organize, and interpret information to form a meaningful picture of the world. a. Readiness b. Selectivity c. Perception d. Motivation Answer: (c) Difficulty: (2) Page: 205 43. People can form different perceptions of the same stimulus because of three perceptual processes. These processes are best described as being: a. selective attention, selective distortion, and selective retention. b. subliminal perception, selective remembrance, selective forgetting. c. closure, modeling, and perceptual screening. d. needs distortion, wants analysis, and perceptual screening. Answer: (a) Difficulty: (3) Page: 204, 205 9 44. Kellye is a loyal Sony user. Her television, DVD player, cassette player, and VCR are all Sony products. When she hears or sees ads for Sony products, she almost always remembers the good points about the brand. In addition, when she hears or sees an ad for a competing product that points out the strengths of its products, she tends forget these points quickly or does not process them at all. The process that Kellye is has gone through is best described as being one of: a. selective retention. b. selective attention. c. selective distortion. d. stimulus actualization. Answer: (a) Difficulty: (3) Page: 205 45. In 1957, a researcher announced that he had flashed the phrases Eat popcorn and Drink Coca-Cola on a screen in a movie theater every five seconds for 1/300th of a second. He reported that although viewers did not consciously recognize these messages, they absorbed them subconsciously and bought 58 percent more popcorn and 18 percent more Coke. This process was eventually named: a. deceptive advertising. b. subliminal advertising. c. psychological manipulation. d. psychological modeling and transfusion. Answer: (b) Difficulty: (2) Page: 205 46. _______________ describes changes in an individuals behavior arising from experience. a. Modeling b. Motivation c. Perception d. Learning Answer: (d) Difficulty: (1) Page: 205 47. A ___________ is a strong internal stimulus that calls for action. a. drive b. cue c. response d. perception Answer: (a) Difficulty: (1) Page: 205 10 48. Jack Lerma has a special relationship with his dog, Chris. Seeing dog toys in a pet store window, hearing of a special price on dog food during a television commercial, or talking with a friend and receiving a recommendation a on kennel are all forms of __________, which may eventually impact Jacks purchasing decisions and responses to the objects he has seen or heard about. a. drives b. cues c. reinforcements d. dyads Answer: (b) Difficulty: (2) Page: 205 49. If a consumer describes a car as being the most economical car on the market, then this descriptor is a(n): a. rule. b. attitude. c. belief. d. cue. Answer: (c) Difficulty: (2) Page: 205 50. If a consumer tells friends I like my car more than any other car on the road, then the consumer has expressed a(n): a. rule. b. attitude. c. belief. d. cue. Answer: (b) Difficulty: (2) Page: 206 51. ___________ puts people into a frame of mind of liking or disliking things, of moving toward or away from them. a. A rule b. An attitude c. A belief d. A cue Answer: (b) Difficulty: (2) Page: 206 52. Which of the following is NOT one of the five stages of the buyer decision process? a. need recognition b. brand identification c. information search d. purchase decision Answer: (b) Difficulty: (2) Page: 207, Figure 6-4 11 53. According to the buyer decision process suggested in the text, the first stage is characterized as being one of: a. awareness. b. information search. c. need recognition. d. demand formulation. Answer: (c) Difficulty: (1) Page: 207, Figure 6-4 54. The buying process can be triggered by a(n) __________ when one of the persons normal needshunger, thirst, sexrises to a level high enough to become a drive. a. awareness b. external stimuli c. internal stimuli d. experiential motivation Answer: (c) Difficulty: (2) Page: 207 55. The stage in the buyer decision process in which the consumer is aroused to search for more information is called: a. information search. b. evaluation of alternatives. c. search for needs. d. perceptual search. Answer: (a) Difficulty: (1) Page: 208 56. The consumer can obtain information from any of several sources. If the consumer were to obtain information from handling, examining, or using the product, then the consumer would have obtained the information by using a(n): a. personal source. b. commercial source. c. informative source. d. experiential source. Answer: (d) Difficulty: (2) Page: 208 57. How the consumer processes information to arrive at brand choices occurs during which stage of the buyer decision process? a. need recognition b. information search c. evaluation of alternatives d. purchase decision Answer: (c) Difficulty: (1) Page: 208 12 58. Generally, the consumers purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. These two factors are best described as being: a. the cost and availability of the product. b. the attitude of others and the cost of the product. c. the availability of the product and unexpected situational factors. d. the attitude of others and unexpected situational factors. Answer: (d) Difficulty: (2) Page: 209 59. With respect to postpurchase behavior, the larger the gap between expectations and performance: a. the greater likelihood of re-purchase. b. the greater the customers dissatisfaction. c. the less likely the consumer will be influenced by advertising. d. the less likely the consumer will need sales confirmation and support. Answer: (b) Difficulty: (2) Page: 209 60. Cognitive dissonance occurs in which stage of the buyer decision process model? a. need recognition b. information search c. evaluation of alternatives d. postpurchase conflict Answer: (d) Difficulty: (2) Page: 209 61. A company must always guard against dissatisfying customers. On average, a satisfied customer tells 3 people about a good purchase experience. A dissatisfied customer, however, on average gripes to ________ people. a. 7 b. 9 c. 11 d. 30 Answer: (c) Difficulty: (3) Page: 210 62. The _________________ is the mental process through which an individual passes from first hearing about an innovation to final adoption. a. adoption process b. consumption process c. innovation process d. new product development process Answer: (a) Difficulty: (2) Page: 210 13 63. All of the following are part of the adoption process that consumers may go through when considering an innovation EXCEPT: a. awareness. b. process. c. interest. d. trial. Answer: (b) Difficulty: (2) Page: 21 64. With respect to adopter categories, the _______________ are guided by respect, are the opinion leaders in their communities, and adopt new ideas early but carefully. a. seekers b. innovators c. early adopters d. early majority Answer: (c) Difficulty: (2) Page: 213, Figure 6-5 65. With respect to adopter categories, the ___________________ are skeptical and they adopt an innovation only after a majority of people have tried it. a. early adopters b. early majority c. late majority d. laggards Answer: (c) Difficulty: (2) Page: 213, Figure 6-5 66. Several characteristics are especially important in influencing an innovations rate of adoption. _________ is the degree to which the innovation may be tried on a limited basis. a. Relative advantage b. Synchronization c. Compatibility d. Divisibility Answer: (d) Difficulty: (3) Page: 213 67. If a company makes products and services for the purpose of reselling or renting them to others at a profit or for use in the production of other products and services, then the company is selling to the: a. business market. b. international market. c. consumer market. d. private sector market. 14 Answer: (a) Difficulty: (1) Page: 215 68. All of the following are among the primary differences between a business market and a consumer market EXCEPT: a. purchase decisions to satisfy needs. b. market structure and demand. c. the nature of the buying unit. d. the types of decisions and the decision process involved. Answer: (a) Difficulty: (3) Page: 215 69. The business marketer normally deals with _____________ than the consumer marketer does. a. far greater but smaller buyers b. far greater and larger buyers c. far fewer but far larger buyers d. far fewer and smaller buyers Answer: (c) Difficulty: (2) Page: 215 70. When demand comes (as it does in the business market) from the demand for consumer goods, this form of demand is called: a. kinked demand. b. inelastic demand. c. cyclical demand. d. derived demand. Answer: (d) Difficulty: (2) Page: 215 71. General Motors buys steel because consumers buy cars. If consumer demand for cars drops, so will General Motors demand for steel. This is an example of the relationships found in: a. kinked demand. b. inelastic demand. c. cyclical demand. d. derived demand. Answer: (d) Difficulty: (2) Page: 215 72. That business markets have more buyers involved in the purchase decision is evidence of which of the following characteristic differences between business and consumer markets? a. market structure and demand b. the nature of the buying unit c. types of decisions made d. type of decision process itself 15 Answer: (b) Difficulty: (3) Page: 215-216 73. Purchases in the business market often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyers organization. This is evidence of which of the following characteristic differences between business and consumer markets? a. market structure and demand b. the nature of the buying unit c. types of decisions made and the decision process d. type of business classification Answer: (c) Difficulty: (3) Page: 216 74. The place in the business buying behavior model where interpersonal and individual influences might interact is called the: a. environment. b. response. c. stimuli. d. buying center. Answer: (d) Difficulty: (2) Page: 216-219, Figure 6-6 75. In a _______________, the buyer reorders something without any modifications. a. habitual rebuy b. straight rebuy c. modified rebuy d. new task buy Answer: (b) Difficulty: (1) Page: 217 76. In a _______________, the buyer wants to change something about product specifications, prices, terms, or suppliers. a. habitual rebuy b. straight rebuy c. modified rebuy d. new task buy Answer: (c) Difficulty: (1) Page: 217 77. When a firm buys a product or service for the first time, it is facing a: a. habitual rebuy situation. b. straight rebuy situation. c. modified rebuy situation. d. new task situation. 16 Answer: (d) Difficulty: (1) Page: 217 78. The in suppliers are most likely to get nervous and feel pressure to put their best foot forward in which of the following types of buying situations? a. modified rebuy b. new task buying c. straight rebuy d. indirect rebuy Answer: (a) Difficulty: (2) Page: 217 79. If a firm were to bid to do a turnkey operation where they would choose a building site, design a cement factory to build the plant, hire construction crews, assemble materials and equipment to run the new factory, and turn over the finished factory ready to operate to the owners, the bidding firm would be using which of the following? a. core process products selling b. design products selling c. reciprocal selling d. systems selling Answer: (d) Difficulty: (2) Page: 218 80. The decision-making unit of a buying organization is called its _____________: all the individuals and units that participate in the business decision-making process. a. buying center b. purchasing center c. bidding center d. demand-supply center Answer: (a) Difficulty: (1) Page: 218, 219 81. Considering the major influences on business buyer behavior, as shown in a model in the text, under which influence stage would you expect to find the influences of authority, status, empathy, and persuasiveness? a. environmental b. organizational c. interpersonal d. individual Answer: (c) Difficulty: (2) Page: 220, Figure 6-7 17 82. The stage of the business buying process where the buyer describes the characteristics and quantity of the needed item is called: a. problem recognition. b. general need description. c. product specification. d. proposal solicitation. Answer: (b) Difficulty: (2) Page: 223-225, Figure 6-8 83. If a buying team is asked by the purchasing department to rank the importance durability, of reliability, price, and other attributes of an item, then the team is going through a business buying process stage called: a. problem recognition. b. general need description. c. product specification. d. proposal solicitation. Answer: (b) Difficulty: (2) Page: 223-225, Figure 6-8 84. ________________ is the stage of business buying where an organization decides on and specifies the best technical product characteristics for a needed item. a. Problem recognition b. General need description c. Product specification d. Proposal solicitation Answer: (c) Difficulty: (2) Page: 223 85. _________________ is an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production. a. Cost analysis b. Order analysis c. Product analysis d. Value analysis Answer: (d) Difficulty: (3) Page: 223 86. Reviewing trade directories, doing a computer search, or phoning other companies for recommendations would be methods that an interested buyer might perform in which of the following stages of the business buying process model? a. problem recognition b. vendor analysis c. product specification d. supplier search 18 Answer: (d) Difficulty: (1) Page: 223 87. Factors such as supplier reputation for repair and servicing capabilities are important criteria for evaluation at which stage in the business buying process? a. problem recognition b. supplier search c. supplier selection d. order-routine specification Answer: (c) Difficulty: (2) Page: 224 88. Blanket contracts are typically part of which of the following stages in the business buying process? a. general need description b. product specification c. supplier selection d. order-routine specification Answer: (d) Difficulty: (2) Page: 224, 225 89. The stage of the business buying process in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties is called: a. general need description. b. product specification. c. supplier selection. d. order-routine specification. Answer: (d) Difficulty: (2) Page: 224 90. The _______________ may lead the buyer to continue, modify, or drop the arrangement that has been entered into by the buyer and seller. a. performance review b. order-routine specification c. supplier selection d. general need description Answer: (a) Difficulty: (1) Page: 225 91. Increasingly, business buyers are purchasing all kinds of products and services electronically, either through electronic data interchange links (EDI) or on the Internet. The descriptive term for such purchases, exchanges, and links is: a. e-marketing. b. e-commerce. c. e-procurement. d. e-transaction. 19 Answer: (c) Difficulty: (2) Page: 225 92. E-purchasing by businesses has its drawbacks and problems. More than 80 percent of companies say that __________ is the leading barrier to expanding electronic links with customers and partners. a. security b. privacy c. cost d. lack of correct technology Answer: (a) Difficulty: (2) Page: 227, 228 TRUE/FALSE QUESTIONS 93. One of the beauties of studying consumer buying behavior is its simplicity. Answer: (False) Difficulty: (1) Page: 191, 192 94. With respect to studying consumer or buyer behavior, the central question for marketers is: How do consumers respond to various marketing efforts the company might use? Answer: (True) Difficulty: (1) Page: 192 95. In a simple model of buyer behavior, marketing and other stimuli are processed in a consumers black box. Answer: (True) Difficulty: (1) Page: 192, Figure 6-1 96. If consumers have a cultural shift toward greater concern about health and fitness, then a correct marketing response would be to manufacture or market health and fitness services, exercise equipment, and sports clothing. Answer: (True) Difficulty: (1) Page: 193 97. If the U.S. population of Asian Americans were a separate nation, its buying power of $500 billion annually would rank twelfth in the free world. Answer: (False) Difficulty: (3) Page: 194 98. The fastest growing and most affluent racial or ethnic subculture within the United States culture is the Asian American group. Answer: (True) Difficulty: (2) Page: 195 20 99. In the United States, a source of concern is the fixed lines between social classes and the problems that this rigidity brings. Answer: (False) Difficulty: (2) Page: 196 100. Inherited wealth characterizes the lower upper social class category. Answer: (False) Difficulty: (2) Page: 197, Table 6-1 101. Upper lowers in the United States social class lead a working-class lifestyle. Answer: (False) Difficulty: (1) Page: 197, Table 6-1 102. Opinion leaders are people within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Answer: (True) Difficulty: (1) Page: 197 103. Women account for nearly one-half of all hardware purchases. The most accurate correlation with this example would be that of changing social class distinctions. Answer: (False) Difficulty: (1) Page: 198 104. A persons lifestyle is reflected by his or her activities, interests, and opinions. Answer: (True) Difficulty: (1) Page: 199 105. In the VALS typology, action-oriented buyers base their purchases on the actions and opinions of others. Answer: (False) Difficulty: (3) Page: 200 106. A good illustration of the Mouse Potatoes lifestyle (as described by Forresters Technographics scheme) would be a person who is dedicated to interactive entertainment and willing to spend for the latest in technotainment. Answer: (True) Difficulty: (1) Page: 201 107. A persons self-concept is also called the self-image. Answer: (True) Difficulty: (1) Page: 201 108. Another term for motive is self-concept. 21 Answer: (False) Difficulty: (1) Page: 202 109. The highest order of needs within Maslows hierarchy of needs scheme is esteem needs such as self-esteem, recognition, or status. Answer: (False) Difficulty: (3) Page: 202, Figure 6-3 110. Selective attention is the tendency for people to screen out most of the information to which they are exposed. Answer: (True) Difficulty: (1) Page: 204 111. Numerous studies by psychologists and consumer researchers have found no link between subliminal messages and consumer behavior. Answer: (True) Difficulty: (2) Page: 205 112. Learning occurs through the interplay between drives, stimuli, cues, responses, and reinforcement. Answer: (True) Difficulty: (2) Page: 205 113. Research has shown that attitudes are relatively easy to change while beliefs are extremely difficult to change. Answer: (False) Difficulty: (3) Page: 205-207 114. The buyer decision process model begins with information search. Answer: (False) Difficulty: (2) Page: 207, Figure 6-4 115. The larger the gap between expectations and performance, the greater the consumers dissatisfaction. Answer: (True) Difficulty: (2) Page: 209 116. The early majority segment of adopter classification scheme shown in the text are characterized as being guided by respectthey are the opinion leaders in their communities, and adopt new ideas early but carefully. Answer: (False) Difficulty: (2) Page: 213, Figure 6-5 117. In the adopter classification scheme, innovators account for about half of the bell-shaped adoption curve. Answer: (False) Difficulty: (2) Page: 213, Figure 6-5 22 118. The business market consists of all the organizations that buy goods and services to use in the production of other products and services that are sold, rented, or supplied to others. Answer: (True) Difficulty: (1) Page: 215 119. The business market is huge, however, at present the consumer market still involves more dollars and items for sale. Answer: (False) Difficulty: (2) Page: 215 120. Business buyers usually face more simple situations when purchasing than do consumers because of the amount of information that they have prior to purchase. Answer: (False) Difficulty: (2) Page: 216 121. A straight rebuy occurs when a business buyer wants to modify product specifications, prices, terms, or suppliers. Answer: (False) Difficulty: (1) Page: 217 122. The buying center, by its very nature, is a fixed and formally identifiable unit within an organization. Answer: (False) Difficulty: (2) Page: 218 123. Unlike consumer buying behavior, business buying behavior is not influenced by interpersonal factors. Answer: (False) Difficulty: (2) Page: 220, 221, Figure 6-7 124. The first stage of the business buying process is that of problem recognition. Answer: (True) Difficulty: (2) Page: 221, Figure 6-8 125. Value analysis is performed in the supplier search stage of the business buying process model. Answer: (False) Difficulty: (3) Page: 223 126. In business buying, MRO stands for maintenance, repair, and operations. Answer: (True) Difficulty: (2) Page: 225 23 ESSAY QUESTIONS 127. Harley-Davidson Motorcycle Company has used consumer behavior studies to advance the organizations knowledge about its consumers. This strategy has been pivotal in meeting the challenge of the Japanese motorcycle manufacturers. How has Harley-Davidson used focus groups to keep up with its shifting market and varying consumer tastes? What information has the company obtained about its customers? Answer: Harley-Davidson uses focus groups to explore its consumers feelings about the companys products. For example, cut-and-paste collages of pictures (assembled by representative consumers) showed how consumers felt about the companys motorcycles. This focus group exercise was then followed by a more extensive (16,000 surveys) battery of psychological, sociological, and demographic questions that attempted to classify Harley users into distinct groups (advertising could then be directed toward these specific groups). The company found that Harley customers were buying more than just motorcycles when the companys product was purchased. The customers were making a lifestyle statement and displaying an attitude. These lifestyle statements and attitudes were then captured in advertisements directed toward the target audiences. The company believes that knowledge of consumer behavior is very important to the overall success of their strategy and campaigns. Difficulty: (2) Page: 189-191 128. Define the consumer market and briefly describe the elements of a simple model of buying behavior as identified in your text. Answer: The consumer market is made up of all the final consumers of products and services combined. A simple model of consumer behavior consists of (1) marketing and other stimuli (such as the 4Ps [product, price, place, and promotion] and environmental forces [economic, technological, political, and cultural forces]), (2) the buyers black box (that includes the buyers characteristics and the buying decision process), and (3) the buyers responses (which includes product choice, brand choice, dealer choice, purchase timing, and purchase amount). Difficulty: (2) Page: 192, Figure 6-1 129. Describe the importance of culture, subculture, and social class influences on consumer buying behavior. Answer: Culture is the most basic cause of a persons wants and behavior. Subcultures are smaller groups of shared value systems based upon common life experiences or situations. Subcultures often make up significant market segments. Social classes are relatively 24 permanent and ordered divisions in a society whose members share similar values, interests, and behaviors related to product preferences and purchase behaviors. Difficulty: (2) Page: 193-196 130. Briefly, characterize the Hispanic, African American, and Asian American subcultures found in the United States market. Answer: a). Hispanic Americans consist of Cuban, Mexican, Central American, South American, and Puerto Rican peoples. They are approximately 35 million strong, and buy more than $400 billion worth of goods and services each year. They are expected to grow by 64 percent in the next 20 years. They are somewhat easy to reach through the growing number of Spanish media stations and publications. This group has long been a target for food, beverages, and household care items. b). African Americans, if a separate nation, would (with a buying power of $500 billion annually) rank twelfth in the free world. This group is growing in affluence and sophistication. They are strongly motivated by quality and selection. They are brand loyal and do less shopping around. c). Asian Americans are the fastest-growing and most affluent of the subculture segments. They now number 10 million with a disposable income of $229 billion annually. They are estimated to reach 30 million by 2050. Presently, the Chinese group is the largest. Difficulty: (2) Page: 193-195 131. Describe what a group is, and the various forms of groups that (according to the text) a consumer might be a part of. Register to View Answergroup is two or more people who interact to accomplish individual or mutual goals. Types of groups would include: a). Membership groupsgroups that have a direct influence and to which a person belongs. b). Reference groupsserve as a direct (face-to-face) or indirect points of comparison or reference in forming a persons attitudes or behavior. c). Aspirational groupsone to which the individual wishes to belong. Difficulty: (2) Page: 196, 197 132. List and briefly describe the five categories of Forresters Technographics scheme, which segments consumers according to motivation, desire, and ability to invest in technology. 25 Answer: The five categories as outlined in the text include: a). Fast Forwardsthe biggest spenders on computer technology. Fast Forwards are early adopters of new technology for home, office, and personal use. b). New Age Nurturersalso big spenders but focused on technology for home uses, such as a family PC. c). Mouse Potatoesconsumers who are dedicated to interactive entertainment and willing to spend for the latest in technotainment. d). Techno-Striversconsumers who use technology primarily to gain a career edge. e). Handshakersolder consumers, typically managers, who dont touch computers at work and leave that to younger assistants. Difficulty: (3) Page: 201 133. List and briefly describe Maslows Hierarchy of Needs. Answer: Beginning at the bottom of the pyramid model: a). physiological needshunger, thirst b). safety needssecurity, protection c). social needssense of belonging, love d). esteem needsself-esteem, recognition, status e). self-actualization needsself-development and realization Difficulty: (2) Page: 202, 204, Figure 6-3 134. Discuss and illustrate the difference between an attitude and a belief. Register to View Answerbelief is a descriptive thought that a person holds about something. An attitude is a persons consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Beliefs may be based on knowledge, opinion, or faith, and they may carry an emotional charge. Attitudes are primarily feelings of like and dislike. Attitudes are difficult to change. Difficulty: (2) Page: 205-207 135. Identify each of the stages of the buyer decision process. Be sure to give a brief description of each stage. Answer: a). Need recognition: The first stage of the buyer decision process, in which the consumer recognizes a problem or need. The buyer senses a difference between his or her actual state and some desired state. The need can be triggered by internal or external stimuli. 26 b). Information search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. c). Evaluation of Alternatives: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. The consumer can use product attributes, degrees of importance, brand beliefs, total product satisfaction, or an evaluation procedure to perform alternative evaluation. d). Purchase decision: The stage in the buyer decision process in which the consumer actually buys the product. Factors that can influence this action phase are: the purchase intention, the attitudes of others, and unexpected situational factors. e). Postpurchase behavior: The stage of the buyer decision process in which consumers take further action after purchase based upon their satisfaction or dissatisfaction. The considerations are the consumers expectations and the products perceived performance. Cognitive dissonance can set in, and must be dealt with before complete satisfaction can be achieved. Difficulty: (3) Page: 207-210, Figure 6-4 135. People differ in their readiness to adopt or try new products. Take each of the five adopter groups mentioned in the text and give a synonym or brief description of each primary characteristic that sets each particular group apart from the others. Answer: a). Innovatorsventuresomethey try new ideas at some risk. b). Early adoptersrespectedthey are the opinion leaders in their communities and adopt new ideas early but carefully. c). Early majoritydeliberatealthough they are rarely leaders, they adopt new ideas before the average person. d). Late majorityskepticalthey adopt an innovation only after a majority of people have tried it. e). Laggardstradition boundthey are suspicious of changes and adopt the innovation only when it has become something of a tradition itself. Difficulty: (2) Page: 213, Figure 6-5 136. An innovative products rate of adoption is influenced by five characteristics. List and then briefly discuss each of these characteristics. Answer: a). Relative advantagethe degree to which an innovation appears superior to existing products. b). Compatibilitythe degree to which the innovation fits the values and experiences of potential consumers. c). Complexitythe degree to which the innovation is difficult to understand or use. d). Divisibilitythe degree to which the innovation may be tried on a limited basis. 27 e). Communicabilitythe degree to which the results of using the innovation can be observed or described to others. Difficulty: (2) Page: 213, 214 137. Explain how business markets differ from consumer markets. Answer: The main differences include market structure and demand, the nature of the buying unit, and the types of decisions and the decision process within the two. Business markets are geographically concentrated and have derived, inelastic, and fluctuating demand. Buying is more professional and involves more people. Decisions are more complex, more formalized, and the buyer and seller are more dependent upon one another. Difficulty: (2) Page: 215 138. There are three types of buying situations faced by the business buyer. List and briefly explain or characterize each of these situations. Answer: a). Straight rebuythe buyer reorders something without any modifications. It is usually handled on a routine basis by the purchasing department. b). Modified rebuythe buyer wants to modify product specifications, prices, terms, or suppliers. More people in the firm are involved in this situation. c). New-taska company buys a product for the first time. In such cases, the greater the cost or risk, the larger the number of decision participants and the greater their efforts to collect information will be. Difficulty: (2) Page: 217 139. List and define the stages in the business buying decision process. Answer: (a) Problem recognition: the stage in which someone in the company recognizes a problem or need that can be met by acquiring a good or a service. (b) General need description: the stage in which the company describes the general characteristics and quantity of a needed item. (c) Product specification: the stage in which the buying organization decides on and specifies the best technical product characteristics for a needed item. (d) Supplier search: the stage in which the buyer tries to find the best vendors. (e) Proposal solicitation: the stage in which the buyer invites qualified suppliers to submit proposals. (f) Supplier selection: the stage in which the buyer reviews proposals and selects a supplier or suppliers. 28 (g) Order-routine specification: the stage in which the buyer writes the final order with the chosen supplier(s), listing the technical specifications, quantity needed, expected time of delivery, return policies, and warranties. (h) Performance review: the stage in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop them. Difficulty: (3) Page: 221-225, Figure 6-8 APPLICATION QUESTION 140. In the past few years, Frito-Lay snack foods introduced several new products to their already extensive line of chips. The new products were a baked potato chip and a reduced fat potato chip. Using information found in the chapter on factors that influence consumer behavior, indicate cultural, social, personal, and psychological questions that would be useful to answer so that meaningful market segments can be derived for either of these two new products (pick one of the two products). Be specific in your recommendations. Answer: The purpose of this question is to get students to review information found in the chapter and in Figure 6-2. This question may be given as a take-home assignment since it requires extended thought. In order to construct an answer, the student should consider the following: a) Cultureany relevant variables within the general culture, subculture, and social class structure should be identified. For example, what types of Americans have an affinity for snack foods, which groups prefer a more healthy or reduced diet, do particular subcultures have different preferences in snack foods, do the different subcultures have different views toward healthy lifestyles, and do social class and income (or occupational) variables have any impact on the question? b) Socialwould groups influence the acceptability of the new products, would there be peer pressure (such as with stop smoking campaigns), what family dynamics would come into play in the selection of the new products (would a Mom that wants a healthy lifestyle have more influence than children who want traditional snack items), and would either of the new products have an elevated status because of their newness? c) Personalin this section such factors as the consumers age and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept should be examined. For example, would these new products be aimed at those that are already participating in a health-related lifestyle, with respect to product selection, or should the products be aimed at those that have problems and are looking for healthy alternatives to solve their problems? d) Psychologicala consumers motivation, perception, learning, and beliefs and attitudes would certainly be impacted by the adoption of either of these two new products. Does the consumer look at these two new products as being inferior to the older, more preferred products, how much does the consumer really know about these 29 products, and what beliefs or attitudes must be formed or changed for the products to be successful? Students should construct their answers using some type of plan that is similar to the ideas presented above unless other more specific instructions are given. Students should feel free to construct their own questions, however, the questions should be useful in determining market segments that could be targeted by the company for sales and promotional efforts. Difficulty: (3) Page: 193-207, Figure 6-2 30

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American University of Beirut - BUS - 102
Chapter 10 Understanding Marketing Processes and Consumer BehaviorCHAPTER 10Understanding Marketing Processes and Consumer BehaviorMultiple Choice1.The process of planning and executing the conception, pricing, promotion, and distribution ofideas, g
American University of Beirut - BUS - 102
Chapter 4The Marketing EnvironmentMultiple Choice1.The most commercially influential demographic group in history is _.a. generation Xb. baby boomersc. generation Yd. seniors(b; Easy; p. 105)2.The current marketing environment has a tendency to
American University of Beirut - BUS - 102
Chapter TwoCompany and MarketingStrategyPartnering to Build CustomerRelationshipsCopyright 2009 Pearson Education, Inc.Publishing as Prentice HallChapter 2- slide 1Company and Marketing StrategyTopicOutline Companywide Strategic Planning:Defini
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 6: Foreign CurrencyTranslationChoi/Meek, 6/e1Learning ObjectivesWhy do firms translate from one currency to another?What is the difference between a spot, forward, and swaptrans
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 7: Financial Reportingand Changing PricesChoi/Meek, 6/e1Learning ObjectivesWhat do we mean by the term, changing prices?Why are financial statements misleading duringperiods of
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 8: Global Accountingand Auditing StandardsChoi/Meek, 6/e1Learning ObjectivesDefine and understand the distinction between harmonizationand convergence as they apply to accounting
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 9: International FinancialStatement AnalysisChoi/Meek, 6/e1Learning ObjectivesWhat is a logical approach to analyzing foreign financialstatements?Why is it difficult to undertak
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 1: IntroductionChoi/Meek, 6/e1Learning ObjectivesHow is international accounting distinct fromdomestic accounting?What does international accounting diversity entail?Does intern
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 2: Development andClassificationChoi/Meek, 6/e1Learning ObjectivesIdentify and understand the importance of the eight factorsthat have a significant influence on accounting devel
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 3:Comparative Accounting:EuropeChoi/Meek, 6/e1IFRS in the European Union Startingin 2005, all EU-listed companiesmust follow IFRS in their consolidatedfinancial statements. G
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 4:Comparative Accounting: TheAmericas and AsiaChoi/Meek, 6/e1Choi/Meek, 6/e2United StatesOverviewFinancial Accounting Standards Board (FASB)Public Company Accounting Oversigh
American University of Beirut - ACCT - 210
International Accounting, 6/eFrederick D.S. ChoiGary K. MeekChapter 5: Reporting andDisclosureChoi/Meek, 6/e1Learning ObjectivesDistinguish voluntary and mandatory disclosure and theapplicable regulatory measures.Identify the broad objectives fo
American University of Beirut - ACCT - 208
Ch 7 Solutions Horngren 13th edition7-1Management by exception is the practice of concentrating on areas not operating as expected and giving less attention to areasoperating as expected. Variance analysis helps managers identify areas not operating as
American University of Beirut - ACCT - 208
CHAPTER 3: COST-VOLUME-PROFIT ANALYSISTRUE/FALSE1.In order to perform cost-volume-profit analysis, a company must be able to separatecosts into fixed and variable components.Answer:2.Difficulty:1Objective:1Cost-volume-profit analysis may be use
American University of Beirut - ACCT - 208
5-17(25 min.) ABC, cost hierarchy, service.1.Output unit-level costsa. Direct-labor costs, $240,000b. Equipment-related costs (rent, maintenance, energy, and so on), $400,000These costs are output unit-level costs because they are incurred on each u
American University of Beirut - ACCT - 208
CHAPTER 7FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, ANDMANAGEMENT CONTROL7-16(2030 min.) Flexible budget.Units soldRevenuesVariable costsContribution marginFixed costsActualResults(1)2,800g$313,600a229,600d84,00050,000gFlexibleBudgetVaria
American University of Beirut - ACCT - 208
CHAPTER 9INVENTORY COSTING AND CAPACITY ANALYSIS9.1 No. Differences in operating income between variable costing and absorption costing aredue to accounting for fixed manufacturing costs. Under variable costing only variablemanufacturing costs are inc
American University of Beirut - ACCT - 208
File: ch18, Chapter 18: Cost-Volume-ProfitMultiple Choice1. Variable costs are costs that:a) vary in total directly and proportionately with changes in the activity level.b) remain the same per unit at every activity level.c) Neither of the above.d)
American University of Beirut - ACCT - 208
Chapter 7 quiz cost accounting1. Budgeting is used to help companies:a. plan to better satisfy customersb. anticipate potential problemsc. focus on opportunities*d. All of these answers are correct.2. Financing decisions PRIMARILY deal with:a. the
American University of Beirut - ACCT - 208
CHAPTER 4JOB COSTING4-17(20 min.) Actual costing, normal costing, accounting for manufacturingoverhead.Budgeted manufacturingoverhead rateActual manufacturingoverhead rate==1.Budgeted manufacturingoverhead costsBudgeted direct manufacturing
American University of Beirut - ACCT - 208
CHAPTER 6MASTER BUDGET AND RESPONSIBILITYACCOUNTINGDo multiple choice 1 and 2.Assign Problem 6-31.Do multiple choice 11 and 12. Assign Exercise 6-27 and Problem 6-35.CHAPTER QUIZ SOLUTIONS: 1.dCHAPTER QUIZ2.a 3.b 4.d 5.c 6.b 7.c 8.a 9.d 10.b 11.c
American University of Beirut - ACCT - 208
CHAPTER 5ACTIVITY-BASED COSTING and ACTIVITY-BASEDMANAGEMENTI. LEARNING OBJECTIVES1. Explain how broad averaging undercosts and overcosts products or services2. Present three guidelines for refining a costing system3. Distinguish between simple and
American University of Beirut - ACCT - 208
CHAPTER 6MASTER BUDGET AND RESPONSIBILITY ACCOUNTINGI. LEARNING OBJECTIVES1. Describe what the master budget is and explain its benefits2. Describe the advantages of budgets3. Prepare the operating budget and its supporting schedules4. Use computer-
American University of Beirut - FIN - 305
Chapter 14 Bond Prices and YieldsMultiple Choice Questions1. The current yield on a bond is equal to _.A) annual interest divided by the current market priceB) the yield to maturityC) annual interest divided by the par valueD) the internal rate of r
American University of Beirut - FIN - 305
Multiple Choice Questions1. The duration of a bond is a function of the bond'sA) coupon rate.B) yield to maturity.C) time to maturity.D) all of the above.E) none of the above.Answer: D Difficulty: EasyRationale: Duration is calculated by discounti
American University of Beirut - ACCT - 406
Chapter 8CONSOLIDATIONS CHANGES IN OWNERSHIP INTERESTSAnswers to Questions1Preacquisition earnings and dividends are the earnings and dividends applicable to an investment interestprior to its acquisition during an accounting period. Assume that P pu
American University of Beirut - ACCT - 406
Chapter 9INDIRECT AND MUTUAL HOLDINGSAnswers to Questions1An indirect holding of the stock of an affiliated company gives the investor an ability to control orsignificantly influence the decisions of an investee not directly owned through an investee
American University of Beirut - ACCT - 406
Noncash investments of partners should be recorded at their fair values in order to provide equitabletreatment to the individual partners. The recording of noncash assets at less than fair value will result inallocating the amount of understatement betw
American University of Beirut - ACCT - 406
25. On December 31, 2006, Giant-Petrel Corporations Investment in Penguin Corporationaccount had a balance of $525,000. The balance consisted of 80% of Penguins $600,000stockholders' equity on that date and $45,000 of goodwill. On January 2, 2007, Pengu
American University of Beirut - ACCT - 406
http:/www.askmehelpdesk.com/finance-accounting/consolidating-balance-sheets234359.htmlconsolidating balance sheets-1. A controlling interest in a company implies that the parent companya. owns all of the subsidiary's stock.b. has influence over a majo
American University of Beirut - ACCT - 406
http:/www.scribd.com/doc/12897437/accounting-samplesChapter 5,6,7True or False1. In a business combination that establishes a parent company-subsidiary affiliation, the subsidiaryprepares journal entries on the date of the combination to increase the
American University of Beirut - ACCT - 106
3 Chapter Comparative Accounting: EuropeDiscussion Questions1. Regulating and enforcing financial reporting is a government function in France. The NationalAccounting Board (CNC) and the Accounting Regulation committee (CRC) set accountingstandards un
American University of Beirut - ACCT - 320
Audit 456 - Fall 2008 - Chapter 3 Quiz1.a.b.c.d.Auditing standards require that the audit report must be titled and that the title must:include the word independent.indicate if the auditor is a CPA.indicate if the auditor is a proprietorship, par
American University of Beirut - ACCT - 430
AUDITING CHAPTER 41.Society has attached a special meaning to the term "professional." A professional isa. someone who has passed a qualifying exam to enter the job market.b. a person who is expected to conduct himself or herself at a higher level tha
University of Toronto - ECONOMICS - eco375
APPENDIX BSOLUTIONS TO PROBLEMSB.1 Before the student takes the SAT exam, we do not know nor can we predict with certainty what the score will be. The actual score depends on numerous factors, many of which wecannot even list, let alone know ahead of
University of Toronto - ECONOMICS - eco375
APPENDIX CSOLUTIONS TO PROBLEMSC.1 (i) This is just a special case of what we covered in the text, with n = 4: E( Y ) = andVar( Y ) = 2/4.(ii) E(W) = E(Y1)/8 + E(Y2)/8 + E(Y3)/4 + E(Y4)/2 = [(1/8) + (1/8) + (1/4) + (1/2)] = (1 +1 + 2 + 4)/8 = , which
University of Toronto - ECONOMICS - eco375
APPENDIX DSOLUTIONS TO PROBLEMS 0 1 6 2 1 7 20D.1 (i) AB = 1 8 0 = 4 5 0 5 3 0 0612 36 24 (ii) BA does not exist because B is 3 3 and A is 2 3.D.3 Using the basic rules for transpose, ( XX) = ( X)( X) = XX , which is what we wanted tosho
University of Toronto - ECONOMICS - eco375
APPENDIX ESOLUTIONS TO PROBLEMSE.1 This follows directly from partitioned matrix multiplication in Appendix D. Write x1 x2X = 2 , X = ( x1 x x ), and y =nx nTherefore, XX =n xxt =1ttand Xy =n x yt =1tt y1 y2 y n. An equivalent
University of Toronto - ECONOMICS - eco375
CHAPTER 1SOLUTIONS TO PROBLEMS 1.1 It does not make sense to pose the question in terms of causality. Economists would assume that students choose a mix of studying and working (and other activities, such as attending class, leisure, and sleeping) based
University of Toronto - ECONOMICS - eco375
CHAPTER 2SOLUTIONS TO PROBLEMS 2.2 (i) Let yi = GPAi, xi = ACTi, and n = 8. Then x = 25.875, y = 3.2125, (xi x )(yi y ) =i =1 n 5.8125, and (xi x )2 = 56.875. From equation (2.9), we obtain the slope as 1 =i =1n 5.8125/56.875 .1022, rounded to four
University of Toronto - ECONOMICS - eco375
CHAPTER 3SOLUTIONS TO PROBLEMS 3.2 (i) hsperc is defined so that the smaller it is, the lower the students standing in high school. Everything else equal, the worse the students standing in high school, the lower is his/her expected college GPA. (ii) Jus
University of Toronto - ECONOMICS - eco375
CHAPTER 4SOLUTIONS TO PROBLEMS 4.2 (i) and (iii) generally cause the t statistics not to have a t distribution under H0. Homoskedasticity is one of the CLM assumptions. An important omitted variable violates Assumption MLR.3. The CLM assumptions contain
University of Toronto - ECONOMICS - eco375
CHAPTER 5SOLUTIONS TO PROBLEMS 5.2 The variable cigs has nothing close to a normal distribution in the population. Most people do not smoke, so cigs = 0 for over half of the population. A normally distributed random variable takes on no particular value
University of Toronto - ECONOMICS - eco375
CHAPTER 6SOLUTIONS TO PROBLEMS 6.1 This would make little sense. Performances on math and science exams are measures of outputs of the educational process, and we would like to know how various educational inputs and school characteristics affect math an
University of Toronto - ECONOMICS - eco375
CHAPTER 7SOLUTIONS TO PROBLEMS 7.1 (i) The coefficient on male is 87.75, so a man is estimated to sleep almost one and one-half hours more per week than a comparable woman. Further, tmale = 87.75/34.33 2.56, which is close to the 1% critical value agains
University of Toronto - ECONOMICS - eco375
CHAPTER 8SOLUTIONS TO PROBLEMS 8.1 Parts (ii) and (iii). The homoskedasticity assumption played no role in Chapter 5 in showing that OLS is consistent. But we know that heteroskedasticity causes statistical inference based on the usual t and F statistics
University of Toronto - ECONOMICS - eco375
CHAPTER 9SOLUTIONS TO PROBLEMS 9.1 There is functional form misspecification if 6 0 or 7 0, where these are the population parameters on ceoten2 and comten2, respectively. Therefore, we test the joint significance of these variables using the R-squared f
University of Toronto - ECONOMICS - eco375
CHAPTER 10SOLUTIONS TO PROBLEMS 10.1 (i) Disagree. Most time series processes are correlated over time, and many of them strongly correlated. This means they cannot be independent across observations, which simply represent different time periods. Even s
University of Toronto - ECONOMICS - eco375
CHAPTER 11SOLUTIONS TO PROBLEMS 11.1 Because of covariance stationarity, 0 = Var(xt) does not depend on t, so sd(xt+h) = 0 forany h 0. By definition, Corr(xt,xt+h) = Cov(xt,xt+h)/[sd(xt) sd(xt+h)] = h /( 0 0 ) = h / 0 . 11.3 (i) E(yt) = E(z + et) = E(z
University of Toronto - ECONOMICS - eco375
CHAPTER 12SOLUTIONS TO PROBLEMS12.1 We can reason this from equation (12.4) because the usual OLS standard error is anestimate of / SSTx . When the dependent and independent variables are in level (or log) form,the AR(1) parameter, , tends to be posit
University of Toronto - ECONOMICS - eco375
CHAPTER 13SOLUTIONS TO PROBLEMS13.1 Without changes in the averages of any explanatory variables, the average fertility rate fellby .545 between 1972 and 1984; this is simply the coefficient on y84. To account for theincrease in average education leve
University of Toronto - ECONOMICS - eco375
CHAPTER 14SOLUTIONS TO PROBLEMS14.1 First, for each t > 1, Var(uit) = Var(uit ui,t-1) = Var(uit) + Var(ui,t-1) = 2 u2 , where we usethe assumptions of no serial correlation in cfw_ut and constant variance. Next, we find thecovariance between uit and u
University of Toronto - ECONOMICS - eco375
CHAPTER 15SOLUTIONS TO PROBLEMS15.1 (i) It has been fairly well established that socioeconomic status affects student performance.The error term u contains, among other things, family income, which has a positive effect onGPA and is also very likely t
University of Toronto - ECONOMICS - eco375
CHAPTER 16SOLUTIONS TO PROBLEMS16.1 (i) If 1 = 0 then y1 = 1z1 + u1, and so the right-hand-side depends only on the exogenousvariable z1 and the error term u1. This then is the reduced form for y1. If 1 = 0, the reducedform for y1 is y1 = 2z2 + u2. (N
University of Toronto - ECONOMICS - eco375
CHAPTER 17SOLUTIONS TO PROBLEMS17.1 (i) Let m0 denote the number (not the percent) correctly predicted when yi = 0 (so theprediction is also zero) and let m1 be the number correctly predicted when yi = 1. Then theproportion correctly predicted is (m0
University of Toronto - ECONOMICS - eco375
CHAPTER 18SOLUTIONS TO PROBLEMS18.1 With zt1 and zt2 now in the model, we should use one lag each as instrumental variables, zt-1,1and zt-1,2. This gives one overidentifying restriction that can be tested.18.3 For , yt zt = yt zt + ( )zt, which is an
University of Toronto - ECONOMICS - eco375
STUDENT SOLUTIONS MANUALJeffrey M. WooldridgeIntroductory Econometrics: A Modern Approach, 4eCONTENTSPrefaceivChapter 1Introduction1Chapter 2The Simple Regression Model3Chapter 3Multiple Regression Analysis: Estimation9Chapter 4Multiple Re
University of Toronto - ECO - 325
University of Toronto - ECO - 325
University of Toronto - ECO - 325
UNIVERSITY OF TORONTOFaculty of Arts and ScienceAPRIL/MAY 2008 EXAMINATIONS 2008ECO 325H1Duration: 2 hoursNO AIDS ALLOWEDNOTE TO STUDENT: Enter your name and student number on each examination bookthat you use. There are three questions on this exa
University of Toronto - ECO - 325
UNIVERSITY OF TORONTOFaculty of Arts and ScienceDECEMBER EXAMINATIONS 2009ECO 325H1 FDuration: 2 hoursNO AIDS ALLOWEDNOTE TO STUDENT: Enter your name and student number on each examination bookthat you use. There are four questions on this test for