Ch7 - Ch7 Student: _ 1. Demand equations derived from...

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Ch7 Student: ___________________________________________________________________________ 1. Demand equations derived from actual market data are A. empirical demand functions. B. never estimated using consumer interviews. C. generally estimated using regression analysis. D. both a and c E. all of the above 2. A representative sample A. eliminates the problem of response bias. B. reflects the characteristics of the population. C. is frequently a random sample. D. both b and c E. all of the above 3. One problem with consumer interviews is that A. the sample may not be a representative sample. B. response bias. C. interviews are not very scientific. D. both a and b E. all of the above The next 5 questions refer to the following: The estimated demand for a good is = 25 - 5 P + 0.32 M + 12 P R where Q is the quantity demanded of the good, P is the price of the good, M is income, and is the price of related good R . 4. The coefficient on P A. does not have the expected sign. B. is negative as expected. C. should have the same sign as the coefficient on . D. should not be greater than one (in absolute value). E. both b and d 5. The good is A. an inferior good since the coefficient on is positive. B. a normal good since the coefficient on is positive. C. an inferior good since the coefficient on M is greater than one. D. a normal good since the coefficient on M is positive. E. none of the above
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6. This good and the related good R are A. complements since the coefficient on M is positive. B. substitutes since the coefficient on M is positive. C. complements since the coefficient on is positive. D. substitutes since the coefficient on is positive. 7. If income decreases by $1,000, all else constant , quantity demanded will ________ by _________ units. A. decrease; 320 units B. increase; 3.2 units C. decrease; 1200 units D. increase; 500 units E. decrease; 500 units 8. If the price of the good falls by $4, the quantity demanded will ________ by ________ units. A. increase; 5 units B. increase; 20 units C. increase; 50 units D. increase; 48 units E. decrease; 12 units The next 5 questions refer to the following: The estimated demand for a good is = 4,800 - 16 P - 0.65 M - 1.5 P R where Q is the quantity demanded of the good, P is the price of the good, M is income, and is the price of related good R . 9. The coefficient on P A. violates the law of demand. B. is negative as dictated by the law of demand. C. should not be greater than one (in absolute value). D. should have the same sign as the coefficient on P R . E. both c and d 10. The good is A. an inferior good since the coefficient on P R is negative. B. a normal good since the coefficient on P R is negative. C. a normal good since the coefficient on M is greater than one (in absolute value). D. an inferior good since the coefficient on
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Ch7 - Ch7 Student: _ 1. Demand equations derived from...

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