Econ 414 Exam 2 - Custom Scholars
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Econ 414 Exam 2

question
An example of a time series data set is one for which the:
data would be collected for a given firm for several consecutive periods (e.g., months)
question
Emma uses a linear model to forecast quarterly same-store sales at the local garden center. The results of her multiple regression is:
Sales = 2,800 + 200T - 350D
Where T goes from 1 to 16 for each quarter of the year from the first quarter of 2006 ('06I) through the fourth quarter of 2009 ('09 IV). D is a dummy variable which is 1 if sales are in the cold and dreary first quarter, and zero otherwise, because the months of January, February, and March generate few sales at the Garden Center. Use this model to estimate sales in a store for the first quarter of 2010 in the 17th month; that is : {2010 I}. Emma's forecast should be:
5,850
question
For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to use?
consumer surveys, where potential customers hear about the product and are asked their opinions
question
In the first-order exponential smoothing model, the new forecast is equal to a weighted average of the old forecast and the actual value in the most recent period
True
question
Mr. Geppetto uses exponential smoothing to predict revenue in his wood carving business. He uses a weight of ω = .4 for the naïve forecast and (1-ω) = .6 for the past forecast. What revenue did he predict for March using the data below? Select closet answer.
106.2
question
Select the correct statement
a. Qualitative forecasts give the direction of change.
b. Quantitative forecasts give the exact amount or exact percentage change.
c. Diffusion forecasts use the proportion of the forecasts that are positive to forecast up or down.
d. Surveys are a form of qualitative forecasting.
e. all of the above are correct.
e. all of the above are correct
question
The type of economic indicator that can best be used for business forecasting is the:
question
The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:
cyclical variation
question
Variations in a time-series forecast can be caused by:
a. cyclical variations
b. secular trends
c. seasonal effects
d. a and b only
e. a, b, and c
e. a, b, and c
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(a)Develop 2-month moving average forecasts for March through July.
116
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(b)Develop 4-month moving average forecasts for May through July.
113
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(c)Develop forecasts for February through July using the exponential smoothing method (with w = .5). Begin by assuming . Yt+1= Yt
113.5
question
Concerning the maximization of output subject to a cost constraint, which of the following statements (if any) are true?
all of the above
question
Fill in the missing data to solve this problem.
Variable InputTotal ProductAverage ProductMarginal Product4?70---5??406350??
What is the total product for 5 units of input, and what is the marginal product for 6 units of input
320 and 30
question
Given a Cobb-Douglas production function estimate of for a given industry, this industry would have:
Hint: read Lecture slides - Page 30
decreasing returns to scale
question
Holding the total output constant, the rate at which one input X may be substituted for another input Y in a production process is:
all of the above
question
If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is \$30, then what should the firm?
the firm should use relatively more labor
question
In a production process, an excessive amount of the variable input relative to the fixed input is being used to produce the desired output. This statement is true for:
stage III
question
In a relationship among total, average and marginal products, where TP is maximized:
MP is equal to zero
question
In the Cobb-Douglas production function :
if the amount of labor input (L) is increased by 1 percent, the output will increase by β1 percent
question
The law of diminishing marginal returns:
none of the above
question
Economists at the Wilson Company are interested in developing a production function for fertilizer plants. They collected data on 13 different plants that product fertilizer. See the following table:
Suppose that the production function is given by Cobb-Douglas production function Q = aLb1 Kb2 .
1) Estimate the Cobb-Douglas production function
hint: Watch the video posted on BB ( Weekly Study Materials - Week #7)
In Q = − 4.81 + 0.397 ln K + 1.112 ln L
question
2) Determine the percentage increase in output if labor input is increased by 10% (assuming that capital input is held constant)
11.12%
question
3)Determine the percentage increase in output if both labor and capital are increased by 20%.
30.18%
question
A cottage industry exists in the home-manufacture of 'country crafts'. Especially treasured are handmade quilts. If the fourth completed quilt took 30 hours to make, and the eighth quilt took 28 hours, what is the percentage learning?
6.7%
question
According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
increasing returns and declining average marginal costs
question
Economies of Scope refers to situations where per unit costs are:
reduced when two or more products are produced
question
Economies of scale exist whenever long-run average costs:
decrease as output is increased
question
For a short-run cost function which of the following statements is (are) not true?
The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum
question
If TC = 321 + 55Q -5Q^2, then average total cost at Q=10 is:
37.1
question
Possible sources of economies of scale (size) within a production plant include:
specialization in the use of capital and labor
question
Suppose that total cost is given by TC = 200 + 5Q -0.4Q^2 + 0.001Q^3
all of the above are correct
question
The cost function is:
a schedule or mathematical relationship showing the total cost of producing various quantities of output
question
The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
problems of coordination and control encountered by management
question
Which of the following statements about cost functions is true?
The shape of the firm's long-run cost function is important in decisions to expand the scale of operations
question
A linear total cost function implies that:
a. marginal costs are constant as output increases
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above
c. a and b
question
George Webb Restaurant collects on the average \$5 per customer at its breakfast & lunch diner. Its variable cost per customer averages \$3, and its annual fixed cost is \$40,000. If George Webb wants to make a profit of \$20,000 per year at the diner, it will have to serve__________ cus-tomers per year.
20,000 customers
question
In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:
survivorship analysis
question
In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed costs divided by:
one minus the variable cost ratio
question
In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
contribution margin per unit
question
Offshore Petroleum's fixed costs are \$2,500,000 . Selling price per barrel of oil is \$18 and variable costs per barrel are \$10.
5,625,000
question
The short-run cost function is:
relevant to decisions in which one or more inputs to the production process are fixed
question
Theoretically, in a long-run cost function:
all inputs are considered variable
question
What is another term meaning the degree of operating leverage?
all of the above
1 of 44
question
An example of a time series data set is one for which the:
data would be collected for a given firm for several consecutive periods (e.g., months)
question
Emma uses a linear model to forecast quarterly same-store sales at the local garden center. The results of her multiple regression is:
Sales = 2,800 + 200T - 350D
Where T goes from 1 to 16 for each quarter of the year from the first quarter of 2006 ('06I) through the fourth quarter of 2009 ('09 IV). D is a dummy variable which is 1 if sales are in the cold and dreary first quarter, and zero otherwise, because the months of January, February, and March generate few sales at the Garden Center. Use this model to estimate sales in a store for the first quarter of 2010 in the 17th month; that is : {2010 I}. Emma's forecast should be:
5,850
question
For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to use?
consumer surveys, where potential customers hear about the product and are asked their opinions
question
In the first-order exponential smoothing model, the new forecast is equal to a weighted average of the old forecast and the actual value in the most recent period
True
question
Mr. Geppetto uses exponential smoothing to predict revenue in his wood carving business. He uses a weight of ω = .4 for the naïve forecast and (1-ω) = .6 for the past forecast. What revenue did he predict for March using the data below? Select closet answer.
106.2
question
Select the correct statement
a. Qualitative forecasts give the direction of change.
b. Quantitative forecasts give the exact amount or exact percentage change.
c. Diffusion forecasts use the proportion of the forecasts that are positive to forecast up or down.
d. Surveys are a form of qualitative forecasting.
e. all of the above are correct.
e. all of the above are correct
question
The type of economic indicator that can best be used for business forecasting is the:
question
The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:
cyclical variation
question
Variations in a time-series forecast can be caused by:
a. cyclical variations
b. secular trends
c. seasonal effects
d. a and b only
e. a, b, and c
e. a, b, and c
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(a)Develop 2-month moving average forecasts for March through July.
116
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(b)Develop 4-month moving average forecasts for May through July.
113
question
Brewing Company experienced the following monthly sales (in thousands of barrels) during 2010:
Jan.Feb.Mar.Apr.MayJune10092112108116116
(c)Develop forecasts for February through July using the exponential smoothing method (with w = .5). Begin by assuming . Yt+1= Yt
113.5
question
Concerning the maximization of output subject to a cost constraint, which of the following statements (if any) are true?
all of the above
question
Fill in the missing data to solve this problem.
Variable InputTotal ProductAverage ProductMarginal Product4?70---5??406350??
What is the total product for 5 units of input, and what is the marginal product for 6 units of input
320 and 30
question
Given a Cobb-Douglas production function estimate of for a given industry, this industry would have:
Hint: read Lecture slides - Page 30
decreasing returns to scale
question
Holding the total output constant, the rate at which one input X may be substituted for another input Y in a production process is:
all of the above
question
If the marginal product of labor is 100 and the price of labor is 10, while the marginal product of capital is 200 and the price of capital is \$30, then what should the firm?
the firm should use relatively more labor
question
In a production process, an excessive amount of the variable input relative to the fixed input is being used to produce the desired output. This statement is true for:
stage III
question
In a relationship among total, average and marginal products, where TP is maximized:
MP is equal to zero
question
In the Cobb-Douglas production function :
if the amount of labor input (L) is increased by 1 percent, the output will increase by β1 percent
question
The law of diminishing marginal returns:
none of the above
question
Economists at the Wilson Company are interested in developing a production function for fertilizer plants. They collected data on 13 different plants that product fertilizer. See the following table:
Suppose that the production function is given by Cobb-Douglas production function Q = aLb1 Kb2 .
1) Estimate the Cobb-Douglas production function
hint: Watch the video posted on BB ( Weekly Study Materials - Week #7)
In Q = − 4.81 + 0.397 ln K + 1.112 ln L
question
2) Determine the percentage increase in output if labor input is increased by 10% (assuming that capital input is held constant)
11.12%
question
3)Determine the percentage increase in output if both labor and capital are increased by 20%.
30.18%
question
A cottage industry exists in the home-manufacture of 'country crafts'. Especially treasured are handmade quilts. If the fourth completed quilt took 30 hours to make, and the eighth quilt took 28 hours, what is the percentage learning?
6.7%
question
According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
increasing returns and declining average marginal costs
question
Economies of Scope refers to situations where per unit costs are:
reduced when two or more products are produced
question
Economies of scale exist whenever long-run average costs:
decrease as output is increased
question
For a short-run cost function which of the following statements is (are) not true?
The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum
question
If TC = 321 + 55Q -5Q^2, then average total cost at Q=10 is:
37.1
question
Possible sources of economies of scale (size) within a production plant include:
specialization in the use of capital and labor
question
Suppose that total cost is given by TC = 200 + 5Q -0.4Q^2 + 0.001Q^3
all of the above are correct
question
The cost function is:
a schedule or mathematical relationship showing the total cost of producing various quantities of output
question
The existence of diseconomies of scale (size) for the firm is hypothesized to result from:
problems of coordination and control encountered by management
question
Which of the following statements about cost functions is true?
The shape of the firm's long-run cost function is important in decisions to expand the scale of operations
question
A linear total cost function implies that:
a. marginal costs are constant as output increases
b. average total costs are continually decreasing as output increases
c. a and b
d. none of the above
c. a and b
question
George Webb Restaurant collects on the average \$5 per customer at its breakfast & lunch diner. Its variable cost per customer averages \$3, and its annual fixed cost is \$40,000. If George Webb wants to make a profit of \$20,000 per year at the diner, it will have to serve__________ cus-tomers per year.
20,000 customers
question
In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent. The size that is becoming more predominant is presumed to be least cost. This is called:
survivorship analysis
question
In the linear breakeven model, the breakeven sales volume (in dollars) is equal to fixed costs divided by:
one minus the variable cost ratio
question
In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
contribution margin per unit
question
Offshore Petroleum's fixed costs are \$2,500,000 . Selling price per barrel of oil is \$18 and variable costs per barrel are \$10.
5,625,000
question
The short-run cost function is:
relevant to decisions in which one or more inputs to the production process are fixed
question
Theoretically, in a long-run cost function:
all inputs are considered variable
question
What is another term meaning the degree of operating leverage?
all of the above

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