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ECON 528 Midterm

question
21. The hiring of an input, input X, is optimal if the marginal revenue (MR) times the marginal product of X (MPX) is equal to the price of the input (PX). But if
MR. MPX > PX then the employment of the input should be _________, and if
MR. MPX < PX then the employment of the input should be ________.
answer
expanded; contracted
question
22. If demand function is given by: P = $1,000 - $4Q, the Marginal Revenue
answer
(MR = $1,000 - $8Q).
question
23. Total cost minimization occurs at the point where
answer
MC = 0.
question
24. Average cost minimization occurs at the point where
answer
MC = AC.
question
25. Total revenue is maximized where
answer
MR = 0.
question
26. When Average Cost is falling,
answer
AC is greater than MC.
question
27. When Average Cost is rising,
answer
AC is smaller than MC.
question
28. Profit-maximizing occurs where
answer
MR = MC.
question
29. Also, when marginal profit is zero,
answer
profit is maximized.
question
30. A demand curve expresses the relation between the
answer
quantity demanded and the "price."
question
31. Quantity demanded is positively affected by consumers' income, population, price of its substitutes, and advertising expenditures and negatively affected by its own price, price of its complements, and the interest rate.
answer
...
question
32. Quantity supplied is positively affected by its own price and negatively affected by the price of its inputs and the interest rate.
answer
...
question
33. If two goods are complements, a decrease in the price of one will
answer
"increase the demand for the other."
question
34. If two goods are complements, an increase in the price of one will
answer
"decrease the demand for the other."
question
35. If two goods are substitutes, a decrease in the price of one will
answer
"decrease the demand for the other."
question
36. If two goods are substitute, an increase in the price of one will
answer
"increase the demand for the other."
question
37. If two goods or services provide the same amount of satisfaction or utility, the consumer is said to
answer
display indifference.
question
38. All combinations of goods and services that provide the same utility are identified by the
answer
indifference curve.
question
39. If the quantity of all inputs are increased by a multiple of k, and, as a result, the output increases by a multiple of h, then the production function exhibits an increasing returns to scale if h > k, a decreasing returns to scale if h < k, and a constant returns to scale if h = k.
answer
...
question
40. A consumer will obtain the maximum level of utility if
answer
MUX/MUY = PX/PY or MUX/PX = MUY/PY.
question
41. Because moviegoers like to consume buttered popcorn and soda at the theater, movies, buttered popcorn and soda are all
answer
complements.
question
42. Holding all else constant, a given percentage increase in the price of X and Y will cause the budget constraint to shift
answer
inward in a parallel manner.
question
43. Holding all else constant, a given percentage increase in the price of X will cause the budget constraint to become
answer
more steeply sloped (i.e. move inward along the X-axis only while maintaining a fixed Y-intercept).
question
44. Holding all else constant, a given percentage decrease in the price of X will cause the budget constraint to become
answer
more flatly sloped (i.e. move outward along the X-axis only while maintaining a fixed Y-intercept).
question
45. Holding all else constant, a given percentage increase in the price of Y will cause the budget constraint to become
answer
more flatly sloped (i.e. move inward along the Y-axis only while maintaining a fixed X-intercept).
question
46. Holding all else constant, a given percentage decrease in the price of Y will cause the budget constraint to become more
answer
steeply sloped (i.e. move outward along the Y-axis only while maintaining a fixed X-intercept).
question
47. Point elasticity measures elasticity at a
answer
spot on a function.
question
48. With elastic demand, a price increase
answer
lowers the total revenue (causes a more than proportionate decline in quantity demanded).
question
49. With elastic demand, a price decrease
answer
raises the total revenue (causes a more than proportionate increase in quantity demanded).
question
50. With inelastic demand, a price increase
answer
raises the total revenue (causes a less than proportionate decline in quantity demanded).
question
51. With inelastic demand, a price decrease
answer
lowers the total revenue (causes a less than proportionate increase in quantity demanded).
question
52. With unitary elastic demand, a price increase does
answer
not raise or lower the total revenue (causes a proportionate decline in quantity demanded).
question
53. With unitary elastic demand, a price decrease does
answer
not raise or lower the total revenue (causes a proportionate increase in quantity demanded).
question
54. A direct relation exists between the price of one product and the
answer
demand for substitutes.
question
55. An indirect relation exists between the price of one product and the
answer
demand for complements.
question
56. The demand for a product tends to be ____ if a small portion of a consumer's income is spent on the good.
answer
inelastic
question
57. The demand for a product tends to be _____ if a large portion of a consumer's income is spent on the good.
answer
elastic
question
58. Two products are complements if the cross-price elasticity of demand is
answer
less than zero.
question
59. Two products are substitutes if the cross-price elasticity of demand is
answer
greater than zero.
question
61. If the income elasticity of demand for a good is greater than zero but less than one, the good is a
answer
noncyclical normal good.
question
62. If the income elasticity of demand for a good is less than zero, the good is an
answer
inferior good.
question
63. If the income elasticity of demand for a good is zero, the good is neither a
answer
normal nor an inferior good.
question
64. A product that enjoys rapidly growing demand over time is likely to be a
answer
cyclical normal good.
question
65. When the product demand curve is Q = 140 - 10P the point price elasticity at the price of $10 is
answer
(-2.5).
question
66. When the product demand curve is Q = 140 - 10P and the price is decreased from P1 = $10 to P2 = $9, the quantity increases by
answer
(10).
question
67. If the point price elasticity of demand equals -2 and the marginal cost per unit is $5, the optimal price is
answer
($10).
question
68. If εP = -3 and MC = $0.66, the optimal (profit maximizing) price is
answer
($0.99).
question
69. A linear model implies a constant effect of
answer
X on Y.
question
70. A rhythmic annual pattern in sales or profits is called
answer
seasonal variation.
question
71. Linear trend analysis assumes a constant period-by-period unit change in an important
answer
economic variable over time.
question
72. Growth trend analysis assumes a constant period-by-period percentage change in an important
answer
economic variable over time.
question
73. A secular trend is the long-run pattern of
answer
increase or decrease in a series of economic data
question
74. If an economic time series is growing by a constant dollar amount each period, the most accurate forecast model is a
answer
linear model.
question
R^2=ESS/TSS , F=(ESS⁄((k-1)))/(RSS⁄((n-k)))=(R^2⁄((k-1)))/((〖(1-R〗^2))⁄((n-k)))
answer
...
question
76. A F-statistic is used to test the overall significance of the model whereas a
t-statistic is used to test the significance of an individual independent variable.
answer
...
question
77. A one--tailed test is conducted to test if an independent variable has any effect (negative or positive) on the
answer
dependent variable.
question
78. A two--tailed test is conducted to test if an independent variable has either negative or positive effect on the
answer
dependent variable.
1 of 57
question
21. The hiring of an input, input X, is optimal if the marginal revenue (MR) times the marginal product of X (MPX) is equal to the price of the input (PX). But if
MR. MPX > PX then the employment of the input should be _________, and if
MR. MPX < PX then the employment of the input should be ________.
answer
expanded; contracted
question
22. If demand function is given by: P = $1,000 - $4Q, the Marginal Revenue
answer
(MR = $1,000 - $8Q).
question
23. Total cost minimization occurs at the point where
answer
MC = 0.
question
24. Average cost minimization occurs at the point where
answer
MC = AC.
question
25. Total revenue is maximized where
answer
MR = 0.
question
26. When Average Cost is falling,
answer
AC is greater than MC.
question
27. When Average Cost is rising,
answer
AC is smaller than MC.
question
28. Profit-maximizing occurs where
answer
MR = MC.
question
29. Also, when marginal profit is zero,
answer
profit is maximized.
question
30. A demand curve expresses the relation between the
answer
quantity demanded and the "price."
question
31. Quantity demanded is positively affected by consumers' income, population, price of its substitutes, and advertising expenditures and negatively affected by its own price, price of its complements, and the interest rate.
answer
...
question
32. Quantity supplied is positively affected by its own price and negatively affected by the price of its inputs and the interest rate.
answer
...
question
33. If two goods are complements, a decrease in the price of one will
answer
"increase the demand for the other."
question
34. If two goods are complements, an increase in the price of one will
answer
"decrease the demand for the other."
question
35. If two goods are substitutes, a decrease in the price of one will
answer
"decrease the demand for the other."
question
36. If two goods are substitute, an increase in the price of one will
answer
"increase the demand for the other."
question
37. If two goods or services provide the same amount of satisfaction or utility, the consumer is said to
answer
display indifference.
question
38. All combinations of goods and services that provide the same utility are identified by the
answer
indifference curve.
question
39. If the quantity of all inputs are increased by a multiple of k, and, as a result, the output increases by a multiple of h, then the production function exhibits an increasing returns to scale if h > k, a decreasing returns to scale if h < k, and a constant returns to scale if h = k.
answer
...
question
40. A consumer will obtain the maximum level of utility if
answer
MUX/MUY = PX/PY or MUX/PX = MUY/PY.
question
41. Because moviegoers like to consume buttered popcorn and soda at the theater, movies, buttered popcorn and soda are all
answer
complements.
question
42. Holding all else constant, a given percentage increase in the price of X and Y will cause the budget constraint to shift
answer
inward in a parallel manner.
question
43. Holding all else constant, a given percentage increase in the price of X will cause the budget constraint to become
answer
more steeply sloped (i.e. move inward along the X-axis only while maintaining a fixed Y-intercept).
question
44. Holding all else constant, a given percentage decrease in the price of X will cause the budget constraint to become
answer
more flatly sloped (i.e. move outward along the X-axis only while maintaining a fixed Y-intercept).
question
45. Holding all else constant, a given percentage increase in the price of Y will cause the budget constraint to become
answer
more flatly sloped (i.e. move inward along the Y-axis only while maintaining a fixed X-intercept).
question
46. Holding all else constant, a given percentage decrease in the price of Y will cause the budget constraint to become more
answer
steeply sloped (i.e. move outward along the Y-axis only while maintaining a fixed X-intercept).
question
47. Point elasticity measures elasticity at a
answer
spot on a function.
question
48. With elastic demand, a price increase
answer
lowers the total revenue (causes a more than proportionate decline in quantity demanded).
question
49. With elastic demand, a price decrease
answer
raises the total revenue (causes a more than proportionate increase in quantity demanded).
question
50. With inelastic demand, a price increase
answer
raises the total revenue (causes a less than proportionate decline in quantity demanded).
question
51. With inelastic demand, a price decrease
answer
lowers the total revenue (causes a less than proportionate increase in quantity demanded).
question
52. With unitary elastic demand, a price increase does
answer
not raise or lower the total revenue (causes a proportionate decline in quantity demanded).
question
53. With unitary elastic demand, a price decrease does
answer
not raise or lower the total revenue (causes a proportionate increase in quantity demanded).
question
54. A direct relation exists between the price of one product and the
answer
demand for substitutes.
question
55. An indirect relation exists between the price of one product and the
answer
demand for complements.
question
56. The demand for a product tends to be ____ if a small portion of a consumer's income is spent on the good.
answer
inelastic
question
57. The demand for a product tends to be _____ if a large portion of a consumer's income is spent on the good.
answer
elastic
question
58. Two products are complements if the cross-price elasticity of demand is
answer
less than zero.
question
59. Two products are substitutes if the cross-price elasticity of demand is
answer
greater than zero.
question
61. If the income elasticity of demand for a good is greater than zero but less than one, the good is a
answer
noncyclical normal good.
question
62. If the income elasticity of demand for a good is less than zero, the good is an
answer
inferior good.
question
63. If the income elasticity of demand for a good is zero, the good is neither a
answer
normal nor an inferior good.
question
64. A product that enjoys rapidly growing demand over time is likely to be a
answer
cyclical normal good.
question
65. When the product demand curve is Q = 140 - 10P the point price elasticity at the price of $10 is
answer
(-2.5).
question
66. When the product demand curve is Q = 140 - 10P and the price is decreased from P1 = $10 to P2 = $9, the quantity increases by
answer
(10).
question
67. If the point price elasticity of demand equals -2 and the marginal cost per unit is $5, the optimal price is
answer
($10).
question
68. If εP = -3 and MC = $0.66, the optimal (profit maximizing) price is
answer
($0.99).
question
69. A linear model implies a constant effect of
answer
X on Y.
question
70. A rhythmic annual pattern in sales or profits is called
answer
seasonal variation.
question
71. Linear trend analysis assumes a constant period-by-period unit change in an important
answer
economic variable over time.
question
72. Growth trend analysis assumes a constant period-by-period percentage change in an important
answer
economic variable over time.
question
73. A secular trend is the long-run pattern of
answer
increase or decrease in a series of economic data
question
74. If an economic time series is growing by a constant dollar amount each period, the most accurate forecast model is a
answer
linear model.
question
R^2=ESS/TSS , F=(ESS⁄((k-1)))/(RSS⁄((n-k)))=(R^2⁄((k-1)))/((〖(1-R〗^2))⁄((n-k)))
answer
...
question
76. A F-statistic is used to test the overall significance of the model whereas a
t-statistic is used to test the significance of an individual independent variable.
answer
...
question
77. A one--tailed test is conducted to test if an independent variable has any effect (negative or positive) on the
answer
dependent variable.
question
78. A two--tailed test is conducted to test if an independent variable has either negative or positive effect on the
answer
dependent variable.
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