Question Details

Demand functions in the multiplicative form are most common 



1.	The method which can give some information in estimating demand of a product that hasn’t yet come to market is:
a.	the consumer survey
b.	market experimentation
c.	a statistical demand analysis
d.	plotting the data
e.	the barometric method


	

	2.	Demand functions in the multiplicative form are most common for all of the following reasons except:
a.	elasticities are constant over a range of data
b.	ease of estimation of elasticities
c.	exponents of parameters are the elasticities of those variables
d.	marginal impact of a unit change in an individual variable is constant
e.	c and d


	

	3.	The Identification Problem in the development of a demand function is a result of:
a.	the variance of the demand elasticity
b.	the consistency of quantity demanded at any given point
c.	the negative slope of the demand function
d.	the simultaneous relationship between the demand and supply functions
e.	none of the above


	



	4.	Consider the following linear demand function where QD = quantity demanded, P = selling price, and Y = disposable income:

          QD = 36 2.1P + .24Y

The coefficient of P (i.e., 2.1) indicates that (all other things being held constant):
a.	for a one percent increase in price, quantity demanded would decline by 2.1 percent
b.	for a one unit increase in price, quantity demanded would decline by 2.1 units
c.	for a one percent increase in price, quantity demanded would decline by 2.1 units
d.	for a one unit increase in price, quantity demanded would decline by 2.1 percent
e.	none of the above


	

5.	Consider the following multiplicative demand function where QD = quantity demanded, P = selling price, and Y = disposable income:

 

The coefficient of Y (i.e., .2) indicates that (all other things being held constant):
a.	for a one percent increase in disposable income, quantity demanded would increase by .2 percent
b.	for a one unit increase in disposable income, quantity demanded would increase by .2 units
c.	for a one percent increase in disposable income quantity demanded would increase by .2 units
d.	for a one unit increase in disposable income, quantity demanded would increase by .2 percent
e.	none of the above


	
6.	Which is NOT true about the coefficient of determination?
a.	As you add more variables, the R-square generally rises.
b.	As you add more variables, the adjusted R-square can fall.
	c.	If the R-square is above 50%, the regression is considered significant.
d.	The R-square gives the percent of the variation in the dependent variable that is explained by the independent variables.
e.	The higher is the R-square, the better is the fit.



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