For studying demand relationships for a proposed new product that no one has ever used before what would be the best method to use? Answer

For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to use?
Answer

ordinary least squares regression on historical data

market experiments, where the price is set differently in two markets

consumer surveys, where potential customers hear about the product and are asked their opinions

double log functional form regression model

The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as:
Answer

econometric technique

time-series forecasting

opinion polling

barometric technique

judgment forecasting

The type of economic indicator that can best be used for business forecasting is the:
Answer

leading indicator

coincident indicator

lagging indicator

current business inventory indicator

optimism/pessimism indicator

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:
Answer

secular trend

cyclical variation

seasonal effect

unpredictable random factor

Time-series forecasting models:
Answer

are useful whenever changes occur rapidly and wildly

are more effective in making long-run forecasts than short-run forecasts

are based solely on historical observations of the values of the variable being forecasted

attempt to explain the underlying causal relationships which produce the observed outcome

The use of quarterly data to develop the forecasting model Yt = a +bYt−1 is an example of which forecasting technique?
Answer

Barometric forecasting

Time-series forecasting

Survey and opinion

Econometric methods based on an understanding of the underlying economic variables involved

Input-output analysis

An appreciation of the U.S. dollar has what impact on Harley-Davidson (HD), a U.S. manufacturer of motorcycles?
Answer

domestic sales of HD motorcycles increase and foreign sales of HD motorcycles increase

domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles increase

domestic sales of HD motorcycles increase and foreign sales of HD motorcycles decrease

domestic sales of HD motorcycles decrease and foreign sales of HD motorcycles decrease

Trading partners should specialize in producing goods in accordance with comparative advantage, then trade and diversify in consumption because
Answer

out-of-pocket costs of production decline

free trade areas protect infant industries

economies of scale are present

manufacturers face diminishing returns

more goods are available for consumption

Using demand and supply curves for the Japanese yen based on the $/¥ price for yen, an increase in US INFLATION RATES would
Answer

Decrease the demand for yen and decrease the supply of the yen.

Increase the demand for yen and decrease the supply of the yen.

Increase the demand and increase the supply of yen.

Decrease both the supply and the demand of yen.

Have no impact on the demand or supply of the yen.

An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from
Answer

higher anticipated costs of production in the U.S.

higher interest rates and higher inflation in the U.S.

higher growth rates in the trading partner’s economy

a change in the terms of trade

lower export industry productivity

If the British pound (₤) appreciates by 10% against the dollar:
Answer

both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound.

the US exporters will find it harder to sell to foreign customers in Britain.

the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line.

both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates.

In Chinese coastal provinces, brick housing for a fast expanding middle class is very comparable in size to housing in the U.S. for a family with median income of $51,000 because
Answer

median income per capita has risen in China to nearly equal median income in the U.S.

the Chinese government builds much of the housing in China

construction companies have begun to migrate to the coastal provinces of China

housing is an income inferior good

bricks, trade skill workers and construction labor are very cheap in China

The optimal currency area involves a trade-off of reducing transaction costs but the inability to use changes in exchange rates to help ailing regions. If the US, Canada, and Mexico had one single currency (the Peso-Dollar) we would tend to see all of the following EXCEPT:
Answer

Even more intraregional trade of goods across the three countries.

Lower transaction costs of trading within North America.

A greater difficulty in helping Mexico as you can no longer deflate the Mexican peso.

Less migration of workers across the three countries.

An elimination of correlated macroeconomic shocks across the countries.

The primary purpose of the Cobb-Douglas power function is to:
Answer

allow one to make estimates of cost-output relationships

allow one to make predictions about a resulting increase in output for a given increase in the inputs

aid one in gaining accurate empirical values for economic variables

calculate a short-run linear total cost function

Marginal revenue product is defined as the amount that an additional unit of the variable input adds to ____.
Answer

marginal revenue

total output

total revenue

marginal product

The marginal rate of technical substitution may be defined as all of the following except:
Answer

the rate at which one input may be substituted for another input in the production process, while total output remains constant

equal to the negative slope of the isoquant at any point on the isoquant

the rate at which all combinations of inputs have equal total costs

equal to the ratio of the marginal products of X and Y

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?
Answer

The firm should use relatively more capital

The firm should use relatively more labor

The firm should not make any changes – they are currently efficient

Using the Equimarginal Criterion, we can’t determine the firm’s efficiency level

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:
Answer

stage II

stages I and II

when Ep = 1

stage III

Which of the following is never negative?
Answer

marginal product

average product

production elasticity

marginal rate of technical substitution

slope of the isocost lines

What method of inventory valuation should be used for economic decision-making problems?
Answer

book value

original cost

current replacement cost

cost or market, whichever is lower

historical cost

For a short-run cost function which of the following statements is (are) not true?
Answer

The average fixed cost function is monotonically decreasing.

The marginal cost function intersects the average fixed cost function where the average variable cost function is a minimum.

The marginal cost function intersects the average variable cost function where the average variable cost function is a minimum.

The marginal cost function intersects the average total cost function where the average total cost function is a minimum.

According to the theory of cost, specialization in the use of variable resources in the short-run results initially in:
Answer

decreasing returns and declining average and marginal costs

increasing returns and declining average and marginal costs

increasing returns and increasing average and marginal costs

decreasing returns and increasing average and marginal costs

The cost function is:
Answer

a means for expressing output as a function of cost

a schedule or mathematical relationship showing the total cost of producing various quantities of output

similar to a profit and loss statement

incapable in being developed from statistical regression analysis

Economies of scale exist whenever long-run average costs:
Answer

Increase as output is increased

Remain constant as output is increased

Decrease as output is increased

Decline and then rise as output is increased

If TC = 321 + 55Q – 5Q2, then average total cost at Q = 10 is:
Answer

10.2

102

37.1

371

321