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# Economic student guide

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If the price for umbrellas is price Inelastic, Then:
a) Changes in price do not affect the number of umbrellas demanded.
b) If more umbrellas are sold as the result of a price decrease, total expenditures by consumers on umbrellas will decrease.
c) The percentage change in prices is less than the percentage change in quantity demanded.
d) The percentage change in quantity demanded is greater than the percentage change in price.
e) None of the above.

Perfume industry statistics show that over the past five years, the number of bottles of perfume sold decreased by 30%, but the total dollar amount spent by consumers was unchanged. This mean that:
a) Consumers were unresponsive to changes in price, i.e., the percentage change in quantity demanded was less than the percentage change in price.
b) Demand was elastic
c) Demand was inelastic
d) Demand was unitary elastic.
e) Both a and c.

For an unconstrained maximization problem.
a) The decision maker seeks to maximize net benefits.
b) The decision maker seeks to maximize total benefits.
c) The decision maker does not take cost into account because there is not constraint.
d) The decision maker does not take the objective function into account because there is no constraint.
e) None of the above.

Using regression analysis, the objective is to:
a) Estimate the parameters a and b.
b) Estimate the variables Y and X
c) Fit a straight line through the data scatter in such a way that the sum of the squared errors is minimized.
d) Both a and c.
e) All of the above.

Which of the following is a time series data set?
a) Amount of labor employed in each factory in the US in 1999
b) Amount of labor employed yearly in a specific factory from 1984 to 1999.
c) Average amount of labor employed at specific times of the day at a specific factory in 1999.
d) Both b and c

The rate at which a consumer is ABLE to substitute one good for another is determined by:
a) The indifference map
b) The marginal rate of substitution
c) The consumer income
d) The ratio of the prices of the goods.

Demand equations derived from actual market data are:
a) Empirical demand functions
b) Never estimated using consumer interviews.
c) Frequently estimated using regression analysis
d) Both a and c
e) All of the above.

One problem with consumer interview 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

Qualitative forecasting methods.
a) Use higher quality data than statistical methods.
b) Are often the result of expert opinion.
c) Cannot be replicated by another researcher.
d) Both b and c
e) All of the above

Time -series data
a) Shows the behavior of a particular variable over time
b) May exhibit trend or cyclical variation, but not both at the same time.
c) May exhibit trend or cyclical variation at the same time.
d) Both a and b
e) Both a and c

Suppose you run a pizza shop and currently have two employees. If you hire a third employee, your output of pizzas per day rises from 55 to 65. If you hire a fourth employee, output rises to 80 per day. A fifth and six employee would cause output to rise to 90 and 95 per day, respectively. Pick the correct statement:
a) Diminishing returns set in with the hiring of the fourth worker.
b) Diminishing returns set in with the hiring of the fifth worker.
c) Diminishing returns set in with the hiring of the six worker.
d) Diminishing returns set have not yet set in because output is still increases.