managerial economic assignment

Use the following demand and supply functions to answer the following.

Equilibrium price and output are

A.	P = $5 and Q = 70.

B.	P = $11 and Q = 3.32.

C.	P = $12 and Q = 44.

D.	P = $15 and Q = 50.

E.	none of the above

Suppose that the market for salad dressing is in equilibrium. Then the price of lettuce rises. What will happen?

A.	The price of salad dressing will rise.

B.	The supply of salad dressing will decrease.

C.	The demand for salad dressing will decrease.

D.	The quantity demanded of salad dressing will increase.

Suppose that more people want Orange Bowl tickets than the number of tickets available. Which of the following statements is correct?

A.	There is a shortage of Orange Bowl tickets at the box office price.

B.	The box office price is higher than the equilibrium price for Orange Bowl tickets.

C.	If the box office price were raised, the excess demand for Orange Bowl tickets would decrease.

D.	both a and c.

E.	all of the above.

, where P is the price of good X, M is income, and PR is the price of a related good, R.

What is the demand function when M = $50,000 and PR = $10?

E.	none of the above

The general linear demand function below is used to answer question

where Qd = quantity demanded, P = the price of the good, M = income, PR = the price of a good related in consumption.

The law of demand requires that

a < 0.

b < 0.

P < 0.

D.	a < 0 and b < 0.

E.	b < 0 and P < 0.

The linear regression equation, Y = a + bX, was estimated. The following computer printout was obtained:
managerial economic assignment 1

The parameter estimate of a indicates

A.	when X is zero, Y is 5.09.

B.	when X is zero, Y is 15.48.

C.	when Y is zero, X is -21.36.

D.	when Y is zero, X is 8.03.

Computer output from estimating the parameters of the nonlinear model

The computer output from the regression analysis is:
managerial economic assignment 2

The nonlinear relation can be transformed into the following linear regression model:

10.

Which of the parameter estimates are statistically significant at the 90% level of confidence?

A.	All the parameter estimates are statistically significant.

B.	All parameter estimates except â and are statistically significant.

C.	â is not statistically significant, but all the rest of the parameter estimates are significant.

D.	is not statistically significant, but all the rest of the parameter estimates are significant.

11.

The quadratic equation Y = a + bX +cX2 can be estimated using linear regression by estimating

A.	Y = a + bX + ZX where Z = c2

B.	Y = a + ZX where Z = (b + c)

C.	Y = a + bZ where Z = X2

D.	Y = a + ZX where Z = (b + c)2

E.	None of the above will work

A manager wishes to estimate an average cost equation of the following form:

where Q is the level of output. Letting Z = Q2 and using least-squares estimation, the manager obtains the following computer output:
managerial economic assignment 4

12.

The value of R2 indicates that _______ of the total variation in C is explained by the regression equation.

0.7679%

76.79%

7.679%

7679%

13.

Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for $35 instead of the usual $40. If both ticket revenues and blood donations rise with this plan, which of the following is true?

A.	The demand for Houston Rockets' tickets is price elastic.

B.	The demand for Houston Rockets' tickets is price inelastic.

C.	The demand for blood donations is price elastic.

D.	The demand for blood donations is price inelastic.

Refer to the following graph:
managerial economic assignment 5

14.

The price elasticity of demand over the price interval $90 to $110 is

-0.5.

-1.0.

-1.5.

-2.0.

-0.4.

15.

Suppose price rises from $90 to $110. Total revenue moves in the ________ (same, opposite) direction as the dominant effect. In this case, total revenue ____________ (increases, decreases, stays the same) because the quantity effect is _________ (larger than, smaller than, the same as) the price effect.

A.	same; increases; larger than

B.	same; decreases; smaller than

C.	same; decreases; larger than

D.	opposite; increases; larger than

E.	opposite; decreases; smaller than

The estimated demand for a good is

where Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R.

16.

If the price of the good falls by $4, the quantity demanded will ________ by ________ units.

A.	increase; 5 units

B.	increase; 20 units

C.	increase; 50 units

D.	increase; 48 units

E.	decrease; 12 units

The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:

where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and PR is the price of a related product. The results of the estimation are presented below:
managerial economic assignment 6
Assume that the income is $10,000, the price of the related good is $40, and Conlan chooses to set the price of this product at $30.

18.

At the prices and income given above, what is the price elasticity of demand?

-0.43

-0.86

-1.00

-1.43

-2.40

The manufacturer of Beanie Baby dolls used quarterly price data for 2005I-2013IV (t = 1, ..., 36) and the regression equation

to forecast doll prices in the year 2014. Pt is the quarterly price of dolls, and D1t, D2t and D3t are dummy variables for quarters I, II, and III, respectively.
managerial economic assignment 8

19.

What is the estimated intercept of the trend line in the 4th quarter?

22.8

E.	none of the above

A forecaster used the regression equation

and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and D1, D2 and D3 are dummy variables for quarters I, II, and III.
managerial economic assignment 9

20.

Using a 5 percent significance level, these estimation results indicate that

A.	sales in the first quarter are significantly greater than sales in any other quarter.

B.	sales in the second quarter are significantly greater than sales in any other quarter.

C.	sales in the third quarter are significantly greater than sales in any other quarter.

D.	sales in the fourth quarter are significantly greater than sales in any other quarter.

FILL IN THE BLANKS

Market researchers at Chrysler have estimated the demand for their new Chrysler Crossfire sports cars as follows:

where QC is the quantity of Chrysler Crossfires sold annually, PC is the price of a Chrysler Crossfire, M is average household income, PBMW is the price of BMW’s 330i sports sedan, and PP is the price of Porsche’s Boxster S sports car. The marketing team at Chrysler plans to price the Crossfire at $32,000. They predict that average household income is $75,000 for buyers in the market for their sports sedan. The current prices for BMW’s 330i and Porsche’s Boxster S are $34,000 and $50,000, respectively. Use this information to answer the following questions.

Compute the predicted annual sales of the Chrysler Crossfire:

QC = ____________ units per year.

Compute the income elasticity of demand for the Chrysler Crossfire:

EM = __________.

The computed value of income elasticity indicates the Crossfire is a(n) _______________ good. Average household income is predicted to fall next year by 2.5 percent, which will cause sales to _________ (rise, fall) by _______ percent (assuming other factors remain the same).

Compute the price elasticity of demand for the Chrysler Crossfire:

E = __________.

At the current price of $32,000, Chrysler is choosing to price in the ______________ (elastic, inelastic) region of demand. At this point, a 5 percent increase in the price of Crossfires would be expected to cause sales to fall by ________ percent (assuming other factors remain the same).

Compute the cross-price elasticity of demand for Chrysler Crossfires with respect to changes in the price of the BMW 330i:

EC-BMW = __________.

Compute the cross-price elasticity of demand for Chrysler Crossfires with respect to changes in the price of the Porsche Boxster S:

EC-P = __________.

Both cross-price elasticities are _______________ (positive, negative, greater than 1, less than 1) because these two cars are viewed by car-buyers as ______________ (substitute, complement, inferior, normal) goods.

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