Question

In a multiplicative demand model, the income elasticity of demand can be influenced by: Select one: a. income. b. price. c. price of other goods. d. all of these. In a simple regression model, the correlation coefficient is: Select one: a. equal to one. b. greater than one. c. less than one. d. the square root of the coefficient of determination. Movement along a demand curve is indicated by the quantity effect of a change in: Select one: a. advertising. b. price of other goods. c. income. d. pMulticollinearity is caused by: Select one: a. high correlation among the X variables. b. a linear XY relation. c. a log-linear XY relation. d. high correlation between Y and at least one X variable.rice. Suppose Q1 = 50 when P1 = $25, and Q2 = 20 when P2 = $40. A linear estimate of the demand curve is: Select one: a. P = $50 - $0.5Q b. P = $50 + $0.5Q c. Q = 100 + 2P d. Q = 100 - 0.5P

Answer 1

The answers in order of the questions are as follows:

1. The correct answer is: d)

Reason: In a multiplicative demand model, all the factors are interrelated, so all effects the elasticity.

2. The correct answer is: d)

Reason: This by definition, that correlation coefficient, r = sqrt( coefficient of determination).

3. The correct answer is: d)

Reason: Movement along a demand curve is caused by changes in price. Others cause a shift of the demand curve.

4. The correct answer is: a)

Reason: by definition, multicollinearity is the presence of high correlation between the X variables.

5. The correct answer is: a)

Reason:

Thanks!