Question

1) Answer 1-3 based on the Demand curve for normal good X is given by Qd = 40,000 - 10,000Px The Total revenue (TR) function based on the above demand is TR = 4Q - 0.0001Q2

A) True

B) False

2) Based on the above, the Marginal Revenue, MR, function is MR = 4 - 0.0002Q

A) True

B) False

3) Based on the above, TR is maximized at Q = 20,000 units

A) True

B) False
4) 55.57% of the variation in the quantity demanded can be explained by the regression.

A) True

B) False

Scenario 1:

Below is a multiple regression estimate in which the dependent variable is the quantity demanded, Qx, of movie tickets at the theatre, and the independent variables are, Px is the movie ticket price in dollars, Py is the price of a redbox DVD rental in dollars, I is income in dollars, and Adv is advertising expenditures in dollars.

The regression was estimated for 62 movie outletlets

Regression Statistics:

R-Square 0.5557

Adjusted R-Square 0.5329

Observations 62

Coefficient Standard Error

Intercept 6,600 5,050.9

Px -5,000 1,001.5

Py 3,500 1,750

I 35 19.5

Adv. 1,000   333

5) Refer to Scenario 1. By examining the t-statistics associated with the regression coefficients, at the 5 percent significance level, which of the independent variables is statistically different from zero (i.e., statistically significant at the 5% level)?

A) Only Px and Py are statistically significant at the 5% level.

B) Px, Py, and Adv. are statistically significant at the 5% level but not I.

C) all independent variables are statistically significant at the 5% level.

D) Can't tell since the t-statistics for each independent variable are not provided to me.

6) Refer to Scenario 1. If Py increases by $2, all else constant, what is the impact on the quantity demanded of x?

A) it will decrease by 3,500 units

B) it will increase by 7,000 units

C) it will decrease by 7,000 units

D) it will increase by 3,500 units

7) Refer to Scenario 2. When Px = $6, Py = $2, I = $40, and ADV = $20, the point price elasticity of demand equals:

A) -6.0

B) -0.333

C) -1.0

D) -0.6

Answer 1