ECO 550 MIDTERM PART 2 LATEST (TWO VERSIONS) - 92472

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  • From: Economics, Microeconomics
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VERSION 1 Question 1 Consumer expenditure plans is an example of a forecasting method. Which of the general categories best described this example? Answer time-series forecasting techniques barometric techniques survey techniques and opinion polling econometric techniques input-output analysis Question 2 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 Question 3 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 Question 4 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 Question 5 An example of a time series data set is one for which the: Answer data would be collected for a given firm for several consecutive periods (e.g., months). data would be collected for several different firms at a single point in time. regression analysis comes from data randomly taken from different points in time. data is created from a random number generation program. use of regression analysis would impossible in time series Question 6 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 Question 7 The import of Apple iPads assembled in Shanghai at a $295 wholesale price ($213 cost and $82 profit margin) adds more than it should to the U.S. trade deficit with China because Answer Chinese assembly labor represents only 47 % of the wholesale cost the iPad’s popularity has triggered an enormous number of unit sales wholesale prices only count in the trade statistics if final product prices are higher as with foreign-assembled minivans, most of the subassembly components come from the U.S. the Chinese yuan is a managed currency Question 8 The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time Answer increase exports reduce the competitive pressure on prices lower the value of the currency in the country with the higher inflation rate increase foreign aid increase the speculative demand for the currency Question 9 In a recession, the trade balance often improves because Answer service exports exceed manufactured good exports banks sell depressed assets fewer households can afford luxury imports direct investment abroad declines the capital account exceeds the current account Question 10 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 Question 11 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. Question 12 Purchasing power parity or PPP says the ratios composed of: Answer interest rates explain the direction of exchange rates. growth rates explain the direction of exchange rates. inflation rates explain the direction of exchange rates. services explain the direction exchange rates. public opinion polls explain the direction of exchange rates Question 13 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 Question 14 In a relationship among total, average and marginal products, where TP is maximized: Answer AP is maximized AP is equal to zero MP is maximized MP is equal to zero Question 15 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 Question 16 The isoquants for inputs that are perfect complements for one another consist of a series of: Answer right angles parallel lines concentric circles right triangles Question 17 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 Question 18 The marginal product is defined as: Answer The ratio of total output to the amount of the variable input used in producing the output The incremental change in total output that can be produced by the use of one more unit of the variable input in the production process The percentage change in output resulting from a given percentage change in the amount The amount of fixed cost involved. Question 19 Which of the following is never negative? Answer marginal product average product production elasticity marginal rate of technical substitution slope of the isocost lines Question 20 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 Question 21 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 Question 22 If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is: Answer 10.2 102 37.1 371 321 Question 23 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. Question 24 The existence of diseconomies of scale (size) for the firm is hypothesized to result from: Answer transportation costs imperfections in the labor market imperfections in the capital markets problems of coordination and control encountered by management Question 25 Economies of Scope refers to situations where per unit costs are: Answer Unaffected when two or more products are produced Reduced when two or more products are produced Increased when two or more products are produced Demonstrating constant returns to scale Demonstrating decreasing returns to scale VERSION 2 Question 1 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 4 points Question 2 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 4 points Question 3 If two alternative economic models are offered, other things equal, we would Answer tend to pick the one with the lowest R2. select the model that is the most expensive to estimate. pick the model that was the most complex. select the model that gave the most accurate forecasts 4 points Question 4 Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast. Answer opinion polling barometric forecasting econometric forecasting time-series forecasting 4 points Question 5 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 4 points Question 6 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 4 points Question 7 If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar? Answer The value of the dollar falls when US interest rates rise. The value of the dollar rises when US interest rates rise. The value of the dollar is not related to US interest rates. This is known as Purchasing Power Parity or PPP. 4 points Question 8 Companies that reduce their margins on export products in the face of appreciation of their home currency may be motivated by a desire to Answer sacrifice market share abroad but build market share at home increase production volume to realize learning curve advantages sell foreign plants and equipment to lower their debt reduce the costs of transportation 4 points Question 9 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 4 points Question 10 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 4 points Question 11 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 4 points Question 12 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. 4 points Question 13 The import of Apple iPads assembled in Shanghai at a $295 wholesale price ($213 cost and $82 profit margin) adds more than it should to the U.S. trade deficit with China because Answer Chinese assembly labor represents only 47 % of the wholesale cost the iPad’s popularity has triggered an enormous number of unit sales wholesale prices only count in the trade statistics if final product prices are higher as with foreign-assembled minivans, most of the subassembly components come from the U.S. the Chinese yuan is a managed currency 4 points Question 14 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 4 points Question 15 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 4 points Question 16 Which of the following is never negative? Answer marginal product average product production elasticity marginal rate of technical substitution slope of the isocost lines 4 points Question 17 The combinations of inputs costing a constant C dollars is called: Answer an isocost line an isoquant curve the MRTS an isorevenue line 4 points Question 18 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 4 points Question 19 In a relationship among total, average and marginal products, where TP is maximized: Answer AP is maximized AP is equal to zero MP is maximized MP is equal to zero 4 points Question 20 Economies of Scope refers to situations where per unit costs are: Answer Unaffected when two or more products are produced Reduced when two or more products are produced Increased when two or more products are produced Demonstrating constant returns to scale Demonstrating decreasing returns to scale 4 points Question 21 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 4 points Question 22 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 4 points Question 23 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. 4 points Question 24 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 4 points Question 25 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
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