1. Economists estimated that the cross-price elasticity of demand for beer and wine is 0.31 and the income elasticity of wine is 5.03. This means that

A) beer and wine are complements and wine is a luxury good.

B) beer and wine are substitutes and wine is a luxury good.

C) beer and wine are complements and wine is an inferior good. D) beer and wine are substitutes and wine is an inferior good.

2. The t-test is used to test hypotheses concerning the individual regression coefficients. A) True B) False

3. The intercept of the equation: Y = .09 + 1.5X is 1.5. A) True

B) False

4. The South Beach Cafe recently reduced appetizer prices from $12 to $10 for afternoon"early"bird customers and as a result enjoyed an increase in sales from 90 to 150 orders per day. Beverage sales at the South Beach Cafe also increased from 300 to 600 units per day. Based on the above, the ARC price elasticity of demand approximately is

A) -2.75 B) -0.364 C) -3.64 D) -2.222

5.Answer 38-40 based on the Demand curve for normal goodX

Qd= 40,000 - 10,000Px

The Total revenue (TR) function based on the above demand is

TR = 4Q - 0.0001Q2

A) True B) False

6. Based on the above, the Marginal Revenue, MR, function is

MR = 4 - 0.0002Q

A) True B) False

7. Based on the above, TR is maximized at Q = 20,000 units A) True

B) False

8. Scenario 2.

is given by

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 Px -5,000 Py 3,500 I 35 Adv. 1,000

5,050.9 1,001.5 1,750 19.5 333

Refer to Scenario 2. What is the quantity demanded of X when Px = $6, Py = $2, I = $40, and ADV = $20. .

A) 7,500 B) 10,000 C) 3,400 D) 5,000

9. 55.57% of the variation in the quantity demanded can be explained by the regression.

A) True B) False

10.Refer to Scenario 2. 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