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Demand Theory
Regressions
T-Stats
T-Stats and Coef's II
Miscellaneous
100
Name All four demand Shifters
Population Other Goods Income Taste & Preferences
100
The value of the dependent variable if all the explanatory variables are 0
Intercept
100
What is the formula for calculating a T-Stat
Estimated Coef./Standard Error
100
You obtain a T-Stat of 4 and are using a 5% alpha level cut off value (1.96) is the estimated coef. statistically significant
Yes 4 >1.96 , reject the null in favor of the alternative hypothesis Statistically significant
100
What is the expected sign on the Income Variable if it is an inferior good
Negative
200
What is the dependent variable in the price taker equation?
Price
200
Another name for R-Squared, and is a measure of the overall goodness of fit of the model
Coeficient of Determination
200
This is another name for the coeficient of determination
R-squared
200
You estimate a two variable model, quantity of potatoes in pounds is dependent variable, price of potatoes in cents is explanatory variable. You estimate a coeficient of -5 Interpret the coeficient.
If price of potatoes increases by 1 cent quantity of potatoes demanded decreases by 5 pounds
200
Can the taste & preference variable have a positive or negative coeficient
Yes
300
Name one commodity that is sold at a negative price
Apples Spuds
300
This type of error occurs when the true null hypothesis is rejected
Type 1 error
300
Is a small or large standard error preferred in relation to the estimated coeficient?
Small Standard Error because it prides a more precise estimate
300
You estimate a two variable model, quantity of chicken in pounds is dependent variable, price of chicken in cents is explanatory variable. You estimate a coeficient of -3 Interpret the coeficient.
For every one cent increase in the price of chicken quantity demanded decreases by 3 pounds
300
Demand at the consumer level?
Primary Demand
400
A change in the coeficient is a parallel shift (true or false)
False (structural change)
400
Beta is the letter used to identify this part of the equation
Coeficient
400
You obtain an R-Squared figure of .83 Interpret the r-squared figure
83 percent of variation is explained by the model
400
You estimate a model where wage in dollars is the dependent variable and education in years is the explanatory variable, you obtain a coeficient of 2 on the education variable interpret the coeficient
For every one year increase in education wage increases by 2 dollars
400
What is the sign for a subsitute good in an inverse demand equation?
- (negative)
500
Is per capita consuption a good way to measure demand?
NO!!! it does not include price
500
This type of error occurs when an incorrect null is accepted
Type II Error
500
You obtain a T-Stat of 1.09 and you are using a 10% alpha, (1.65) cut off value. Is the variable statistically significant?
No 1.09 < T cut-off value fail to reject the null Not Statistically significant
500
Name two of the three criteria that estimated coeficents must be evaluated based on?
Economic Statistical Econometric
500
The most important concept that drives the entire economic system
Consumer is king