Question

Tests of the b = 0 hypothesis are: Select one: a. tests for the share of dependent variable variation explained by the regression model. b. one-tail t tests. c. two-tail t tests d. tests of direction or comparative magnitude. The demand for most consumer goods is insensitive to changes in: Select one: a. competitor prices. b. the weather. c. advertising. d. the corporate income tax rate. The long-run effect on demand of competitor product-development strategies is: Select one: a. less than the short-run effect. b. the same as the short-run effect. c. unrelated to the short-run effect. d. greater than the short-run effect. The number of observations beyond the minimum needed to calculate a given regression statistic is called: Select one: a. a measure of the goodness of fit for a multiple regression model. b. degrees of freedom. c. the square of the coefficient of multiple correlation. d. a measure of statistical significance for the share of dependent variable variation explained by the regression model. When considering effects on the automobile market, a decrease in auto worker health benefits leads to: Select one: a. a shift in demand. b. movement along the supply curve. c. movement along the demand curve. d. a shift in supply.

Answer 1

1. Test of b=0 (i.e. beta) hypothsis are option (c) two tail t tests. In a two tailed test, we set up the hypothesis as H_o : b=0 and alternate hypothesis H_a : b 0

2. The demand for most consumer goods is insensitive to changes in option (b) the weather. All the other options like competitor prices, advertising, and income tax rate directly affect the demand for goods

3. Option (d) greater than the short-run effect. The long-run effect on demand of competitor product development strategies will be greater than short run effect as the long effect on demand will cause prices & supply to fluctuate for a longer duration which will increase/ decrease number of competitors and will be greater than short run effect.

4. Option (b) degrees of freedom. It is the number of observations beyond the minimum needed to calculate a given regression statistic.

5. When employees are given health benefits, it leads to reduced absenteeism and hence option (d) a shift in supply will be seen with decrease in auto worker health benefits.