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An MBA student has proposed the following demand equation for good Y. QdY = a + b PY + c M where: QdY = quantity demanded of good Y in millions of tons per year PY = Price of good Y in dollars per ton M = Average consumer income in thousands of dollars i. What sign should this student expect a, b, and c to have? Explain. The regression output from the computer is as follows: Dependent Variable: QdY R-Square F-ratio p-value on F Observations: 90 .4 12.84 0.015 Variable Parameter Estimate Standard Error T-ratio P-Value Intercept 60.00 5468.32 3.12 0.0082 PY -1.00 0.65 -1.27 0.2145 M 0.02 3.29 5.12 0.0121 This economist is confortable using parameter estimates that are statistically significant at the 10 percent level or better. ii. Does PY have a statistically significant effect on the quantity demanded of good Y? Explain, using the appropriate p-value. iii. Does M have a statistically significant effect on the quantity demanded of good Y? Explain, using the appropriate p-value. iv. What fraction of the total variation in the quantity demanded of good Y remains unexplained? What can the student do to increase the explanatory power of his demand equation? What other variables might he add to his demand equation? v. What is the expected quantity demanded of good y when PY = 200 and M = 10,000?
Identify whether each of the following transactions involves spot exchange, contract, or vertical integration.
Consider the market for electronics. Patents are granted to investors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy, without the existence of patents; it is argued that research a..
What is the present discounted value of receiving $100 right now, $200 in one year, and $500 in five years? Show your work, and assume r=10%. What is the present discounted value of receiving $100 right now, $500 in one year, and $300 in two years? S..
The price elasticity of demand for natural gas is -1.2, and the price elasticity of supply for natural gas is 0.6. If the government imposes a ceiling price for natural gas that is 10 percent below the equilibrium price, the result will be a shortage..
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A few years, the price of New York City taxi medallions hit $1,000,000. What do you think was behind the increases in the price of New York City taxi medallions? Is that a problem for the city? Should the city intervene in the market for these medall..
In a market, the equilibrium condition is given by the following: Suppose that there is a tax of $1 per unit, and the elasticity of supply is 3 and the elasticity of demand is 2 (in absolute value). How much of the $1 tax is paid by sellers? Which of..
Which of these did the new Dodd-Frank act to do something to address:
You are a novelist who has been published several times. None of your books have been a great commercial success, but you have established a fine reputation as a writer, and you make a decent living. Your agent works for a well-known agency which rep..
q.1. predict what would happen to the labor force participation rate of women if wages for women decreased. explain.2.
According to The Wall Street Journal, Mitsubishi Motors recently announced a major restructuring plan in an attempt to reverse declining global sales. Suppose that as part of the restructuring plan Mitsubishi conducts an analysis of how labor and cap..
q.a borrower takes out a loan from a bank and can invest in a risky project that will produce revenue of 185 with
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