Based on the production function parameter estimates reported in Table 7.4:

a)      Which industry (or industries) appears to exhibit decreasing returns to scale? (Ignore the issue of statistical significance.)

b)      Which industry comes closest to exhibiting constant returns to scale?

c)      In which industry will a given percentage increase in capital result in the largest percentage increase in output?

d)     In what industry will a given percentage increase in production workers result in the largest percentage increase in output?

Microeconomics is distinguished from macroeconomics in that microeconomics focuses on

A. the performance of the national economy.

B. the overall price level.

C. choices made by individuals or groups in the context of individual markets.

D. how to improve the performance of the national economy.

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:

            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.

An appreciation of the U.S. dollar has what impact on Harley-Davidson (HD), a U.S. manufacturer of motorcycles? 

            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

In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?

            the identification problem

            Autocorrelation

            multicollinearity

            heteroscedasticity

            agency problems

Marginal factor cost is defined as the amount that an additional unit of the variable input adds to ________________.

             a.   marginal cost

             b.   variable cost

             c.   marginal rate of technical substitution

             d.   total cost

Marginal revenue product is:

             a.   defined as the amount that an additional unit of the variable input adds to the total revenue

             b.   equal to the marginal factor cost of the variable factor times the marginal revenue resulting from the increase in output obtained

             c.   equal to the marginal product of the variable factor times the marginal product resulting from the increase in output obtained

             d.   a and b

             e.   a and c

The marginal product is defined as:

             a.   the ratio of total output to the amount of the variable input used in producing the output

             b.   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

             c.   the percentage change in output resulting from a given percentage change in the amount of the variable input X employed in the production process with Y

             d.   a and b

Trading partners should specialize production in accordance with comparative advantage, then trade and diversify in consumption because

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

An appreciation of the U.S. dollar has what impact on U.S. manufacturers?

domestic sales increase and foreign sales increase

domestic sales decrease and foreign sales increase

domestic sales increase and foreign sales decrease

domestic sales decrease and foreign sales decrease

Demand functions in the multiplicative form are most common for all of the following reasons except:

             a.   elasticities are constant over a range of data

             b.   ease of estimation

             c.   exponents of parameters are the elasticities of those variables

             d.   marginal impact of a unit change in an individual variable is constant           

One commonly used test in checking for the presence of autocorrelation when working with time series data is the _______________.

             a.   F-test

             b.   Durbin-Watson test

             c.   t-test

             d.   z-test

             e.   none of the above

The estimated slope coefficient (b) of the regression equation (Y = a + bX) measures the _____________ change in Y for a one _______ change in X.

             a.   percentage, unit

             b.   percentage, percent

             c.   unit, unit

             d.   unit, percent

             e.   none of the above

All of the following are reasons why an association relationship may not imply a causal relationship except:

             a.   the association may be due to pure chance

             b.   the association may be the result of the influence of a third common factor

             c.   both variables may be the cause and the effect at the same time

             d.   the association may be hypothetical