ECO 550 midterm exam part 1

Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

Shirking of one’s duties is often encountered in team production settings because

Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women.  The new frequency recommendation was designed to address the family histories of the patients.  The optimal frequency should be where the marginal benefit of an additional pap-test:

The Saturn Corporation (once a division of GM) was permanently closed in 2009.  What went wrong with Saturn?

Economic profit is defined as the difference between revenue and ____.

Income tax payments are an example of ____.

A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.

The standard deviation is appropriate to compare the risk between two investments only if

The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:

The level of an economic activity should be increased to the point where the ____ is zero.

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Generally, investors expect that projects with high expected net present values also will be projects with

When demand elasticity is ____ in absolute value (or ____), an increase in price will result in a(n) ____ in total revenues.

Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because

Marginal revenue (MR) is ____ when total revenue is maximized.

The factor(s) which cause(s) a movement along the demand curve include(s):

Which of the following would tend to make demand INELASTIC?

When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded, the net result being a constant total consumer expenditure.

An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.

Even though insignificant explanatory variables can raise the adjusted R2 of a demand function, one    should not interpret their effects on the regression when

When two or more "independent" variables are highly correlated, then we have:

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

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

In regression analysis, the existence of a significant pattern in successive values of the error term constitutes:

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