ECON 2020 Midterm: Exam-ECON2002-2002December[2]

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turquoisegnu128

31 Jan 2019

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5 5 e ) ) - r " . r e a i . E c o n 2 0 0 2 d. 4 : / u r p d 9 c 5 i a a p r o c l " l r. " _ j i i i ^ i s c r n. ; 1 3 j r - , t f t lnstructions: Total marks equal60, and each question is worth 10 marks. An individual"s utility tunction is u(c. , c, ) = t,l"tt,t"r . where c, is consumption in period t:0, l income in the first period is ,000, and in the second period income is $ 1 5. 000. The individual can borrow at an interest rate of l0%. and lend at a rate of 5oa. Indicate using a diagram and algebraically the budget constraint. Using the lagrangian function technique, find the consumer equilibrium and determine u"hether the individual will be a lender or a borrow"er.

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AI 16. If the price of X is set at $0.10 per unit, the quantity of the good purchased by this consumer each month will be: B) 2 C)3 D) 4 E) 6 F) 8 G) 10 H) 12 I) 16.5 J) 23.5 K) 63 L) 64 M) 128 N) 129 0) 150 P) 156 Q) 157.5 R) 159.5 S) 160 T) 255 U) 256 V) 256.5 W) 257.5 X) 260 Y)0 Z) none of the above

The table below describes the total product of a firm. Fill in the missing values, a) - u), by calculating marginal product and average product.

1	2	3	4
Units of the variable resource (Capital)	Total Product (TP)	Marginal Product (MP)	Average Product (AP)
Units of the variable resource (Capital)	Total Product (TP)	Marginal Product (MP)	Average Product (AP)	0	0	a	-
1	1	b	l
2	3	c	m
3	6	d	n
4	10	e	o
5	15	f	p
6	18	g	q
7	20	h	r
8	19	i	s
9	17	j	t
10	13	k	u

Refer to the table from above.

a. List the units of capital exhibit increasing marginal returns?

b. List the units of capital exhibit decreasing marginal returns?

c. List the units of capital exhibit negative marginal returns?

8. Describe how the total product and average product curves change as a firm moves from increasing to diminishing to negative marginal returns.

9. Does the law of diminishing returns mean that, as a firm hires additional workers, each of those workers is successively worse at doing their job? Why or why not?

chocolategoose43

TABLE 66 Stock Prices and Consumer Prices

CITY
Y = Rate of Change, Stock Prices, Percent Per Year
X = Rate of Change, Consumer Prices, Percent Per Year

CITY	Y	X
A	5	4.3
B	11.1	4.6
C	3.2	2.4
D	7.9	2.4
E	25.5	26.4
F	3.8	4.2
G	11.1	5.5
H	9.9	4.7
I	3.3	2.2
J	1.5	4
K	6.4	4
L	8.9	8.4
M	8.1	3.3
N	13.5	4.7
O	4.7	5.2
P	7.5	3.6
Q	4.73.	6
R	8	4
S	7.5	3.9
T	9	2.1

Table 66 gives data on percent change per year stock prices (Y) and consumer prices (X) for a cross section of 20 cities.

******************* answer in "SAS format" please********************* (if possible)

1) Plot the data in scattergram

2) Regress Y on X and examine the residuals from this regression. What do you observe?

3) Since the data for city(E) is unusual, repeat the regression in (2) dropping the data on city(E). Now examine the residuals from this regression. What do you observe?

4) If on the basis of the results in (2) you conclude that there was heteroscedasticity in the error variance but on the basis of the results in (3) you reverse your conclusion, what general conclusions do you draw?

State whether the following statements are true or false. Breifly justify your answer:

5) When autocorrelation is present, OLS estimators are biased as well as inefficient;

6) The R squared values of two models, one involving regression in the first-difference form and another in the level form, are not directly comparable.

7) In the presence of heterscedasticity the usual OLS method always overestimates the standard errors of estimators.

8) If a regression model is mis-specified (e.g., an important variable is ommitted), the OLS residuals will show a distinct pattern.

redcamel374

ECON 2020 Midterm: Exam-ECON2002-2002December[2]

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