AEB 3300 Well Set Exam 3

1. The y-intercept tells us the point at which the straight line crosses the horizontal axis (x-axis). a. True b. False - b 1. The equation of any straight line can be written in the form a. True b. False - a 1. If the slope is positive, then x and y move in the same direction, such that when x increases then y also increases and vice versa. a. True b. False - a1. A linear regression is a method for estimating a linear relationship between different variables. a. True b. False 1. A linear regression is a method for estimating a linear relationship between different variables. a. True b. False - a 1. In a linear regression, we are essentially estimating the slope and y-intercept a. True b. False - a 1. Yield and fertilizer used are related through the equation: . which of the following statements is true? a. If fertilizer increases by 1 unit, yield will increase by 15 units b. If fertilizer decreases by 1unit yield will increase by 2.5 units c. If fertilizer is equal to zero, yield would equal 2.5 units d. If fertilizer increases by 1unit yield would increase by 2.5 units e. None of the answers are correct - d 1. Which of the following statements is correct? a. A dummy variable is used to estimate nonlinear quadratic relationships between 2 variables b. A dummy variable can only be used as the dependent variable in a regression c. A dummy variable can only take two values (0 and 1) d. A dummy variable can only be used to estimate negative relationships between 2 variables e. None of the answers are correct - c 1. A country engages in imports when it sells its products to other countries a. True b. False - b 1. Tariffs refer to import quotas that are placed on imports and exports a. True b. False - b 1. NAFTA is a trade agreement between the US, Canada, and Mexico that decreases tariffs and trade barriers between those three countries a. True b. False - a 1. Economists argue that free trade is good for the society in almost every circumstance a. True b. False - a 1. A country has a comparative advantage in the production of a good if it has a lower opportunity cost for producing that good compared to other countries a. True b. False - a 1. Which of the following refers to a restriction by a country on the amount of imports of a certain product during a given period of time? a. Fixed tariffs b. Variable tariffs c. Import quotas d. Export quotas e. All of the answers are correct - c 1. What does it mean if a country has a trade deficit with the rest of the world? a. The value of the countries imports from the rest of the world exceed the value of its exports to the rest of the world b. The value of the countries exports to the rest of the world exceed the value of its imports to the rest of the world c. The country is borrowing money from the rest of the world to produce its products d. The country is lending money to the rest of the world to help other countries produce e. None of the answers are correct - a 1. In a production contract, the producer is usually responsible for supplying the animals and the feed while the buyer provides the growing facilities. a. True b. False - b 1. The futures price refers to the amount of money that the long position pays to sign the futures contract. a. True b. False - b 1. If a forward contract exists on a specific commodity, then a futures contract has to exist as well. a. True b. False - b 1. One difference between forwards and futures contracts is that a forwards contract is prone to counter party risk while a futures contract is not. a. True b. False - a 1. One way to mitigate marketing risk is to plant the crop in geographically distant locations. a. True b. False - b 1. Which of the following is not one of the characteristics of futures contracts? a. They do not exist for all commodities b. They are only available for standard contract sizes c. They involve a margin requirement to cover losses d. They are prone to counter party risk e. None of the answers are correct - d 1. Ben wants to take a long position in a futures contract for corn. He calls his broker to enter a limit order on the Chicago Mercantile Exchange (CME) with a price of $3.5/bushel. Currently, there are 3 short positions on the CME for $4/bushel, $3.8/bushel, and $3.6/bushel. Considering the current situation, what would happen to Ben's limit order? a. It would get fulfilled for a futures price of $4/bushel b. It would get fulfilled for a futures price of $3.8/bushel c. It would get fulfilled for a futures price of $3.6/bushel d. It would not get fulfilled at this time. e. None of the answers are correct - d 1. Amy wants to take a short positi