An Introduction to Econometrics
Which of the following is NOT generally included in the study of econometrics? - (correct Answer) -
developing new economic relationships.
Consider the following model:
Qd = f(P, Ps, Pc, INC)
where Qd is quantity demanded of a particular product per month, P is the price of the product, Ps is the
price of substitutes, Pc is the price of complements, and INC is monthly income.
This equation represents - (correct Answer) - a challenge to the law of demand.
Economic theory provides a basis for which variables are relevant and should be included in an
econometric model. But econometrics provides tools to estimate ____________________ which tells us
________________________________. - (correct Answer) - a parameter, how much or to what degree
things change.
Why is a random error term included in an econometric model? - (correct Answer) - because there is
intrinsic uncertainty in any economic activity due to individual decision making
Refer to the following equation:
Qs = 1 + 2P + 3Pr + 4Ps + 5TAX + e
where Qs is annual quantity supplied, P is the price of the product, Pr is the price of resources, Ps is the
price of goods that are substitutes in production, and TAX is the excise tax on the product. This equation
is - (correct Answer) - an econometric model
Refer to the following equation:
Qs = B1 + 2P + B3Pr + B4Ps +B5TAX + e
where Qs is annual quantity supplied, P is the price of the product, Pr is the price of resources, Ps is the
price of goods that are substitutes in production, and TAX is the excise tax on the product. In this
equation B1 represents - (correct Answer) - a parameter to be estimated
The parameters estimated using econometric methods are generally used for ___________________ or
_____________________. - (correct Answer) - testing hypotheses, predicting
Suppose you stand outside a store and randomly give some shoppers coupons as they enter while other
shoppers receive none. You then record how much each shopper spends in the store. The data you
collect are - (correct Answer) - experimental data
Which of the following is NOT generally included in the study of econometrics? - (correct Answer) -
developing new economic relationships.
Consider the following model:
Qd = f(P, Ps, Pc, INC)
where Qd is quantity demanded of a particular product per month, P is the price of the product, Ps is the
price of substitutes, Pc is the price of complements, and INC is monthly income.
This equation represents - (correct Answer) - a challenge to the law of demand.
Economic theory provides a basis for which variables are relevant and should be included in an
econometric model. But econometrics provides tools to estimate ____________________ which tells us
________________________________. - (correct Answer) - a parameter, how much or to what degree
things change.
Why is a random error term included in an econometric model? - (correct Answer) - because there is
intrinsic uncertainty in any economic activity due to individual decision making
Refer to the following equation:
Qs = 1 + 2P + 3Pr + 4Ps + 5TAX + e
where Qs is annual quantity supplied, P is the price of the product, Pr is the price of resources, Ps is the
price of goods that are substitutes in production, and TAX is the excise tax on the product. This equation
is - (correct Answer) - an econometric model
Refer to the following equation:
Qs = B1 + 2P + B3Pr + B4Ps +B5TAX + e
where Qs is annual quantity supplied, P is the price of the product, Pr is the price of resources, Ps is the
price of goods that are substitutes in production, and TAX is the excise tax on the product. In this
equation B1 represents - (correct Answer) - a parameter to be estimated
The parameters estimated using econometric methods are generally used for ___________________ or
_____________________. - (correct Answer) - testing hypotheses, predicting
Suppose you stand outside a store and randomly give some shoppers coupons as they enter while other
shoppers receive none. You then record how much each shopper spends in the store. The data you
collect are - (correct Answer) - experimental data
