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Midterm Exam Economic Analysis

The midterm exam is worth 25% of the final grade. It contains 4 questions and will take 80 minutes to complete. Calculators, books, notes, phones and internet access are not allowed. The questions cover economic forces that promote firm profitability, supply and demand analysis using a supply function, interpreting regression results about factors that impact wages, and applying the concept of indifference curves and marginal utility. Good luck is wished for the exam.

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Imran
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138 views1 page

Midterm Exam Economic Analysis

The midterm exam is worth 25% of the final grade. It contains 4 questions and will take 80 minutes to complete. Calculators, books, notes, phones and internet access are not allowed. The questions cover economic forces that promote firm profitability, supply and demand analysis using a supply function, interpreting regression results about factors that impact wages, and applying the concept of indifference curves and marginal utility. Good luck is wished for the exam.

Uploaded by

Imran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Midterm Exam

Midterm Exam is 25% of your Final Grade. You should answer all questions with their
respective subsections. Books, Class Notes, Mobile Phones and Internet usage is not
allowed. Exam time is 80 minutes. Good luck!

Question 1. Provide detailed explanation of 4 of the economic forces that promote long run profitability
of the firms. (6 points)

Question 2. Consider the general supply function:


Qs=60+5P-12PI +10F
where Qs - quantity supplied, P price of the commodity, PI = price of a key input in the production
process, and F = number of firms producing the commodity.
a. Interpret the slope parameters on P, PI, and F. (1 point)
b. Derive the equation for the supply function when PI =$90 and F=20. (1 point)
c. Sketch a graph of the supply function in part b. At what price does the supply curve intersect the price
axis? Give an interpretation of the price intercept of this supply curve. (2 points)
d. Using the supply function from part b, calculate the quantity supplied when the price of the commodity
is $300 and $500. (1 point)
e. Derive the inverse of the supply function in part b. Using the inverse supply function, calculate the
supply price for 680 units of the commodity. Give an interpretation of this supply price. (2 points)

Question 3. Consider the following Regression results.


Source SS df MS Number of obs = 10
F( 4, 5) = 1.08
Model 2738786.01 4 684696.502 Prob > F = 0.4550
Residual 3169253.99 5 633850.798 R-squared = 0.4636
Adj R-squared = 0.0344
Total 5908040 9 656448.889 Root MSE = 796.15

wage Coef. Std. Err. t P>|t| [95% Conf. Interval]

education 117.1772 78.46713 1.49 0.196 -84.52896 318.8834


experience -15.16369 157.6754 -0.10 0.927 -420.4813 390.1539
tenure -98.33199 260.5481 -0.38 0.721 -768.0922 571.4282
Male -520.4533 544.0998 -0.96 0.383 -1919.106 878.1996
_cons 823.2709 991.0497 0.83 0.444 -1724.304 3370.845

a) Interpret the coefficients of this regression. (1 point)


b) Which variables is significant at 10% significance level. Formulate Null and Alternative hypothesis for
each variable. (3 points)
c) Write the estimated equation based on the information given in the above. Interpret confidence
interval of Education and Male. (2 points)
d) Interpret the R2. Can this model be used to predict wage level? Discuss. (2 points)

Question 4. Discuss the logic behind indifference and marginal utility by using U(x,y)=0.4*X 0.4Y0.6.
Provide calculation and interpretation. (4 points)

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