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36 Cards in this Set
- Front
- Back
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How do you calculate the T Statistic?
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The coefficient divided by the Standard Error
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How do you calculate Total Revenue?
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P*Q
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How do you calculate Marginal Revenue?
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The Change in TR/ The Change in Q
(TR1-TR0) --------------- (Q1-Q0) |
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Total Revenue is at a max when MR = what number?
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0
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To calculate the MINIMUM point on a TC cost curve after using the quadratic equation,
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1. Take the 2nd derivative of the original function
2. Plug each value into the formula 3. The one with the HIGHER value is the minimum point (the curve starts going up). The one with the Lower value is the Maximum point (curve starts going down) |
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What is the equation for the Profit Function? (Pie Symbol)
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TR-TC
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If you have a profit function? What would you do to get an equation to determine the P and Q that maximize profit?
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Take the 1st derivative of the Profit Function (Turns it into a quadratic function)
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How do you find the equilibrium price and quantity given a demand curve?
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When Supply = Demand, equilibrium is achieved. Set supply equation = to demand equation and solve.
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what is the Arc elasticity formula?
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[(Q1-Q0)/The Midpoint of Q1,Q0]
------------------------------------------------------------- [(P1-P0)/The Midpoint of P1,P0] |
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What are the general rules to determine if a value is elastic/inelastic?
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0< Value <1 = Inelastic
1< Value = Elastic |
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How do you calculate the point price elasticity demand when given a demand formula and a value, P?
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Take the first derivative of the demand formula, and multiply it by P/Q.
To solve for Q, plug the value P into the equation |
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How can you tell if a set of data is significant?
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If the F statistic is greater than 0.05
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What is the significance of the Adjusted R Squared?
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It is a measure of variability in Y that is explained by X in the model. It also takes into account Sample Size compared to just the R squared which does not.
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What type of data is over 1 period of time with different characteristics of data?
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Cross Sectional data
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What is an example of a cross sectional data set?
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Car demand across 50 states for 1 year
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What type of data is collected over a specific time period?
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Time Series data
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What is an example of a time series data set?
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The demand for cars between 1950 and now
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The negative sign for the P variable indicates what type of relationship between price and quantity demanded for the product?
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An Inverse relationship . A unit increase in price will cause the quantity demanded to decrease. A unit decrease in price will cause the quantity demanded to increase.
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The positive sign for P variable indicates what type of relationship between the price of a related product and the quantity demanded?
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A direct relationship.
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How do you calculate the degrees of freedom?
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n-k-1
Where: n = the sample size k = the number of independent variables (x's) |
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What does the t-test calculate?
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The statistical significance of each estimate regression coefficient
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What does the F-test calculate?
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The statistical significance of the entire regression equation rather than of each individual coefficient (as the t-test does)
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What is the formula for calculating the Moving average?
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Make three columns: Forecast, Absolute Error, and Squared Error
Forecast: Take the first 3 months actual data and divide by 3 to get the 4th period's forecast. Absolute Error: Take the actual amount for the 4th period minus the forecasted amount Squared Error: square the absolute error Take the lowest sum of squared errors for finding which forecast you should use |
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How do you use Smoothing factor to calculate a forecast?
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Three columns: Forecast, Absolute Error, Squared Error
Forecast: Take the (Actual data from the prior period*smoothing factor) + (1-Smoothing factor*forecast from the period before) Absolute error and squared error are the same as Moving average |
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What is the formula for Compound growth rate?
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The last year's amount / the first year's amount = % growth rate. Multiply the value from the period before to get next period's data.
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What is the Rule of 2?
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A rule of thumb employed by economists in conducting the t-test. It states that any t-ratio of 2 or more indicates that the estimated coefficient is statistically significant at the 0.05 level.
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If a coefficient is negative in a regression statistic, it is expected to be a(n)
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Inverse determinant of the demand for the good.
If the price of pizza (X1) changes, the quantity demanded for the god will change in the opposite direction. |
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If a coefficient is positive in a regression equation, it is expected to be a(n)
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direct relation.
Higher tuition costs (x2) are associated with a greater demand for pizza. |
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If a coefficient is negative and is a different good compared to the data being analyzed, it is said to be a
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compliment. As the price of a soft drink goes up, college students tend to buy less pizza.
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If the estimated coefficient of a variable passes the t-test, we can be confident that,
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the variable truly has an impact on demand.
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If the price for a related product (Px) has a positive sign, this indicates,
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A direct relationship between the price of a related product and the quantity demanded. This indicates that the related product is a substitute.
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In a production function, what do Q,X and Y stand for?
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Q = Output
X = Labor Y=Capital |
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What does the law of diminishing returns state?
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As additional units of a variable input are combined with a fixed input, at some point the additional output (marginal product) starts to diminish
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What is the definition of Total Revenue Product (TRP)?
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The market value of the firm's output, computed by multiplying the total product by the market price (Q*P)
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What is the definition of Marginal revenue product? (MRP)
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The change in the firm's total revenue product resulting from a unit change in the number of inputs used (Der of TRP/Der X). It can also be computed by multiplying the marginal product by the product price. (MP * P)
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What is the definition of Total labor cost?
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The total cost of using the variable input, labor, computed by multiplying the wage rate, by the number of variable inputs employed
(Wage rate * x) |
