When a transfer price decreases
a. the profits of the division producing the intermediate product will rise
b. the profits of the division producing the intermediate product will fall
c. the costs of the division producing the intermediate product will rise
d. the costs of the division producing the intermediate product will fall
QUESTION 2As the income for bus consumers increased, the wages of bus drivers increased simultaneously. How does this affect the market for bus rides (inferior good)?
a. The demand curve will shift to the left; the supply curve will shift to the left
b. The demand curve will shift to the left; the supply curve will shift to the right
c. The demand curve will shift to the right; the supply curve will shift to the left
d. The demand curve will shift to the right; the supply curve will shift to the right
QUESTION 3The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to:
a. 1.0
b. their minimum values
c. their average values
d. 0.0
e. none of the above
QUESTION 4When a transfer price increases
a. the profits of the division producing the intermediate product will rise
b. the profits of the division producing the intermediate product will fall
c. the costs of the division producing the intermediate product will rise
d. the costs of the division producing the intermediate product will fall
QUESTION 5Based on the answer above, the price for laptops _____________ and the quantity supplied for laptops ____________.
a. Increase; increase
b. Increase; decrease
c. Decrease; increase
d. Decrease, decrease
QUESTION 6Caution must be exercised in using regression models for prediction when:
a. the value of the independent variable lies inside the range of observations from which the model was estimated
b. the value of the independent variable lies outside the range of observations from which the model was estimated
c. diminishing returns are present
d. the existence of saturation levels are present
e. none of the above