ART111 Study Guide - Final Guide: Bayes Error Rate, Overfitting, Tikhonov Regularization
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You work for Segway, in the sales division of the Drift W1 (which are basically motorized roller skates). Youâve traveled into the future (since they arenât available yet) and collected data on monthly sales (S) and the price of the Drift W1 (P), both in dollars, as well as the daily average summer temperature in your most popular market (T) in degrees Fahrenheit. You estimate the following regression model: S=a+bP+cT In your regressions, you usually look for a 10%-or-better level of confidence.
The expected sign of
Select one:
a. b is negative and c is positive.
b. b is negative and c is negative.
c. b is positive and c is positive.
d. b is positive and c is negative.
Your regression yields the following results:
Dep. Var.: S
Adj. R-square 0.820
Variable | Coefficient | Standard Error | t-stat | P-value |
---|---|---|---|---|
Intercept | 1936 | 309 | 6.259 | 0.00153 |
P | -4.71 | 0.81 | -5.816 | 0.00212 |
T | 6.57 | 3.50 | 1.879 | 0.11902 |
The estimated coefficient for aa (intercept) suggests that
Select one:
a. If PP and TT are zero, we could still expect about $1,936 in sales per month.
b. aa cannot be interpreted with confidence since its parameter estimate is not statistically significant.
c. Sales will range between $309 and $1,936 per month, but not outside those limits.
d. Sales will be $1,936 per month when PP and TT are at their optimal values.
The estimated coefficient for bb (price of the Drift W1) suggests that
Select one:
a. a $1 increase in the price of the Drift W1 is associated with a decrease of monthly sales of $4.71.
b. monthly sales will increase by $5.816 if the price of the Drift W1 decreases by $4.71.
c. a one-dollar increase in price is associated with an increase in monthly sales of 4.71 units.
d. when price is close to $212, then consumers will demand one more unit per month if price drops by $4.71.
The estimated coefficient for cc (daily average summer temperature) suggests that
Select one:
a. a one-degree increase in temperature is associated with a $3.50 increase in monthly sales.
b. temperature has a more important effect on our sales than does the price of our units, since c>bc>b.
c. a one-degree increase in temperature is associated with a $119.02 increase in price.
d. a one-degree increase in temperature is associated with a $6.57 increase in monthly sales.
The price of the Drift W1 has a statistically significant effect on our sales.
Select one:
True
False
Daily average summer temperature affects the sales of the Drift W1 in a statistically significant way.
Select one:
True
False
What portion of the total variation in sales of the Drift W1 remains unexplained?
Select one:
a. 0.872, or 87.2%
b. 0.180, or 18.0%
c. 0.00153, or 0.153%
d. 0.051, or 5.1%
Segway is considering selling the Drift W1 in a new city, where the average daily summer temperature is 73°, for a price of $320. What level of sales would you expect in this new city (rounded to the nearest dollar)?
Answer:
1. Economists use ____________ as a measure of the relative level of satisfaction when someone consumes a good or service.
consumer happiness |
utility |
a happiness index |
a satisfaction index |
2. Sue likes brownies. However, Sue notices that the more brownies she eats the less satisfaction she receives from each extra brownie. We can say that Sue is experiencing ___________________ from each extra brownie.
sugar sickness |
total utility |
diminishing marginal utility |
increasing marginal utility |
3. When total utility is maximized, the marginal utility will be
positive. |
zero. |
negative. |
none of these. |
4. Consider Dirk and Lee. They are both eating pizza. Which of the following statements is true regarding their satisfaction and utility?
Dirk and Lee both receive 10 utils from eating pizza. |
Dirk and Lee both receive the same level of satisfaction from eating pizza. |
Dirk gets more twice as much satisfaction as Lee from eating pizza. |
It is difficult to determine because the utility is subjective. |
5. For many products, the total utility curve is
strictly increasing because of increasing marginal utility. |
strictly decreasing because of diminishing marginal utility. |
increasing initially because of increasing marginal utility, but eventually decreases. |
increasing initially at a decreasing rate because of diminishing marginal utility but eventually decreases. |
6. When consumers get the biggest bang for the buck, we say they
used the loudest gun in hunting season. |
reached a consumer optimum. |
minimized consumer satisfaction. |
maximized marginal utility. |
7. By choosing to consume at the consumer optimum, consumers will
maximize their total utility. |
minimize their total utility. |
maximize the amount they spend on each good. |
minimize the amount they spend on each good. |
8. A consumer is in equilibrium when consuming two goods when which of the following holds?
MUa/ Pa = MUb/ Pb |
MUa/ Ph =MUb/ Pa |
Pa/ MUa = Pb/ MUb |
MUa x Pa = MUbxPb |
9. If the marginal utility of good 1 is 15 and its price is $3, and the marginal utility of good 2 is 12, and its price is $4, then the consumer
has achieved a consumer optimum. |
should increase his or her consumption of good 1. |
should increase his or her consumption of good 2. |
should decrease his or her consumption of good 1. |
10.Suppose the price of an iPod decrease and the price of HD TVs remains the same; what noticeable effect(s) occur(s)?
the substitution effect only |
the real-income effect only |
the substitution effect and real-income effect, if there is a noticeable change in purchasing power |
the substitution effect and real-income effect, if there isnât a noticeable change in purchasing power |
11. The ______________ paradox was described by Adam Smith in 1776.
diamond-carbon |
diamond-water |
diamond-life |
water-utility |
12. What is the key to solving the diamond-water paradox?
more water and fewer diamonds |
marginal utility |
total utility |
consumer demand |
13. When solving the diamond-water paradox we notice that the marginal utility of
diamonds are equal to the marginal utility of water. |
diamonds are greater than the marginal utility of water. |
diamonds are less than the marginal utility of water. |
water is equal to its price, and therefore lower than the marginal utility of diamonds. |
14. The consumer surplus for water is
greater than that for diamonds because water is nonessential. |
greater than that for diamonds because water is essential. |
less than that for diamonds because water is nonessential. |
less than that for diamonds because water is essential. |
15. Suppose a consumer consumes only diamonds and water, and the price of diamonds increases. All else being equal, a consumerâs marginal utility for diamonds
decreases and the marginal utility for water stays the same. |
increases and the marginal utility for water decreases. |
decreases and the marginal utility for water increases. |
increases and the marginal utility for water stays the same. |