*For profit maximization, a resource should be used until ...



Quantitative Methods

Miscellaneous

*For profit maximization, a resource should be used until what point?

MVP=MFC

*At the boundary between stages II and III, what is TPP equal to? MPP equal too?

TPP is at its maximum and MPP= zero

*What does the Y=X look like in a Y X coordinate space?

A 45-degree line originating from the origin.

*What does the function Y=2 look like in a Y X coordinate space?

Horizontal line at Y=2

*What is the distance between the smallest and largest measurement of a data set?

The range

*Who developed Calculus?

Sir Isaac Newton

*At the beginning of Stage II, what is the relationship between APP and MPP?

They are equal.

* What is a matrix?

A rectangular array of elements arranged in rows and columns.

*Describe the slope of a demand curve.

It is negative.

*The ratio: Relative change in demand/relative change in price, it is what type of elasticity?

The elasticity of demand at a given price. (Point elasticity of demand)

*The more vertical the supply curve, the ___________ the elasticity.

Greater

Linear Programming

*What do the production possibilities equations tell us?

They define all possible combinations of enterprise that can be produced with the given or scarce resources.

*What is the shadow price associated with a resource constraint?

The MVP of a one-unit change in a resource. It basically tells you what you would be willing to pay for one additional unit of a resource

*What is linear programming?

A computational method to determine the best plan or course of action, among many which are possible, when there are many alternatives for the plan, a specific or numerical objective exists for it, and resources are limited.

*What are the three quantitative components of a Linear Programming problem?

The objective function, the alternative ways of producing, and resource constraints.

*What is the purpose of a supply-balance (transfer) equation?

It allows output from one activity to be used as an input into another activity. (Ex: Taking the yield of corn crop & using the corn as feed.)

*What type of activity accounts for unused resources?

A slack activity.

*Which linear programming assumption states that the total usage of each resource equals the sum used by each activity?

Additivity

*The amount by which profits will decrease if one until of an activity is forced into the solution is known as what?

The reduced cost

*When is it possible to have multiple optimal solutions to a problem?

If the isoprofit line coincides with one of the boundaries of the feasible solution space.

*The rate of change in the objective function value for a per unit change in a resource is known as __________________ .

The shadow/dual price

Statistics

*The applications of statistics to business can be divided into two broad areas, what are they?

DESCRIBING large masses of data and making INFERENCES about some set of data based on sampling.

*What is the difference between quantitative data and qualitative data?

Quantitative data are observations that are measured on a numerical scale. Qualitative data is nonnumerical.

*What is the difference between X bar and Mu?

X bar is the sample mean; it is used to estimate the population mean. Mu is the population mean; it is the true mean.

*When is a statistic unbiased?

If its sampling distribution has a mean equal to the parameter it is intended to estimate.

*What is the Central Limit Theorem?

For sufficiently large samples, the sampling distribution of X bar will be approximately normal.

*What is type I error?

Rejection of the null hypothesis when it is true.

*What is type II error?

Failing to reject the null hypothesis when it is false.

*The general property of the relationship between Type I error and Type II error: as alpha is _________, beat is ____________.

Decreased (Increased); Increased (Decreased)

*What does a 95% Confidence Interval mean?

That you are 95% sure that the population parameter is within a given interval estimator.

*What two things determine how accurately X bar estimates Mu?

Sample size and variability (spread the data).

Regression

*What is the difference between R square and adjusted R square?

R square equals the percentage of variation explained; adjusted R square equals the percentage of variance explained.

*What does the use of ordinary least squares for estimating econometric relationships guarantee?

It guarantees that the sum of the square errors in the estimated equation will be minimum.

*What do estimated coefficients indicate?

Each indicates the average units of change in the dependent variable per unit change in the independent variable for which it is associated.

*In a least squares regression, what is the value of the dependent variable when all independent variables are equal to zero?

The constant term (B1). [The slope]

*What are the right hand side ranges?

Amounts by which the resource capacities can be increased (decreased) without changing the activities in the optimum solution.

*What does BLUE stand for?

Best linear unbiased estimator.

*What is an F-test?

A statistical test of the existence of a linear relationship between the dependent variable and all of the independent variables, with the exception of the intercept.

*What are three of the five assumptions of OLS?

1- The expected value of the error is equal to zero.

2- The equation has linear parameters.

3- Error terms have the same variance and are not correlated.

4- The independent variables are non-stochastic.

5- The number of observations is greater than the number of independent variables.

*The coefficient of multiple determination is equal to the _____________ divided by the total sum of squares.

The regression sum of squares.

*_________________ refers to a condition in multiple regression analysis when there is a high level of correlation between independent variables.

Multicollinearity

Calculus

*The slope of any local or global maximum or minimum equals what?

Zero

*Given a function for average cost, how can you determine the average cost per unit?

Divide the function by the number of units.

*When finding a maximum or minimum, what do the second order conditions tell us?

Shape of the curve. Whether it is at a max or a min.

*What is a second order derivative?

It is the derivative if the first order derivative.

*What is an inflection point?

The slope changes from increasing (decreasing) at an increasing rate to increasing (decreasing) at a decreasing rate.

*The derivative of a function measures what?

The derivative measures the instantaneous rate if change of the function.

*In determining the maximum of a function what are the first order conditions (FOC)?

Set all first order partial derivatives equal to zero.

*The slope of the total revenue curve is equal to what?

Marginal Revenue

*If the graph of a function has two different points of maximization, the higher point is known as the _______________ max and the lower of the two is known as the ______________ max.

Global, Local

*What is a partial derivative?

Given a function with two or more variables, a partial derivative is the derivative of the function with respect to one variable and holding all other variables constant.

* Y =  AKα Lβ this function is known as?

The Cobb-Douglas Function

* Which variable of a regression output gives the chance that both a and b are statistically insignificant?

Significance F

* When a curve has two maximum points, what is the higher point called?

Global Maximum

* With regard to minimization, in the second order condition, the function of

X must be....

greater than 0

* State the formula for Price Elasticity:

% change in Q/% change in P

* State 5 Quantitative Methods

Calculus, Statistics, Regression, Linear Programming, and Capital

Budgeting

* If a graph is skewed to the right, in what order will you find the mean and

median starting at the origin moving out?

the mean will be smaller(before) than the median.

* What is the formula for degree of freedom?

n-k-1

* When working a maximization problem the second order conditions should _________.

 

   be less than zero or f'(x) ................
................

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