Problem 7: The following table represents data on three
leading indicators for a three-month period. Construct the
composite index (with each indicator assigned equal
weight) and the diffusion index.
Appendix Problem 1: The following table reports the
Consumer Price Index for the Los Angeles area on a
monthly basis from January 1998 to December 2000 (base
year= 1982-1984). Eliminating the data for 2000, use Excel
to forecast the index for all of 2000 using a three- and six-
month average. Which provides a better forecast for 2000
using the data provided?
Appendix Problem 3: Forecast the data for 2000 again in
Problem 1 with exponential smoothing with w=0.3 and
w=0.7. Is this a better forecast than the moving average?
Salvatore’s Chapter 7:
Discussion Questions: 3, 11, and 12.
Problems: 4, 12, and 13.
Discussion Question 3:
a) How is the law of diminishing returns reflected in the
shape of the total product curve?
b) What is the relationship between diminishing returns
and the stages of production?
Discussion Question 11: Minimum wage legislation
requires most firms to pay workers no less than the
legistiated minimum wage per hour. Using marginal