1. Economic profit is defined as the difference between revenue and ____.<\/p>\n
explicit cost<\/p>\n
total economic cost<\/p>\n
implicit cost<\/p>\n
shareholder wealth<\/p>\n
2. In the shareholder wealth maximization model, the value of a firm’s stock is equal to the present value of all expected future ____ discounted at the stockholders’ required rate of return.<\/p>\n
Profits (cash flows)<\/p>\n
Revenues<\/p>\n
Outlays<\/p>\n
Costs<\/p>\n
Investments <\/p>\n
3. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?<\/p>\n
Saturn’s cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.<\/p>\n
Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.<\/p>\n
Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.<\/p>\n
Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Cadillac.<\/p>\n
4. The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?<\/p>\n
risk-bearing theory of profit<\/p>\n
dynamic equilibrium theory of profit<\/p>\n
innovation theory of profit<\/p>\n
managerial efficiency theory of profit<\/p>\n
stochastic optimization theory of profit<\/p>\n
5. A Real Option Value is:<\/p>\n
An option that been deflated by the cost of living index makes it a \u201creal\u201d option.<\/p>\n
An opportunity cost of capital.<\/p>\n
An opportunity to implement a new cost savings or revenue expansion activity that arises from business plans that the managers adopt.<\/p>\n
An objective function and a decision rule that comes from it.<\/p>\n
Both a and b.<\/p>\n
6. The form of economics most relevant to managerial decision-making within the firm is:<\/p>\n
macroeconomics<\/p>\n
welfare economics<\/p>\n
free-enterprise economics<\/p>\n
microeconomics<\/p>\n
none of the above<\/p>\n
7.An closest example of a risk-free security is<\/p>\n
General Motors bonds<\/p>\n
AT&T commercial paper<\/p>\n
U.S. Government Treasury bills<\/p>\n
San Francisco municipal bonds<\/p>\n
an I.O.U. that your cousin promises to pay you $100 in 3 months<\/p>\n
8. The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)<\/p>\n
68.26%<\/p>\n
2.28%<\/p>\n
34%<\/p>\n
15.87%<\/p>\n
9. The level of an economic activity should be increased to the point where the ____ is zero.<\/p>\n
marginal cost<\/p>\n
average cost<\/p>\n
net marginal cost<\/p>\n
net marginal benefit<\/p>\n
10. Generally, investors expect that projects with high expected net present values also will be projects with<\/p>\n
low risk<\/p>\n
high risk<\/p>\n
certain cash flows<\/p>\n
short lives<\/p>\n
none of the above<\/p>\n
11. The ____ is the ratio of ____ to the ____.<\/p>\n
standard deviation; covariance; expected value<\/p>\n
coefficient of variation; expected value; standard deviation<\/p>\n
correlation coefficient; standard deviation; expected value<\/p>\n
coefficient of variation; standard deviation; expected value<\/p>\n
12. The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:<\/p>\n
a. the coefficient of variation is easier to compute.<\/p>\n
b. the standard deviation is a measure of relative risk whereas the coefficient of variation is a measure of absolute risk.<\/p>\n
c. the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk.<\/p>\n
d. the standard deviation is rarely used in practice whereas the coefficient of variation is widely used<\/p>\n
13. Iron ore is an example of a:<\/p>\n
durable good<\/p>\n
producers’ good<\/p>\n
nondurable good<\/p>\n
consumer good<\/p>\n
none of the above<\/p>\n
14. An income elasticity (Ey) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____.<\/p>\n
one percent; quantity supplied; two units<\/p>\n
one unit; quantity supplied; two units<\/p>\n
one percent; quantity demanded; two percent<\/p>\n
one unit; quantity demanded; two units<\/p>\n
ten percent; quantity supplied; two percent<\/p>\n
15. Those goods having a calculated income elasticity that is negative are called:<\/p>\n
producers’ goods<\/p>\n
durable goods<\/p>\n
inferior goods<\/p>\n
nondurable goods<\/p>\n
16. When demand is ____ a percentage change in ____ is exactly offset by the same percentage change in ____ demanded, the net result being a constant total consumer expenditure.<\/p>\n
elastic; price; quantity<\/p>\n
unit elastic; price; quantity<\/p>\n
inelastic; quantity; price<\/p>\n
inelastic; price; quantity<\/p>\n
none of the above<\/p>\n
17. The factor(s) which cause(s) a movement along the demand curve include(s):<\/p>\n
increase in level of advertising<\/p>\n
decrease in price of complementary goods<\/p>\n
increase in consumer disposable income<\/p>\n
decrease in price of the good demanded<\/p>\n
18. Marginal revenue (MR) is ____ when total revenue is maximized.<\/p>\n
greater than one<\/p>\n
equal to one<\/p>\n
less than zero<\/p>\n
equal to zero<\/p>\n
equal to minus one<\/p>\n
19. A price elasticity (ED) of -1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____.<\/p>\n
one percent; increase; 1.50 units<\/p>\n
one unit; increase; 1.50 units<\/p>\n
one percent; decrease; 1.50 percent<\/p>\n
one unit; decrease; 1.50 percent<\/p>\n
ten percent; increase; fifteen percent<\/p>\n
20. The standard deviation of the error terms in an estimated regression equation is known as:<\/p>\n
coefficient of determination<\/p>\n
correlation coefficient<\/p>\n
Durbin-Watson statistic<\/p>\n
standard error of the estimate<\/p>\n
none of the above<\/p>\n
21. The constant or intercept term in a statistical demand study represents the quantity demanded when all independent variables are equal to:<\/p>\n
1.0<\/p>\n
their minimum values<\/p>\n
their average values<\/p>\n
0.0<\/p>\n
none of the above<\/p>\n
22. All of the following are reasons why an association relationship may not imply a causal relationship except:<\/p>\n
the association may be due to pure chance<\/p>\n
the association may be the result of the influence of a third common factor<\/p>\n
both variables may be the cause and the effect at the same time<\/p>\n
the association may be hypothetical<\/p>\n
both c and d<\/p>\n
23. Demand functions in the multiplicative form are most common for all of the following reasons except:<\/p>\n
elasticities are constant over a range of data<\/p>\n
ease of estimation of elasticities<\/p>\n
exponents of parameters are the elasticities of those variables<\/p>\n
marginal impact of a unit change in an individual variable is constant<\/p>\n
c and d<\/p>\n
24. In which of the following econometric problems do we find Durbin-Watson statistic being far away from 2.0?<\/p>\n
the identification problem<\/p>\n
autocorrelation<\/p>\n
multicollinearity<\/p>\n
heteroscedasticity<\/p>\n
agency problems<\/p>\n
25. The method which can give some information in estimating demand of a product that hasn\u2019t yet come to market is.<\/p>\n
the consumer survey<\/p>\n
market experimentation<\/p>\n
a statistical demand analysis<\/p>\n
plotting the data<\/p>\n
the barometric method<\/p>\n","protected":false},"excerpt":{"rendered":"
1. Economic profit is defined as the difference between revenue and ____. explicit cost total economic cost implicit cost shareholder wealth 2. In the shareholder wealth maximization model, the value of a firm’s stock is equal to the present value Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-71220","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/71220","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=71220"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/71220\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=71220"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=71220"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=71220"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}