Question 1

Corporate culture is in part responsible for theascendancy of Wal-Mart, starting in the 1970s.

Accepted Answer

A) True 
 B)False

Question 2

executives were paid based on relative performance:

Accepted Answer

A) compensation would largely be based on luck. 
B) there would be less volatility in executive pay.(True Answer )Correct 
C) stockholders would find it more difficult to monitor how much the executives are being paid. 
D) executives would have less incentive to work hard since ability risk is now high. 
A) compensation would largely be based on luck. 
B) there would be less volatility in executive pay.(True Answer )Correct 
C) stockholders would find it more difficult to monitor how much the executives are being paid. 
D) executives would have less incentive to work hard since ability risk is now high.

Question 3

Which of the following stock portfolios offers the greatestdiversification?

Accepted Answer

A) 3M and Raytheon 
B) Adobe Systems and Sara Lee 
C) Nucor and Wyeth 
D) Ashland, Baker Hughes, Bemis, BMC Software, CA Inc., Century Telephone, Dean Foods, Dover Corp., Eastman Kodak,
EQT Corp., Exxon Mobil, Ford Motor, General Dynamics,
Genworth Financial, Google, Hasbro, Home Depot, Intuit,
Johnson Controls, Kohl's, Legg Mason, Netapp, Pall Corp.,
Pfizer, QLogic, Ryder System, SLM Corp., Target, UPS,
Viacom, Waters Corp., XL Capital, Yahoo, Zimmer
Holdings 
A) 3M and Raytheon 
B) Adobe Systems and Sara Lee 
C) Nucor and Wyeth 
D) Ashland, Baker Hughes, Bemis, BMC Software, CA Inc., Century Telephone, Dean Foods, Dover Corp., Eastman Kodak,
EQT Corp., Exxon Mobil, Ford Motor, General Dynamics,
Genworth Financial, Google, Hasbro, Home Depot, Intuit,
Johnson Controls, Kohl's, Legg Mason, Netapp, Pall Corp.,
Pfizer, QLogic, Ryder System, SLM Corp., Target, UPS,
Viacom, Waters Corp., XL Capital, Yahoo, Zimmer
Holdings

Question 4

The Dow Jones Industrial Average:

Accepted Answer

A) weights larger companies' stocks more than small companies' stocks. 
B) has stocks from thousands of companies. 
C) has stocks from 500 companies. 
D) has stocks from 30 companies. 
A) weights larger companies' stocks more than small companies' stocks. 
B) has stocks from thousands of companies. 
C) has stocks from 500 companies. 
D) has stocks from 30 companies.

Question 5

The slope of the indifference curve is equal to the marginal rateof substitution.

Accepted Answer

A) True 
 B)False

Question 6

(Figure: Budget Constraint) Refer to the figure. What is therelative price of music downloads to movie downloads?

Accepted Answer

A) 3 
B) 1/3 
C) 5 
D) 4 
A) 3 
B) 1/3 
C) 5 
D) 4

Question 7

order for a piece rate to result in high-quality outputby workers, it requires:

Accepted Answer

A) no environmental risk. 
B) the piece rate to be lower than the hourly wage. 
C) good quality control. 
D) workers to have equal abilities. 
A) no environmental risk. 
B) the piece rate to be lower than the hourly wage. 
C) good quality control. 
D) workers to have equal abilities.

Question 8

Corporate culture is the system of pay incentives that isused in an organization.

Accepted Answer

A) True 
 B)False

Question 9

A financial investor faces the lowest risk by investing in:

Accepted Answer

A) a corporate bond. 
B) a three-month U.S.Treasury bill. 
C) the stocks of a new company. 
D) a mutual fund of small company stocks. 
A) a corporate bond. 
B) a three-month U.S.Treasury bill. 
C) the stocks of a new company. 
D) a mutual fund of small company stocks.

Question 10

The efficient markets hypothesis implies that in the stockmarket:

Accepted Answer

A) everyone can earn more than everyone else some of the time. 
B) no one can systematically earn more than the average market return. 
C) people with more funds earn higher returns. 
D) people can use technical analysis to systematically earn high returns. 
A) everyone can earn more than everyone else some of the time. 
B) no one can systematically earn more than the average market return. 
C) people with more funds earn higher returns. 
D) people can use technical analysis to systematically earn high returns.

Question 11

Giving employees shares of the company's stock is aform of:

Accepted Answer

A) monetary motivation. 
B) intrinsic motivation. 
C) deferred compensation. 
D) piece rates. 
A) monetary motivation. 
B) intrinsic motivation. 
C) deferred compensation. 
D) piece rates.

Question 12

Compared to stocks, art investments have _____ monetaryreturns because they offer ______ nonpecuniary returns.

Accepted Answer

A) lower; lower 
B) higher; higher 
C) lower; higher 
D) higher; lower 
A) lower; lower 
B) higher; higher 
C) lower; higher 
D) higher; lower

Question 13

Which of the following risks increases when a badteacher grades on an absolute scale?

Accepted Answer

A) ability risk 
B) environment risk 
C) incentive risk 
D) competition risk 
A) ability risk 
B) environment risk 
C) incentive risk 
D) competition risk

Question 14

If the marginal utility per dollar for hamburgers is 2, and themarginal utility per dollar for pizza is 1, then this consumershould consume more hamburgers.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is TRUE?

Accepted Answer

A) The lure of stock market riches gives entrepreneurs an incentive to develop new products. 
B) Stock markets allow incompetent managers to be replaced by more competent managers. 
C) Stock prices provide information on whether the firm is making good decisions. 
D) All of these statements are true. 
A) The lure of stock market riches gives entrepreneurs an incentive to develop new products. 
B) Stock markets allow incompetent managers to be replaced by more competent managers. 
C) Stock prices provide information on whether the firm is making good decisions. 
D) All of these statements are true.

Question 16

(Figure: Income and Substitution Effects) Refer to the figure.What caused this consumer to switch optimal consumptionbundles from Bundle A to Bundle B?

Accepted Answer

A) a decrease in consumer income available for music downloads 
B) a decrease in the price of music downloads 
C) an increase in the price of music downloads (True Answer )Correct 
D) an increase in the price of movie downloads 
A) a decrease in consumer income available for music downloads 
B) a decrease in the price of music downloads 
C) an increase in the price of music downloads (True Answer )Correct 
D) an increase in the price of movie downloads

Question 17

in the 1980s were given much stronger incentivesto increase their firm's stock price by receiving:

Accepted Answer

A) an extraordinary amount of salary. 
B) stock options. 
C) a lucrative benefit package. 
D) an annual vacation package. 
A) an extraordinary amount of salary. 
B) stock options. 
C) a lucrative benefit package. 
D) an annual vacation package.

Question 18

Environment risk in sales can be described as:

Accepted Answer

A) the risk that an external factor such as customer preferences, recessionary pressures, or the quality of the
Product will depress sales. 
B) the risk that certain members of the sales force will have better sales tactics than other members of the same
Sales force. 
C) the risk that certain products will affect the availability of natural resources and the
Environment. 
D) None of these answers describes environment risk. 
A) the risk that an external factor such as customer preferences, recessionary pressures, or the quality of the
Product will depress sales. 
B) the risk that certain members of the sales force will have better sales tactics than other members of the same
Sales force. 
C) the risk that certain products will affect the availability of natural resources and the
Environment. 
D) None of these answers describes environment risk.

Question 19

Diversification is the only strategy that leads to a higher-than-market-average return.

Accepted Answer

A) True 
 B)False

Question 20

Around the year 2000, there was a ______ in _______.

Accepted Answer

A) boom and bust; tech stocks 
B) boom and bust; housing prices 
C) speculative bubble; crayons 
D) speculative bubble; oysters 
A) boom and bust; tech stocks 
B) boom and bust; housing prices 
C) speculative bubble; crayons 
D) speculative bubble; oysters

Exam 21: Consumer Utility and Optimization

Corporate culture is in part responsible for theascendancy of Wal-Mart, starting in the 1970s.

executives were paid based on relative performance:

Which of the following stock portfolios offers the greatestdiversification?

The Dow Jones Industrial Average:

The slope of the indifference curve is equal to the marginal rateof substitution.

(Figure: Budget Constraint) Refer to the figure. What is therelative price of music downloads to movie downloads?

order for a piece rate to result in high-quality outputby workers, it requires:

Corporate culture is the system of pay incentives that isused in an organization.

A financial investor faces the lowest risk by investing in:

The efficient markets hypothesis implies that in the stockmarket:

Giving employees shares of the company's stock is aform of:

Compared to stocks, art investments have _____ monetaryreturns because they offer ______ nonpecuniary returns.

Which of the following risks increases when a badteacher grades on an absolute scale?

If the marginal utility per dollar for hamburgers is 2, and themarginal utility per dollar for pizza is 1, then this consumershould consume more hamburgers.

Which of the following statements is TRUE?

(Figure: Income and Substitution Effects) Refer to the figure.What caused this consumer to switch optimal consumptionbundles from Bundle A to Bundle B?

in the 1980s were given much stronger incentivesto increase their firm's stock price by receiving:

Environment risk in sales can be described as:

Diversification is the only strategy that leads to a higher-than-market-average return.

Around the year 2000, there was a ______ in _______.

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Filters

Compared to stocks, art investments have _ monetaryreturns because they offer __ nonpecuniary returns.

Around the year 2000, there was a in _.