Question 1

If the annual interest rate is 0%, the present value of receiving $210 in the next year is:

Accepted Answer

A) $221. 
B) $200. 
C) $201. 
D) $210. 
A) $221. 
B) $200. 
C) $201. 
D) $210. D

Question 2

If a producer offers a price that is in excess of a consumer's valuation of the good, the consumer:

Accepted Answer

A) must buy the good at that price. 
B) will refuse to purchase the good. 
C) must revalue the good. 
D) none of the statements associated with this question are correct. 
A) must buy the good at that price. 
B) will refuse to purchase the good. 
C) must revalue the good. 
D) none of the statements associated with this question are correct. B

Question 3

If the interest rate is 12.5%, what is the present value of $200 received in one year?

Accepted Answer

A) $25. 
B) $177.77 
C) $197. 
D) $225. 
A) $25. 
B) $177.77 
C) $197. 
D) $225. B

Question 4

Net benefits in the above table

Accepted Answer

A) initially increase, reach a maximum and then decrease. 
B) initially decrease, reach a minimum and then increase. 
C) remain the relatively stable over different values for the control variable. 
D) initially remain relatively stable and then decrease. 
A) initially increase, reach a maximum and then decrease. 
B) initially decrease, reach a minimum and then increase. 
C) remain the relatively stable over different values for the control variable. 
D) initially remain relatively stable and then decrease.

Question 5

Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:

Accepted Answer

A) greater than the interest rate. 
B) less than the interest rate. 
C) equal to the interest rate. 
D) not constant over time. 
A) greater than the interest rate. 
B) less than the interest rate. 
C) equal to the interest rate. 
D) not constant over time.

Question 6

-At what level of output does marginal cost equal marginal revenue?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 7

If you put $1,000 in a savings account at an interest rate of 10%, how much money will you have in one year?

Accepted Answer

A) $1,200. 
B) $909. 
C) $950. 
D) $1,100. 
A) $1,200. 
B) $909. 
C) $950. 
D) $1,100.

Question 8

Given the benefit function B(Y) = 400Y - 2Y2, the marginal benefit is:

Accepted Answer

A) 200Y. 
B) 400-2Y2. 
C) 400-4Y. 
D) 800-2Y. 
A) 200Y. 
B) 400-2Y2. 
C) 400-4Y. 
D) 800-2Y.

Question 9

Maximizing the lifetime value of the firm is equivalent to maximizing the firm's current profits if the

Accepted Answer

A) interest rate is larger than the growth rate in profits and both are constant. 
B) growth rate in profits is constant and is larger than the interest rate. 
C) interest rate is smaller than the growth rate of profits. 
D) growth rate of profits and the interest rate are equal. 
A) interest rate is larger than the growth rate in profits and both are constant. 
B) growth rate in profits is constant and is larger than the interest rate. 
C) interest rate is smaller than the growth rate of profits. 
D) growth rate of profits and the interest rate are equal.

Question 10

The marginal cost in the above table is

Accepted Answer

A) increasing at an increasing rate. 
B) decreasing at an increasing rate. 
C) increasing at a constant rate. 
D) decreasing at a decreasing rate. 
A) increasing at an increasing rate. 
B) decreasing at an increasing rate. 
C) increasing at a constant rate. 
D) decreasing at a decreasing rate.

Question 11

Which of the following is incorrect?

Accepted Answer

A) Accounting profits generally overstate economic profits. 
B) Accounting profits do not take opportunity cost into account. 
C) Economic costs include not only the accounting costs but also the opportunity costs of the resources used in production. 
D) Managers should only be interested in accounting profits. 
A) Accounting profits generally overstate economic profits. 
B) Accounting profits do not take opportunity cost into account. 
C) Economic costs include not only the accounting costs but also the opportunity costs of the resources used in production. 
D) Managers should only be interested in accounting profits.

Question 12

The higher the interest rate, the greater the

Accepted Answer

A) present value. 
B) net present value. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct. 
A) present value. 
B) net present value. 
C) all of the statements associated with this question are correct. 
D) none of the statements associated with this question are correct.

Question 13

A bond pays $100 at the end of each year for five years, plus an additional $1,000 when the bond matures at the end of five years.What is the most you would be willing to pay for this bond if your opportunity cost of funds is 6 percent?

Accepted Answer

The maximum amount you should

Question 14

If marginal costs exceed marginal benefits, then:

Accepted Answer

A) the firm ends up with a net loss. 
B) the firm's average costs exceed average benefits. 
C) the firm should decrease its production level. 
D) none of the statements associated with this question are correct. 
A) the firm ends up with a net loss. 
B) the firm's average costs exceed average benefits. 
C) the firm should decrease its production level. 
D) none of the statements associated with this question are correct.

Question 15

In order to maximize net benefits, firms should produce where:

Accepted Answer

A) total benefits equal total costs. 
B) profits are zero. 
C) marginal cost is minimized. 
D) marginal benefits equal marginal costs. 
A) total benefits equal total costs. 
B) profits are zero. 
C) marginal cost is minimized. 
D) marginal benefits equal marginal costs.

Question 16

"Our marginal revenue is greater than our marginal cost at the current production level." This statement indicates that the firm

Accepted Answer

A) is maximizing profits. 
B) should increase the quantity produced to increase profits. 
C) should decrease the quantity produced to increase profits. 
D) none of the statements associated with this question are correct. 
A) is maximizing profits. 
B) should increase the quantity produced to increase profits. 
C) should decrease the quantity produced to increase profits. 
D) none of the statements associated with this question are correct.

Question 17

Negotiations between the buyer and seller of a new house is an example of:

Accepted Answer

A) consumer-consumer rivalry. 
B) consumer-producer rivalry. 
C) producer-producer rivalry. 
D) monopoly. 
A) consumer-consumer rivalry. 
B) consumer-producer rivalry. 
C) producer-producer rivalry. 
D) monopoly.

Question 18

-What is the level of net benefits when four units are produced?

Accepted Answer

A) 0. 
B) 70. 
C) -70. 
D) 20. 
A) 0. 
B) 70. 
C) -70. 
D) 20.

Question 19

You are the manager of a firm that specializes in selling exotic animals to zoos around the world.Your goal is to determine the number of baby zebras (Z) that must be born on your firm's farm each month in order to maximize profits.The total benefits (revenues) and costs to your firm of producing various quantities of zebras are given in the first three columns of the table below.Based on this scenario, complete the table and answer the accompanying questions:

Accepted Answer

@#IMG-DLM& a.What level of zebra births maximizes

Question 20

Delta Software earned $10 million this year.Suppose the growth rate of Delta's profits and the interest rate are both constant and Delta will be in business forever.Determine the value of Delta Software when
a.The interest rate is 10 percent and profits grow by 4 percent per year.
b.The interest rate is 10 percent and profits grow by 0 percent per year.
c.The interest rate is 10 percent and profits decline by 4 percent per year.
d.The interest rate is 10 percent and profits grow by 12 percent per year.(This part of the question is tricky.)

Accepted Answer

a. @#IMG-DLM& million.
b. @#IMG-DLM& million.
c. @#IMG-DLM&

If the annual interest rate is 0%, the present value of receiving $210 in the next year is:

If a producer offers a price that is in excess of a consumer's valuation of the good, the consumer:

If the interest rate is 12.5%, what is the present value of $200 received in one year?

Net benefits in the above table

Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:

-At what level of output does marginal cost equal marginal revenue?

If you put $1,000 in a savings account at an interest rate of 10%, how much money will you have in one year?

Given the benefit function B(Y) = 400Y - 2Y², the marginal benefit is:

Maximizing the lifetime value of the firm is equivalent to maximizing the firm's current profits if the

The marginal cost in the above table is

Which of the following is incorrect?

The higher the interest rate, the greater the

A bond pays $100 at the end of each year for five years, plus an additional $1,000 when the bond matures at the end of five years.What is the most you would be willing to pay for this bond if your opportunity cost of funds is 6 percent?

If marginal costs exceed marginal benefits, then:

In order to maximize net benefits, firms should produce where:

"Our marginal revenue is greater than our marginal cost at the current production level." This statement indicates that the firm

Negotiations between the buyer and seller of a new house is an example of:

-What is the level of net benefits when four units are produced?

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 1: The Fundamentals of Managerial Economics

If the annual interest rate is 0%, the present value of receiving $210 in the next year is:

If a producer offers a price that is in excess of a consumer's valuation of the good, the consumer:

If the interest rate is 12.5%, what is the present value of $200 received in one year?

Net benefits in the above table

Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:

-At what level of output does marginal cost equal marginal revenue?

If you put $1,000 in a savings account at an interest rate of 10%, how much money will you have in one year?

Given the benefit function B(Y) = 400Y - 2Y2, the marginal benefit is:

Maximizing the lifetime value of the firm is equivalent to maximizing the firm's current profits if the

The marginal cost in the above table is

Which of the following is incorrect?

The higher the interest rate, the greater the

A bond pays $100 at the end of each year for five years, plus an additional $1,000 when the bond matures at the end of five years.What is the most you would be willing to pay for this bond if your opportunity cost of funds is 6 percent?

If marginal costs exceed marginal benefits, then:

In order to maximize net benefits, firms should produce where:

"Our marginal revenue is greater than our marginal cost at the current production level." This statement indicates that the firm

Negotiations between the buyer and seller of a new house is an example of:

-What is the level of net benefits when four units are produced?

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Given the benefit function B(Y) = 400Y - 2Y², the marginal benefit is: