Question 1

Which of the following are signals to the owners of scarce resources about the best uses of those resources?

Accepted Answer

A)  Profits of businesses 
B)  Government regulations 
C)  Economic indicators 
D)  The accounting cost of those resources 
A)  Profits of businesses 
B)  Government regulations 
C)  Economic indicators 
D)  The accounting cost of those resources A

Question 2

Because of producer-producer rivalry, the price will tend to:

Accepted Answer

A)  be driven to a lower price. 
B)  rise up to the maximum price the consumers are willing and able to pay. 
C)  be the same as the competitive price. 
D)  be the same as the monopoly price. 
A)  be driven to a lower price. 
B)  rise up to the maximum price the consumers are willing and able to pay. 
C)  be the same as the competitive price. 
D)  be the same as the monopoly price. A

Question 3

What is the total cost associated with producing eight units of the control variable, Q (identify point B in the table)?

Accepted Answer

A)  3,000 
B)  3,600 
C)  3,800 
D)  4,200 
A)  3,000 
B)  3,600 
C)  3,800 
D)  4,200 B

Question 4

You are a strong advocate for a one-year investment project that would cost your firm $10,000 today, but generate virtually certain earnings of $15,000 at year-end. Those in your firm's financial group concur that the investment is virtually risk-free, but nonetheless your boss is concerned about the firm's cash flow problems. In fact, the problems are so severe that the firm's bank currently charges it 20 percent on one-year loans. Convince your boss to undertake the project.

Accepted Answer

The net present value of the investment

Question 5

Consumer-consumer rivalry:

Accepted Answer

A)  increases the negotiating power of consumers in the marketplace. 
B)  reduces the negotiating power of producers in the marketplace. 
C)  reduces the negotiating power of consumers in the marketplace. 
D)  increases the likelihood of government intervention in the marketplace. 
A)  increases the negotiating power of consumers in the marketplace. 
B)  reduces the negotiating power of producers in the marketplace. 
C)  reduces the negotiating power of consumers in the marketplace. 
D)  increases the likelihood of government intervention in the marketplace.

Question 6

If the interest rate is 5 percent, what is the present value of $10 received one year from now?

Accepted Answer

A)  $9.50 
B)  $10.05 
C)  $9.52 
D)  $9.77 
A)  $9.50 
B)  $10.05 
C)  $9.52 
D)  $9.77

Question 7

Other things equal, the greater the interest rate:

Accepted Answer

A)  the lower the NPV. 
B)  the higher the NPV. 
C)  the higher the PV. 
D)  None of the statements associated with this question are correct. 
A)  the lower the NPV. 
B)  the higher the NPV. 
C)  the higher the PV. 
D)  None of the statements associated with this question are correct.

Question 8

Which of the following is the incorrect statement?

Accepted Answer

A)  The marginal benefits curve is the slope of the total benefits curve. 
B)  dB(Q)/dQ = MB. 
C)  The slope of the net benefit curve is horizontal where MB = MC. 
D)  The difference in the slope of the total benefit curve and the total cost curve is maximized at the optimal level of Q. 
A)  The marginal benefits curve is the slope of the total benefits curve. 
B)  dB(Q)/dQ = MB. 
C)  The slope of the net benefit curve is horizontal where MB = MC. 
D)  The difference in the slope of the total benefit curve and the total cost curve is maximized at the optimal level of Q.

Question 9

What is the marginal net benefit of producing the twentieth unit?

Accepted Answer

A)  2 
B)  -5 
C)  -2 
D)  8 
A)  2 
B)  -5 
C)  -2 
D)  8

Question 10

What is the marginal benefit associated with producing six units of the control variable, Q (identify point D in the table)?

Accepted Answer

A)  600 
B)  400 
C)  200 
D)  100 
A)  600 
B)  400 
C)  200 
D)  100

Question 11

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. What level of Y will yield the maximum net benefits?

Accepted Answer

A)  75/36 
B)  75/18 
C)  50/18 
D)  100/36 
A)  75/36 
B)  75/18 
C)  50/18 
D)  100/36

Question 12

Suppose the growth rate of the firm's profit is 5 percent, the interest rate is 6 percent, and the current profits of the firm are $100 million. What is the value of the firm?

Accepted Answer

A)  $111.5 million 
B)  $1,766.6 million 
C)  $10,600 million 
D)  None of the statements associated with this question are correct. 
A)  $111.5 million 
B)  $1,766.6 million 
C)  $10,600 million 
D)  None of the statements associated with this question are correct.

Question 13

Net benefits in the table:

Accepted Answer

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

Question 14

Negotiation between the buyer and seller of a new ski boat is an example of:

Accepted Answer

A)  consumer-producer rivalry. 
B)  consumer-consumer rivalry. 
C)  producer-producer rivalry. 
D)  None of the statements associated with this question are correct. 
A)  consumer-producer rivalry. 
B)  consumer-consumer rivalry. 
C)  producer-producer rivalry. 
D)  None of the statements associated with this question are correct.

Question 15

The opportunity cost of an action is the:

Accepted Answer

A)  monetary payment the action required. 
B)  value of the most highly valued alternative action given up. 
C)  cost of all alternative actions that could have been taken. 
D)  None of the statements associated with this question are correct. 
A)  monetary payment the action required. 
B)  value of the most highly valued alternative action given up. 
C)  cost of all alternative actions that could have been taken. 
D)  None of the statements associated with this question are correct.

Question 16

Producer-producer rivalry functions:

Accepted Answer

A)  only when multiple sellers for a product compete in the market. 
B)  only when single sellers for a product compete in the market. 
C)  regardless of the number of sellers. 
D)  even when customers are not scarce. 
A)  only when multiple sellers for a product compete in the market. 
B)  only when single sellers for a product compete in the market. 
C)  regardless of the number of sellers. 
D)  even when customers are not scarce.

Question 17

The additional cost incurred by using an additional unit of the managerial control variable is defined as the:

Accepted Answer

A)  total cost. 
B)  net cost. 
C)  net benefit. 
D)  marginal cost. 
A)  total cost. 
B)  net cost. 
C)  net benefit. 
D)  marginal cost.

Question 18

Accounting profits are:

Accepted Answer

A)  total revenue minus total cost. 
B)  total cost minus total revenue. 
C)  marginal revenue minus total cost. 
D)  total revenue minus marginal cost. 
A)  total revenue minus total cost. 
B)  total cost minus total revenue. 
C)  marginal revenue minus total cost. 
D)  total revenue minus marginal cost.

Question 19

The additional benefits that arise by using an additional unit of the managerial control variable is defined as the:

Accepted Answer

A)  total benefit. 
B)  opportunity cost. 
C)  marginal benefit. 
D)  present value of benefits. 
A)  total benefit. 
B)  opportunity cost. 
C)  marginal benefit. 
D)  present value of benefits.

Question 20

Which of the following is(are) true?

Accepted Answer

A)  Accounting costs generally understate economic costs. 
B)  Accounting profits generally overstate economic profits. 
C)  In the absence of any opportunity costs, accounting profits equal economic profits. 
D)  All of the statements associated with this question are correct. 
A)  Accounting costs generally understate economic costs. 
B)  Accounting profits generally overstate economic profits. 
C)  In the absence of any opportunity costs, accounting profits equal economic profits. 
D)  All of the statements associated with this question are correct.

Which of the following are signals to the owners of scarce resources about the best uses of those resources?

Because of producer-producer rivalry, the price will tend to:

What is the total cost associated with producing eight units of the control variable, Q (identify point B in the table)?

Consumer-consumer rivalry:

If the interest rate is 5 percent, what is the present value of $10 received one year from now?

Other things equal, the greater the interest rate:

Which of the following is the incorrect statement?

What is the marginal net benefit of producing the twentieth unit?

What is the marginal benefit associated with producing six units of the control variable, Q (identify point D in the table)?

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y² and C(Y) = 10Y². What level of Y will yield the maximum net benefits?

Suppose the growth rate of the firm's profit is 5 percent, the interest rate is 6 percent, and the current profits of the firm are $100 million. What is the value of the firm?

Net benefits in the table:

Negotiation between the buyer and seller of a new ski boat is an example of:

The opportunity cost of an action is the:

Producer-producer rivalry functions:

The additional cost incurred by using an additional unit of the managerial control variable is defined as the:

Accounting profits are:

The additional benefits that arise by using an additional unit of the managerial control variable is defined as the:

Which of the following is(are) true?

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

Which of the following are signals to the owners of scarce resources about the best uses of those resources?

Because of producer-producer rivalry, the price will tend to:

What is the total cost associated with producing eight units of the control variable, Q (identify point B in the table)?

Consumer-consumer rivalry:

If the interest rate is 5 percent, what is the present value of $10 received one year from now?

Other things equal, the greater the interest rate:

Which of the following is the incorrect statement?

What is the marginal net benefit of producing the twentieth unit?

What is the marginal benefit associated with producing six units of the control variable, Q (identify point D in the table)?

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. What level of Y will yield the maximum net benefits?

Suppose the growth rate of the firm's profit is 5 percent, the interest rate is 6 percent, and the current profits of the firm are $100 million. What is the value of the firm?

Net benefits in the table:

Negotiation between the buyer and seller of a new ski boat is an example of:

The opportunity cost of an action is the:

Producer-producer rivalry functions:

The additional cost incurred by using an additional unit of the managerial control variable is defined as the:

Accounting profits are:

The additional benefits that arise by using an additional unit of the managerial control variable is defined as the:

Which of the following is(are) true?

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

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y² and C(Y) = 10Y². What level of Y will yield the maximum net benefits?