Question 1

Marginal benefits are the:

Accepted Answer

A)  incremental benefits of a decision. 
B)  average benefits of a decision. 
C)  total benefits of a decision. 
D)  present discounted benefit of a decision. 
A)  incremental benefits of a decision. 
B)  average benefits of a decision. 
C)  total benefits of a decision. 
D)  present discounted benefit of a decision.

Question 2

A firm will maximize the present value of future profits by maximizing current profits when the:

Accepted Answer

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

Question 3

If you put $1,000 in a savings account at an interest rate of 10 percent, 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 4

A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by $2,000 in the first year, $2,500 in the second, and $3,000 in the third and final year of usefulness. The tractor costs $9,000 today, while the above cost savings will be realized at the end of each year. If the interest rate is 7 percent, what is the net present value of purchasing the tractor?

Accepted Answer

A)  $6,764 
B)  $9,362 
C)  $18,362 
D)  None of the statements associated with this question are correct. 
A)  $6,764 
B)  $9,362 
C)  $18,362 
D)  None of the statements associated with this question are correct.

Question 5

The behavior of bidders in an auction is an example of:

Accepted Answer

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

Question 6

"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 7

The marginal benefit in the table is:

Accepted Answer

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

Question 8

If you put $700 in a savings account at an interest rate of 3 percent, how much money will you have in one year?

Accepted Answer

A)  $370 
B)  $679.61 
C)  $703.00 
D)  $721 
A)  $370 
B)  $679.61 
C)  $703.00 
D)  $721

Question 9

Trade will take place:

Accepted Answer

A)  if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good. 
B)  if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good. 
C)  only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good. 
D)  None of the statements associated with this question are correct. 
A)  if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good. 
B)  if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good. 
C)  only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good. 
D)  None of the statements associated with this question are correct.

Question 10

Economic profits are:

Accepted Answer

A)  total revenue minus total cost. 
B)  marginal revenue minus marginal cost. 
C)  total revenue minus total opportunity cost. 
D)  total profits of the economy as a whole. 
A)  total revenue minus total cost. 
B)  marginal revenue minus marginal cost. 
C)  total revenue minus total opportunity cost. 
D)  total profits of the economy as a whole.

Question 11

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 vertical where MB = MC. 
D)  The vertical difference between 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 vertical where MB = MC. 
D)  The vertical difference between the total benefit curve and the total cost curve is maximized at the optimal level of Q.

Question 12

Suppose total benefits and total costs are given by B(Y) = 150Y - 10Y2 and C(Y) = 5Y2. Then marginal benefits are:

Accepted Answer

A)  150 - 20Y. 
B)  150Y - 8Y2. 
C)  15 - 4Y. 
D)  5 - 20Y. 
A)  150 - 20Y. 
B)  150Y - 8Y2. 
C)  15 - 4Y. 
D)  5 - 20Y.

Question 13

Suppose the growth rate of the firm's profit is 4 percent, the interest rate is 5 percent, and the current profits of the firm are $75 million. What is the value of the firm?

Accepted Answer

A)  $2,111.5 million 
B)  $7,766.6 million 
C)  $10,600 million 
D)  None of the statements associated with this question are correct. 
A)  $2,111.5 million 
B)  $7,766.6 million 
C)  $10,600 million 
D)  None of the statements associated with this question are correct.

Question 14

Which of the following is the main goal of a continuing company?

Accepted Answer

A)  To maximize the value of the firm 
B)  To minimize costs 
C)  To improve product quality 
D)  To enhance service to its customers 
A)  To maximize the value of the firm 
B)  To minimize costs 
C)  To improve product quality 
D)  To enhance service to its customers

Question 15

A recent survey of new graduates in High Tech Cauldron Coalescence (HTCC) revealed that every graduate had at least two job offers and the average offer was $100,000 per year. With the release of this information, what do you expect to see happen to the number of HTCC majors? What do you expect to happen to salaries in the HTCC field in 10 years? Why?

Accepted Answer

Initially the number of people that majo

Question 16

The change in net benefits that arises from a one-unit change in quantity is the:

Accepted Answer

A)  marginal net benefits. 
B)  total net benefits. 
C)  variable benefits. 
D)  present value benefits. 
A)  marginal net benefits. 
B)  total net benefits. 
C)  variable benefits. 
D)  present value benefits.

Question 17

Suppose the interest rate is 5 percent, the expected growth rate of the firm is 2 percent, and the firm is expected to continue forever. If current profits are $1,000, what is the value of the firm?

Accepted Answer

A)  $31,000 
B)  $30,000 
C)  $26,500 
D)  $35,000 
A)  $31,000 
B)  $30,000 
C)  $26,500 
D)  $35,000

Question 18

AMS recently instituted an in-house recycling program. The benefits of this program include not only the benefits to the environment of recycling but also the goodwill generated by AMS's leadership in this area. The costs of recycling include all of the energy, labor, and space required to do the recycling. Suppose these benefits and costs are given by B(Q) = 100Q - 2Q2 and C(Q) = 2Q. (Note that MB = 100 - 4Q, and MC = 2.)
a. What level of Q maximizes the total benefits of recycling?
b. What level of Q minimizes the total costs of recycling?
c. What level of Q maximizes the net benefits of recycling?
d. What level of recycling is optimal? Why?

Accepted Answer

a. Total benefits are maximized when MB(

Question 19

Which of the following is NOT a source of rivalry in economic transactions?

Accepted Answer

A)  Consumer-producer rivalry 
B)  Producer-producer rivalry 
C)  Government-producer rivalry 
D)  All of the statements associated with this question are correct. 
A)  Consumer-producer rivalry 
B)  Producer-producer rivalry 
C)  Government-producer rivalry 
D)  All of the statements associated with this question are correct.

Question 20

If the interest rate is 5 percent, $100 received at the end of seven years is worth how much today?

Accepted Answer

A)  100/(0.05)7 
B)  100/(1 + 0.05)7 
C)  100/(1 + 5)7 
D)  100 
A)  100/(0.05)7 
B)  100/(1 + 0.05)7 
C)  100/(1 + 5)7 
D)  100

Marginal benefits are the:

A firm will maximize the present value of future profits by maximizing current profits when the:

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

The behavior of bidders in an auction is an example of:

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

The marginal benefit in the table is:

If you put $700 in a savings account at an interest rate of 3 percent, how much money will you have in one year?

Trade will take place:

Economic profits are:

Which of the following is the incorrect statement?

Suppose total benefits and total costs are given by B(Y) = 150Y - 10Y² and C(Y) = 5Y². Then marginal benefits are:

Suppose the growth rate of the firm's profit is 4 percent, the interest rate is 5 percent, and the current profits of the firm are $75 million. What is the value of the firm?

Which of the following is the main goal of a continuing company?

The change in net benefits that arises from a one-unit change in quantity is the:

Suppose the interest rate is 5 percent, the expected growth rate of the firm is 2 percent, and the firm is expected to continue forever. If current profits are $1,000, what is the value of the firm?

Which of the following is NOT a source of rivalry in economic transactions?

If the interest rate is 5 percent, $100 received at the end of seven years is worth how much today?

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

Marginal benefits are the:

A firm will maximize the present value of future profits by maximizing current profits when the:

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

The behavior of bidders in an auction is an example of:

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

The marginal benefit in the table is:

If you put $700 in a savings account at an interest rate of 3 percent, how much money will you have in one year?

Trade will take place:

Economic profits are:

Which of the following is the incorrect statement?

Suppose total benefits and total costs are given by B(Y) = 150Y - 10Y2 and C(Y) = 5Y2. Then marginal benefits are:

Suppose the growth rate of the firm's profit is 4 percent, the interest rate is 5 percent, and the current profits of the firm are $75 million. What is the value of the firm?

Which of the following is the main goal of a continuing company?

The change in net benefits that arises from a one-unit change in quantity is the:

Suppose the interest rate is 5 percent, the expected growth rate of the firm is 2 percent, and the firm is expected to continue forever. If current profits are $1,000, what is the value of the firm?

Which of the following is NOT a source of rivalry in economic transactions?

If the interest rate is 5 percent, $100 received at the end of seven years is worth how much today?

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) = 150Y - 10Y² and C(Y) = 5Y². Then marginal benefits are: