Question 1

The higher the interest rates

Accepted Answer

A) the more value individuals place on future dollars 
B) the more value individuals place on current dollars 
C) less investments will take place 
D) does not affect the investment strategy 
A) the more value individuals place on future dollars 
B) the more value individuals place on current dollars 
C) less investments will take place 
D) does not affect the investment strategy

Question 2

In order to continue its operations,in the long-run a firm must

Accepted Answer

A) Charge a price that is equal to its AVC 
B) Charge a price that is equal to its AFC 
C) Charge a price that is equal to its AVC + AFC 
D) Need more information to determine the price 
A) Charge a price that is equal to its AVC 
B) Charge a price that is equal to its AFC 
C) Charge a price that is equal to its AVC + AFC 
D) Need more information to determine the price

Question 3

Use the following information to answer Questions 39 - 43
Jim's Production is planning on acquiring a competitive firm with a view to change production technologies.The two firm technologies produce the same output but with different cost functions.Jim's Production technology has a cost function = 1000 + 0.10Q whereas the competitor's cost function = 500 + 0.15Q.
-What is the total cost at the break-even quantity calculated above?

Accepted Answer

A) $750 
B) $1000 
C) $1500 
D) $2000 
A) $750 
B) $1000 
C) $1500 
D) $2000

Question 4

If a firm sells more than the break-even quantity,

Accepted Answer

A) It will make a profit 
B) It will only cover the variable costs 
C) It will make a loss 
D) A firm is unable to sell above the break-even quantity 
A) It will make a profit 
B) It will only cover the variable costs 
C) It will make a loss 
D) A firm is unable to sell above the break-even quantity

Question 5

Use the following information to answer the next two questions:
A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8.
-The break-even quantity is

Accepted Answer

A) 1250 
B) 625 
C) 416.67 
D) 500 
A) 1250 
B) 625 
C) 416.67 
D) 500

Question 6

A firm sells 300,000 units per week.It charges $ 35 per unit,the average variable costs are $ 40,and the average costs are $ 55,the firm should

Accepted Answer

A) Shut-down as the firm is making a loss of $15 million per week 
B) Shut-down as the firm cannot cover the variable costs 
C) Both a and b 
D) None of the above 
A) Shut-down as the firm is making a loss of $15 million per week 
B) Shut-down as the firm cannot cover the variable costs 
C) Both a and b 
D) None of the above

Question 7

What's the firm's contribution margin?

Accepted Answer

A) $15 
B) $18 
C) $3 
D) $4 
A) $15 
B) $18 
C) $3 
D) $4

Question 8

A firm will shut down in the short-run if

Accepted Answer

A) P>AVC B) PAVC B) P

Question 9

A business produces 4,000 units per month which he sells at $20/unit.Costs include: $10,000 on raw materials,$15,000 on operators and $10,000 on sales people.In order to break even the fixed costs will have to be:

Accepted Answer

A) $35,000 
B) $40,000 
C) $45,000 
D) $50,000 
A) $35,000 
B) $40,000 
C) $45,000 
D) $50,000

Question 10

Based on the above information,at what price does the firm consider shutting-down?

Accepted Answer

A) $45 
B) $ 40 
C) $95 
D) $85 
A) $45 
B) $ 40 
C) $95 
D) $85

Question 11

The break-even quantity is

Accepted Answer

A) 3000 
B) 600 
C) 500 
D) 300 
A) 3000 
B) 600 
C) 500 
D) 300

Question 12

Which of the following is classified as a sunk cost?

Accepted Answer

A) Cost of the next best alternative 
B) Additional cost of producing an additional unit 
C) Research costs to determine the implementation of a technology 
D) Total cost of producing a product 
A) Cost of the next best alternative 
B) Additional cost of producing an additional unit 
C) Research costs to determine the implementation of a technology 
D) Total cost of producing a product

Question 13

Based on the above information,at what price does the firm consider shutting-down?

Accepted Answer

A) $25 
B) $0 
C) $15 
D) $10 
A) $25 
B) $0 
C) $15 
D) $10

Question 14

Use the following information to answer the next two questions:
A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8.
-What's the firm's contribution margin?

Accepted Answer

A) $12 
B) $10 
C) $8 
D) $4 
A) $12 
B) $10 
C) $8 
D) $4

Question 15

If firms anticipate that they are at risk of being held up,firms are more likely to adopt contracts or organizational forms such as

Accepted Answer

A) investments in reputation 
B) mergers 
C) exchange of "hostages" 
D) All the above 
A) investments in reputation 
B) mergers 
C) exchange of "hostages" 
D) All the above

Question 16

Firms that anticipate hold-up,choose organizational or contractual forms

Accepted Answer

A) To give each party both the incentive to make relationship-specific investments 
B) To give each party both the incentive to ignore sunk costs 
C) To give each party both the incentive to reduce investments in reputation 
D) To give each party both the incentive to make non-specific investments 
A) To give each party both the incentive to make relationship-specific investments 
B) To give each party both the incentive to ignore sunk costs 
C) To give each party both the incentive to reduce investments in reputation 
D) To give each party both the incentive to make non-specific investments

Question 17

Use the following information to answer the next two questions:
A firm's fixed costs are $10 million.The firm charges $1800 for each unit and the firm's marginal costs are $1,000.
-What's the firm's contribution margin?

Accepted Answer

A) $1800 
B) $800 
C) $1000 
D) $300 
A) $1800 
B) $800 
C) $1000 
D) $300

Question 18

The lower the interest rates

Accepted Answer

A) the more value individuals place on future dollars 
B) the less value individuals place on future dollars 
C) less investments will take place 
D) does not affect the investment strategy 
A) the more value individuals place on future dollars 
B) the less value individuals place on future dollars 
C) less investments will take place 
D) does not affect the investment strategy

Question 19

A firm will shut down in the long-run if

Accepted Answer

A) P>AVC B) PATC A) P>AVC B) PATC

Question 20

Use the following information to answer Questions 39 - 43
Jim's Production is planning on acquiring a competitive firm with a view to change production technologies.The two firm technologies produce the same output but with different cost functions.Jim's Production technology has a cost function = 1000 + 0.10Q whereas the competitor's cost function = 500 + 0.15Q.
-Which firm has higher marginal costs?

Accepted Answer

A) Jim's Production 
B) Competitor's production 
C) They both have the same fixed costs 
D) Need more information 
A) Jim's Production 
B) Competitor's production 
C) They both have the same fixed costs 
D) Need more information

The higher the interest rates

In order to continue its operations,in the long-run a firm must

If a firm sells more than the break-even quantity,

Use the following information to answer the next two questions: A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8. -The break-even quantity is

A firm sells 300,000 units per week.It charges $ 35 per unit,the average variable costs are $ 40,and the average costs are $ 55,the firm should

What's the firm's contribution margin?

A firm will shut down in the short-run if

A business produces 4,000 units per month which he sells at $20/unit.Costs include: $10,000 on raw materials,$15,000 on operators and $10,000 on sales people.In order to break even the fixed costs will have to be:

Based on the above information,at what price does the firm consider shutting-down?

The break-even quantity is

Which of the following is classified as a sunk cost?

Based on the above information,at what price does the firm consider shutting-down?

Use the following information to answer the next two questions: A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8. -What's the firm's contribution margin?

If firms anticipate that they are at risk of being held up,firms are more likely to adopt contracts or organizational forms such as

Firms that anticipate hold-up,choose organizational or contractual forms

Use the following information to answer the next two questions: A firm's fixed costs are $10 million.The firm charges $1800 for each unit and the firm's marginal costs are $1,000. -What's the firm's contribution margin?

The lower the interest rates

A firm will shut down in the long-run if

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long-Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 5: Investment Decisions: Look Ahead and Reason Back

The higher the interest rates

In order to continue its operations,in the long-run a firm must

If a firm sells more than the break-even quantity,

Use the following information to answer the next two questions: A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8. -The break-even quantity is

A firm sells 300,000 units per week.It charges $ 35 per unit,the average variable costs are $ 40,and the average costs are $ 55,the firm should

What's the firm's contribution margin?

A firm will shut down in the short-run if

A business produces 4,000 units per month which he sells at $20/unit.Costs include: $10,000 on raw materials,$15,000 on operators and $10,000 on sales people.In order to break even the fixed costs will have to be:

Based on the above information,at what price does the firm consider shutting-down?

The break-even quantity is

Which of the following is classified as a sunk cost?

Based on the above information,at what price does the firm consider shutting-down?

Use the following information to answer the next two questions: A firm's fixed costs are $5000.The firm charges $12 for each unit.For every additional unit the firm produces,it costs the firm $8. -What's the firm's contribution margin?

If firms anticipate that they are at risk of being held up,firms are more likely to adopt contracts or organizational forms such as

Firms that anticipate hold-up,choose organizational or contractual forms

Use the following information to answer the next two questions: A firm's fixed costs are $10 million.The firm charges $1800 for each unit and the firm's marginal costs are $1,000. -What's the firm's contribution margin?

The lower the interest rates

A firm will shut down in the long-run if

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long-Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters