Exam 1: The Fundamentals of Managerial Economics

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?

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

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

What is the total cost associated with producing eight units of the control variable,Q (identify point B in the table)? Control Variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit Q B(Q) C(Q) N(Q) (Q) (Q) MNB(Q) 0 0 0 0 -- -- -- 1 900 100 800 900 100 800 2 1,700 300 C 800 200 600 3 2,400 600 1,800 700 E 400 4 A 1,000 2,000 600 400 200 5 3,500 1,500 2,000 500 500 F 6 3,900 2,100 1,800 D 600 -200 7 4,200 2,800 1,400 300 700 -400 8 4,400 B 800 200 800 -600 9 4,500 4,500 0 100 900 -800 10 4,500 5,500 -1,000 0 1,000 -1000

To an economist,maximizing profit is:

Property owners move scarce resources toward the production of goods most valued by society because:

According to the five forces framework,sustainable industry profits depend upon:

Suppose the interest rate is 6 percent,the expected growth rate of the firm is 3 percent,and the firm is expected to continue forever.If current profits are $1,200,what is the value of the firm?

The opportunity cost of receiving $10 in the future as opposed to getting that $10 today is:

Marginal net benefits in the table: Control Variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit Q B(Q) C(Q) N(Q) (Q) (Q) MNB(Q) 0 0 0 0 -- -- -- 1 900 100 800 900 100 800 2 1,700 300 C 800 200 600 3 2,400 600 1,800 700 E 400 4 A 1,000 2,000 600 400 200 5 3,500 1,500 2,000 500 500 F 6 3,900 2,100 1,800 D 600 -200 7 4,200 2,800 1,400 300 700 -400 8 4,400 B 800 200 800 -600 9 4,500 4,500 0 100 900 -800 10 4,500 5,500 -1,000 0 1,000 -1000

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

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

What is the marginal cost associated with producing three units of the control variable,Q (identify point E in the table)? Control Variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit Q B(Q) C(Q) N(Q) (Q) (Q) MNB(Q) 0 0 0 0 -- -- -- 1 900 100 800 900 100 800 2 1,700 300 C 800 200 600 3 2,400 600 1,800 700 E 400 4 A 1,000 2,000 600 400 200 5 3,500 1,500 2,000 500 500 F 6 3,900 2,100 1,800 D 600 -200 7 4,200 2,800 1,400 300 700 -400 8 4,400 B 800 200 800 -600 9 4,500 4,500 0 100 900 -800 10 4,500 5,500 -1,000 0 1,000 -1000

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

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?

Generally when calculating profits as total revenue minus total costs,accounting profits are larger than economic profits because economists take into account:

What is the marginal net benefit of producing the twentieth unit? No. Units Produced Total Revenue Total Costs 0 0 0 10 120 40 20 200 100 30 270 170 40 310 260 50 330 370

Which of the following is an implicit cost to a firm that produces a good or service?

The second-order condition for maximizing net benefits is: