Question 1

Nonvalue-maximizing behavior is most common:

Accepted Answer

A)  in vigorously competitive markets. 
B)  when shareholders are poorly informed. 
C)  when managers own a significant ownership interest. 
D)  in the production of goods rather than services. 
A)  in vigorously competitive markets. 
B)  when shareholders are poorly informed. 
C)  when managers own a significant ownership interest. 
D)  in the production of goods rather than services. B

Question 2

Managerial economics cannot be used to identify:

Accepted Answer

A)  how macroeconomic forces affect the organization. 
B)  goals of the organization. 
C)  ways to efficiently achieve the organization's goals. 
D)  microeconomic consequences of managerial behavior. 
A)  how macroeconomic forces affect the organization. 
B)  goals of the organization. 
C)  ways to efficiently achieve the organization's goals. 
D)  microeconomic consequences of managerial behavior. B

Question 3

Monopoly exploitation is reduced by regulation that:

Accepted Answer

A)  enhances product-market competition. 
B)  increases the bargaining power of workers. 
C)  increases the bargaining power of employers. 
D)  restricts output. 
A)  enhances product-market competition. 
B)  increases the bargaining power of workers. 
C)  increases the bargaining power of employers. 
D)  restricts output. A

Question 4

A typical annual rate of return on invested capital is:

Accepted Answer

A)  5%. 
B)  10%. 
C)  15%. 
D)  20%. 
A)  5%. 
B)  10%. 
C)  15%. 
D)  20%.

Question 5

Constrained optimization techniques are not designed to deal with the problem of:

Accepted Answer

A)  self-serving management. 
B)  contractual requirements. 
C)  scarce investment funds. 
D)  limited availability of essential inputs. 
A)  self-serving management. 
B)  contractual requirements. 
C)  scarce investment funds. 
D)  limited availability of essential inputs.

Question 6

Warren Buffett looks for "wonderful businesses" that feature:

Accepted Answer

A)  ongoing innovation. 
B)  large capital investment. 
C)  consistent earnings growth. 
D)  complicated business strategies. 
A)  ongoing innovation. 
B)  large capital investment. 
C)  consistent earnings growth. 
D)  complicated business strategies.

Question 7

To be useful, the theory of the firm must:

Accepted Answer

A)  refrain from abstraction. 
B)  only consider quantitative factors. 
C)  accurately predict real-world phenomena. 
D)  rely upon realistic assumptions. 
A)  refrain from abstraction. 
B)  only consider quantitative factors. 
C)  accurately predict real-world phenomena. 
D)  rely upon realistic assumptions.

Question 8

Value maximization is broader than profit maximization because it considers:

Accepted Answer

A)  total revenues. 
B)  total costs. 
C)  real-world constraints. 
D)  interest rates. 
A)  total revenues. 
B)  total costs. 
C)  real-world constraints. 
D)  interest rates.

Question 9

In a free market economy, the optimal quality of goods and services is determined by:

Accepted Answer

A)  workers. 
B)  firms. 
C)  government. 
D)  customers. 
A)  workers. 
B)  firms. 
C)  government. 
D)  customers.

Question 10

Government regulation is important because government:

Accepted Answer

A)  regulation reduces public-sector employment. 
B)  produces most of society's services output. 
C)  produces most of society's material output. 
D)  uses scarce resources. 
A)  regulation reduces public-sector employment. 
B)  produces most of society's services output. 
C)  produces most of society's material output. 
D)  uses scarce resources.

Question 11

Unfriendly takeovers have the greatest potential to enhance the market price of companies whose managers:

Accepted Answer

A)  maximize short-run profits. 
B)  maximize the value of the firm. 
C)  satisfice. 
D)  maximize long-run profits. 
A)  maximize short-run profits. 
B)  maximize the value of the firm. 
C)  satisfice. 
D)  maximize long-run profits.

Question 12

Economic profit equals:

Accepted Answer

A)  normal profits plus opportunity costs. 
B)  business profits minus implicit costs. 
C)  business profits plus implicit costs. 
D)  normal profits minus opportunity costs. 
A)  normal profits plus opportunity costs. 
B)  business profits minus implicit costs. 
C)  business profits plus implicit costs. 
D)  normal profits minus opportunity costs.

Question 13

To maximize value, management must:

Accepted Answer

A)  maximize short run revenue. 
B)  minimize short run average profit. 
C)  maximize long run profit. 
D)  maximize short run profit. 
A)  maximize short run revenue. 
B)  minimize short run average profit. 
C)  maximize long run profit. 
D)  maximize short run profit.

Question 14

The value of a firm is equal to:

Accepted Answer

A)  the present value of tangible assets. 
B)  the present value of all future revenues. 
C)  the present value of all future cash flows. 
D)  current revenues less current costs. 
A)  the present value of tangible assets. 
B)  the present value of all future revenues. 
C)  the present value of all future cash flows. 
D)  current revenues less current costs.

Question 15

The share of revenues paid to suppliers does not depend upon:

Accepted Answer

A)  resource scarcity. 
B)  input market competition. 
C)  output market competition. 
D)  relative productivity. 
A)  resource scarcity. 
B)  input market competition. 
C)  output market competition. 
D)  relative productivity.

Question 16

Managers display less than optimal behavior if they seek:

Accepted Answer

A)  to maximize leisure. 
B)  to maximize community well-being. 
C)  to maximize employee welfare. 
D)  an industry-average profit rate. 
A)  to maximize leisure. 
B)  to maximize community well-being. 
C)  to maximize employee welfare. 
D)  an industry-average profit rate.

Question 17

The primary virtue of managerial economics lies in its:

Accepted Answer

A)  logic. 
B)  usefulness. 
C)  consistency. 
D)  mathematical rigor. 
A)  logic. 
B)  usefulness. 
C)  consistency. 
D)  mathematical rigor.

Question 18

Managers who seek satisfactory rather than optimal results:

Accepted Answer

A)  take actions that benefit parties other than stockholders. 
B)  are insensitive to social constraints. 
C)  are insensitive to self-imposed constraints. 
D)  increase allocative efficiency. 
A)  take actions that benefit parties other than stockholders. 
B)  are insensitive to social constraints. 
C)  are insensitive to self-imposed constraints. 
D)  increase allocative efficiency.

Question 19

Value maximization theory fails to address the problem of:

Accepted Answer

A)  risk. 
B)  uncertainty. 
C)  sluggish growth. 
D)  self-serving management. 
A)  risk. 
B)  uncertainty. 
C)  sluggish growth. 
D)  self-serving management.

Question 20

The value of the firm decreases with a decrease in:

Accepted Answer

A)  total revenue. 
B)  the discount rate. 
C)  the cost of capital. 
D)  total cost. 
A)  total revenue. 
B)  the discount rate. 
C)  the cost of capital. 
D)  total cost.

Nonvalue-maximizing behavior is most common:

Managerial economics cannot be used to identify:

Monopoly exploitation is reduced by regulation that:

A typical annual rate of return on invested capital is:

Constrained optimization techniques are not designed to deal with the problem of:

Warren Buffett looks for "wonderful businesses" that feature:

To be useful, the theory of the firm must:

Value maximization is broader than profit maximization because it considers:

In a free market economy, the optimal quality of goods and services is determined by:

Government regulation is important because government:

Unfriendly takeovers have the greatest potential to enhance the market price of companies whose managers:

Economic profit equals:

To maximize value, management must:

The value of a firm is equal to:

The share of revenues paid to suppliers does not depend upon:

Managers display less than optimal behavior if they seek:

The primary virtue of managerial economics lies in its:

Managers who seek satisfactory rather than optimal results:

Value maximization theory fails to address the problem of:

The value of the firm decreases with a decrease in:

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Cost Analysis and Estimation

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters

Exam 1: Nature and Scope of Managerial Economics

Nonvalue-maximizing behavior is most common:

Managerial economics cannot be used to identify:

Monopoly exploitation is reduced by regulation that:

A typical annual rate of return on invested capital is:

Constrained optimization techniques are not designed to deal with the problem of:

Warren Buffett looks for "wonderful businesses" that feature:

To be useful, the theory of the firm must:

Value maximization is broader than profit maximization because it considers:

In a free market economy, the optimal quality of goods and services is determined by:

Government regulation is important because government:

Unfriendly takeovers have the greatest potential to enhance the market price of companies whose managers:

Economic profit equals:

To maximize value, management must:

The value of a firm is equal to:

The share of revenues paid to suppliers does not depend upon:

Managers display less than optimal behavior if they seek:

The primary virtue of managerial economics lies in its:

Managers who seek satisfactory rather than optimal results:

Value maximization theory fails to address the problem of:

The value of the firm decreases with a decrease in:

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Cost Analysis and Estimation

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters