Question 1

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

Accepted Answer

A)  2.5Y. 
B)  25Y. 
C)  5Y. 
D)  10Y. 
A)  2.5Y. 
B)  25Y. 
C)  5Y. 
D)  10Y.

Question 2

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

Accepted Answer

A)  only explicit costs. 
B)  only implicit costs. 
C)  both explicit and implicit costs. 
D)  Both types of profits are always equal because they account for the same costs. 
A)  only explicit costs. 
B)  only implicit costs. 
C)  both explicit and implicit costs. 
D)  Both types of profits are always equal because they account for the same costs.

Question 3

To maximize profits, a firm should continue to increase production of a good until:

Accepted Answer

A)  total revenue equals total cost. 
B)  profits are zero. 
C)  marginal revenue equals marginal cost. 
D)  average cost equals average revenue. 
A)  total revenue equals total cost. 
B)  profits are zero. 
C)  marginal revenue equals marginal cost. 
D)  average cost equals average revenue.

Question 4

The marginal cost in the table is:

Accepted Answer

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

Question 5

To maximize net benefits in the table, it is most appropriate to use:

Accepted Answer

A)  four units of the control variable, since the marginal benefit exceeds marginal cost. 
B)  six units of the control variable, since the marginal cost exceeds marginal benefit. 
C)  five units of the control variable, since net marginal benefits are zero. 
D)  None of the statements associated with this question are correct. 
A)  four units of the control variable, since the marginal benefit exceeds marginal cost. 
B)  six units of the control variable, since the marginal cost exceeds marginal benefit. 
C)  five units of the control variable, since net marginal benefits are zero. 
D)  None of the statements associated with this question are correct.

Question 6

Given the cost function C(Y) = 6Y2, what is the marginal cost?

Accepted Answer

A)  6Y 
B)  Y2 
C)  3Y 
D)  12Y 
A)  6Y 
B)  Y2 
C)  3Y 
D)  12Y

Question 7

If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is:

Accepted Answer

A)  $2,562. 
B)  $3,200. 
C)  $439. 
D)  $3,000. 
A)  $2,562. 
B)  $3,200. 
C)  $439. 
D)  $3,000.

Question 8

The higher the interest rate:

Accepted Answer

A)  the greater the present value of a future amount. 
B)  the smaller the present value of a future amount. 
C)  the greater the level of inflation. 
D)  None of the statements associated with this question are correct. 
A)  the greater the present value of a future amount. 
B)  the smaller the present value of a future amount. 
C)  the greater the level of inflation. 
D)  None of the statements associated with this question are correct.

Question 9

What is the marginal cost of producing the fifth unit?

Accepted Answer

A)  270 
B)  110 
C)  50 
D)  0 
A)  270 
B)  110 
C)  50 
D)  0

Question 10

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 9 percent, and the current profits of the firm are $60 million. What is the value of the firm?

Accepted Answer

A)  $289.4 million 
B)  $3,270 million 
C)  $4,480.6 million 
D)  None of the statements associated with this question are correct. 
A)  $289.4 million 
B)  $3,270 million 
C)  $4,480.6 million 
D)  None of the statements associated with this question are correct.

Question 11

Which is the correct statement about the relationship between government and the market?

Accepted Answer

A)  Government should intervene on the consumers' behalf. 
B)  Government should intervene on the producers' behalf. 
C)  Government should not intervene on any party's behalf. 
D)  Government often plays a role in disciplining the market process. 
A)  Government should intervene on the consumers' behalf. 
B)  Government should intervene on the producers' behalf. 
C)  Government should not intervene on any party's behalf. 
D)  Government often plays a role in disciplining the market process.

Question 12

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y2 and C(Y) = 20Y2. What level of Y will yield the maximum net benefits?

Accepted Answer

A)  600/64 
B)  600/32 
C)  300/64 
D)  300/32 
A)  600/64 
B)  600/32 
C)  300/64 
D)  300/32

Question 13

If the annual interest rate is 0 percent, the present value of receiving $1.10 in the next year is:

Accepted Answer

A)  $1.00. 
B)  $1.01. 
C)  $1.11. 
D)  $1.10. 
A)  $1.00. 
B)  $1.01. 
C)  $1.11. 
D)  $1.10.

Question 14

Maximizing total benefits is equivalent to maximizing net benefits if and only if there are:

Accepted Answer

A)  constant marginal costs associated with achieving more benefits. 
B)  no costs associated with achieving more benefits. 
C)  increasing costs associated with achieving more benefits. 
D)  decreasing costs associated with achieving more benefits. 
A)  constant marginal costs associated with achieving more benefits. 
B)  no costs associated with achieving more benefits. 
C)  increasing costs associated with achieving more benefits. 
D)  decreasing costs associated with achieving more benefits.

Question 15

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 10 percent, and the current profits of the firm are $120 million. What is the value of the firm?

Accepted Answer

A)  $44 million 
B)  $4,280 million 
C)  $4,400 million 
D)  $6,800 million 
A)  $44 million 
B)  $4,280 million 
C)  $4,400 million 
D)  $6,800 million

Question 16

Which of the following is an implicit cost of going to college?

Accepted Answer

A)  Tuition 
B)  Cost of books and supplies 
C)  Room and board 
D)  Foregone wages 
A)  Tuition 
B)  Cost of books and supplies 
C)  Room and board 
D)  Foregone wages

Question 17

Your firm's research department has estimated your total revenues to be R(Q) = 3,000 - 8Q2 and your total costs to be C(Q) = 100 + 2Q2. (Note that MB = 3,000 - 16Q and MC = 4Q.)
a. What level of Q maximizes net benefits?
b. What is marginal benefit at this level of Q?
c. What is marginal cost at this level of Q?
d. What is the maximum level of net benefits?
e. What is another word for net benefits in this example?

Accepted Answer

a. Setting MNB(Q) = 3000 - 20Q = 0 and s

Question 18

Find the annual interest rate that would create a perpetual cash flow stream of $15,000 when the present value of the asset is $100,000.

Accepted Answer

A)  0.15 percent 
B)  15 percent 
C)  0.1765 percent 
D)  17.65 percent 
A)  0.15 percent 
B)  15 percent 
C)  0.1765 percent 
D)  17.65 percent

Question 19

The first-order condition for maximizing net benefits is:

Accepted Answer

A)  dB/dQ = 0. 
B)  dN/dQ = 0. 
C)  d2N/dQ2 = 0. 
D)  dC/dQ = 0. 
A)  dB/dQ = 0. 
B)  dN/dQ = 0. 
C)  d2N/dQ2 = 0. 
D)  dC/dQ = 0.

Question 20

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y2 and C(Y) = 20Y2. What is the maximum level of net benefits?

Accepted Answer

A)  2,500.75 
B)  2,812.5 
C)  1916.4 
D)  None of the statements associated with this question are correct. 
A)  2,500.75 
B)  2,812.5 
C)  1916.4 
D)  None of the statements associated with this question are correct.

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

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

To maximize profits, a firm should continue to increase production of a good until:

The marginal cost in the table is:

To maximize net benefits in the table, it is most appropriate to use:

Given the cost function C(Y) = 6Y², what is the marginal cost?

If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is:

The higher the interest rate:

What is the marginal cost of producing the fifth unit?

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 9 percent, and the current profits of the firm are $60 million. What is the value of the firm?

Which is the correct statement about the relationship between government and the market?

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y² and C(Y) = 20Y². What level of Y will yield the maximum net benefits?

If the annual interest rate is 0 percent, the present value of receiving $1.10 in the next year is:

Maximizing total benefits is equivalent to maximizing net benefits if and only if there are:

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 10 percent, and the current profits of the firm are $120 million. What is the value of the firm?

Which of the following is an implicit cost of going to college?

Find the annual interest rate that would create a perpetual cash flow stream of $15,000 when the present value of the asset is $100,000.

The first-order condition for maximizing net benefits is:

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y² and C(Y) = 20Y². What is the maximum level of net benefits?

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

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

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

To maximize profits, a firm should continue to increase production of a good until:

The marginal cost in the table is:

To maximize net benefits in the table, it is most appropriate to use:

Given the cost function C(Y) = 6Y2, what is the marginal cost?

If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and $2,000 at the end of year two, then the present value of these cash flows is:

The higher the interest rate:

What is the marginal cost of producing the fifth unit?

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 9 percent, and the current profits of the firm are $60 million. What is the value of the firm?

Which is the correct statement about the relationship between government and the market?

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y2 and C(Y) = 20Y2. What level of Y will yield the maximum net benefits?

If the annual interest rate is 0 percent, the present value of receiving $1.10 in the next year is:

Maximizing total benefits is equivalent to maximizing net benefits if and only if there are:

Suppose the growth rate of the firm's profit is 7 percent, the interest rate is 10 percent, and the current profits of the firm are $120 million. What is the value of the firm?

Which of the following is an implicit cost of going to college?

Find the annual interest rate that would create a perpetual cash flow stream of $15,000 when the present value of the asset is $100,000.

The first-order condition for maximizing net benefits is:

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y2 and C(Y) = 20Y2. What is the maximum level of net benefits?

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 costs are:

Given the cost function C(Y) = 6Y², what is the marginal cost?

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y² and C(Y) = 20Y². What level of Y will yield the maximum net benefits?

Suppose total benefits and total costs are given by B(Y) = 600Y - 12Y² and C(Y) = 20Y². What is the maximum level of net benefits?