Question 1

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

Accepted Answer

A)  greater than the interest rate. 
B)  less than the interest rate. 
C)  equal to the interest rate. 
D)  not constant over time. 
A)  greater than the interest rate. 
B)  less than the interest rate. 
C)  equal to the interest rate. 
D)  not constant over time.

Question 2

What is the marginal revenue of producing the third unit?

Accepted Answer

A)  250 
B)  70 
C)  0 
D)  90 
A)  250 
B)  70 
C)  0 
D)  90

Question 3

Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but they are unable to do this because of:

Accepted Answer

A)  cost considerations. 
B)  the scarcity of resources. 
C)  competition among sellers. 
D)  competition among buyers. 
A)  cost considerations. 
B)  the scarcity of resources. 
C)  competition among sellers. 
D)  competition among buyers.

Question 4

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. Then marginal benefits are:

Accepted Answer

A)  100 - 16Y. 
B)  100Y - 8Y2. 
C)  50 - 4Y. 
D)  200Y - 10Y. 
A)  100 - 16Y. 
B)  100Y - 8Y2. 
C)  50 - 4Y. 
D)  200Y - 10Y.

Question 5

In order to maximize net benefits, the managerial control variable should be used up to the point where:

Accepted Answer

A)  total costs equal total benefits. 
B)  average costs equal marginal benefits. 
C)  average benefits equal marginal costs. 
D)  net marginal benefits equal zero. 
A)  total costs equal total benefits. 
B)  average costs equal marginal benefits. 
C)  average benefits equal marginal costs. 
D)  net marginal benefits equal zero.

Question 6

The optimal amount of studying is determined by comparing:

Accepted Answer

A)  marginal benefit and the total cost of studying. 
B)  marginal benefit and the total benefit of studying. 
C)  marginal benefit and the marginal cost of studying. 
D)  total benefit and the total cost of studying. 
A)  marginal benefit and the total cost of studying. 
B)  marginal benefit and the total benefit of studying. 
C)  marginal benefit and the marginal cost of studying. 
D)  total benefit and the total cost of studying.

Question 7

If the interest rate is 5 percent and cash flows are $3,000 at the end of year one and $5,000 at the end of year two, then the present value of these cash flows is:

Accepted Answer

A)  $7,392.29. 
B)  $8,400.34. 
C)  $4,222.50. 
D)  $400.74. 
A)  $7,392.29. 
B)  $8,400.34. 
C)  $4,222.50. 
D)  $400.74.

Question 8

Delta Software earned $10 million this year. Suppose the growth rate of Delta's profits and the interest rate are both constant and Delta will be in business forever. Determine the value of Delta Software when:
a. The interest rate is 10 percent and profits grow by 4 percent per year.
b. The interest rate is 10 percent and profits grow by 0 percent per year.
c. The interest rate is 10 percent and profits decline by 4 percent per year.
d. The interest rate is 10 percent and profits grow by 12 percent per year. (This part of the question is tricky.)

Accepted Answer

a. @#IMG-DLM& million.
b. @#IMG-DLM& million.
c. @#IMG-DLM&

Question 9

The difference between marginal benefits and marginal costs is the:

Accepted Answer

A)  profits. 
B)  marginal net benefits. 
C)  opportunity cost. 
D)  accounting cost. 
A)  profits. 
B)  marginal net benefits. 
C)  opportunity cost. 
D)  accounting cost.

Question 10

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. What is the maximum level of net benefits (rounded to the nearest whole number)?

Accepted Answer

A)  92 
B)  139 
C)  78 
D)  None of the statements associated with this question are correct. 
A)  92 
B)  139 
C)  78 
D)  None of the statements associated with this question are correct.

Question 11

If the interest rate is 7 percent, $500 received at the end of nine years is worth how much today?

Accepted Answer

A)  500/(0.07)9 
B)  500/(1 + .07)9 
C)  500/(1 + 7)9 
D)  500 
A)  500/(0.07)9 
B)  500/(1 + .07)9 
C)  500/(1 + 7)9 
D)  500

Question 12

If the interest rate is 3 percent, the present value of $900 received at the end of four years is:

Accepted Answer

A)  $792.00. 
B)  $799.64. 
C)  $873.79. 
D)  $927.40. 
A)  $792.00. 
B)  $799.64. 
C)  $873.79. 
D)  $927.40.

Question 13

Managerial economics:

Accepted Answer

A)  has little to say about day-to-day decisions. 
B)  is valuable to the coordinator of a shelter for the homeless. 
C)  is not relevant for managers of not-for-profit groups. 
D)  is the study of how to get rich in the stock market. 
A)  has little to say about day-to-day decisions. 
B)  is valuable to the coordinator of a shelter for the homeless. 
C)  is not relevant for managers of not-for-profit groups. 
D)  is the study of how to get rich in the stock market.

Question 14

You are the manager of a firm that specializes in selling exotic animals to zoos around the world. Your goal is to determine the number of baby zebras (Z) that must be born on your firm's farm each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities of zebras are given in the first three columns of the following table. Based on this scenario, complete the table and answer the accompanying questions:   a. What level of zebra births maximizes net benefits?
b. What is the relation between marginal benefit and marginal cost at this level of Z?
c. Graph the total cost and total benefit curves.
d. On another graph, plot the points for the marginal cost, marginal benefit, and marginal net benefit.
e. Show how the two graphs relate to each other.

Accepted Answer

@#IMG-DLM& a. Z = 7 maximizes net benefits.
b. Mar

Question 15

Consumer-producer rivalry occurs because of:

Accepted Answer

A)  consumers' high valuation and producers' low production cost of a good. 
B)  producers' high production cost and consumers' low valuation of a good. 
C)  the competing interests of consumers and producers. 
D)  None of the statements associated with this question are correct. 
A)  consumers' high valuation and producers' low production cost of a good. 
B)  producers' high production cost and consumers' low valuation of a good. 
C)  the competing interests of consumers and producers. 
D)  None of the statements associated with this question are correct.

Question 16

You are the manager of a Fortune 500 hotel chain and must decide where to locate a new hotel. Based on tax considerations, your accounting department suggests that Atlantic City is the best choice, followed closely by Las Vegas. In particular, your current year tax savings from locating in Atlantic City are $4 million, but they are only $3 million in Las Vegas. Your marketing department, on the other hand, has provided you with sales estimates that suggest that the present value of the gross (of taxes) operating profits from locating in Atlantic City are only $10 million, but they are $14 million for Las Vegas. It will cost $14 million to build the hotel in either location. Ignoring all other considerations, where should you build the hotel? What are your firm's economic profits if you locate the hotel in Atlantic City?

Accepted Answer

Ignoring other considerations, if you bu

Question 17

As the interest rate increases, the opportunity cost of waiting to receive a future amount:

Accepted Answer

A)  increases. 
B)  decreases. 
C)  may rise or fall. 
D)  remains the same. 
A)  increases. 
B)  decreases. 
C)  may rise or fall. 
D)  remains the same.

Question 18

Compute the present value of a perpetual bond that pays a monthly cash flow of $1,000 at an annual interest rate of 12 percent.

Accepted Answer

A)  $8,333.33 
B)  $9,333.33 
C)  $100,000 
D)  $101,000 
A)  $8,333.33 
B)  $9,333.33 
C)  $100,000 
D)  $101,000

Question 19

Scarce resources are ultimately allocated toward the production of goods most wanted by society because:

Accepted Answer

A)  firms attempt to maximize profits. 
B)  they are most efficiently utilized in these areas. 
C)  consumers demand inexpensive goods and services. 
D)  managers are benevolent. 
A)  firms attempt to maximize profits. 
B)  they are most efficiently utilized in these areas. 
C)  consumers demand inexpensive goods and services. 
D)  managers are benevolent.

Question 20

If the annual interest rate is 0 percent, the present value of receiving $210 in the next year is:

Accepted Answer

A)  $221. 
B)  $200. 
C)  $201. 
D)  $210. 
A)  $221. 
B)  $200. 
C)  $201. 
D)  $210.

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 marginal revenue of producing the third unit?

Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but they are unable to do this because of:

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y² and C(Y) = 10Y². Then marginal benefits are:

In order to maximize net benefits, the managerial control variable should be used up to the point where:

The optimal amount of studying is determined by comparing:

If the interest rate is 5 percent and cash flows are $3,000 at the end of year one and $5,000 at the end of year two, then the present value of these cash flows is:

The difference between marginal benefits and marginal costs is the:

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y² and C(Y) = 10Y². What is the maximum level of net benefits (rounded to the nearest whole number)?

If the interest rate is 7 percent, $500 received at the end of nine years is worth how much today?

If the interest rate is 3 percent, the present value of $900 received at the end of four years is:

Managerial economics:

Consumer-producer rivalry occurs because of:

As the interest rate increases, the opportunity cost of waiting to receive a future amount:

Compute the present value of a perpetual bond that pays a monthly cash flow of $1,000 at an annual interest rate of 12 percent.

Scarce resources are ultimately allocated toward the production of goods most wanted by society because:

If the annual interest rate is 0 percent, the present value of receiving $210 in the next year is:

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

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 marginal revenue of producing the third unit?

Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but they are unable to do this because of:

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. Then marginal benefits are:

In order to maximize net benefits, the managerial control variable should be used up to the point where:

The optimal amount of studying is determined by comparing:

If the interest rate is 5 percent and cash flows are $3,000 at the end of year one and $5,000 at the end of year two, then the present value of these cash flows is:

The difference between marginal benefits and marginal costs is the:

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y2 and C(Y) = 10Y2. What is the maximum level of net benefits (rounded to the nearest whole number)?

If the interest rate is 7 percent, $500 received at the end of nine years is worth how much today?

If the interest rate is 3 percent, the present value of $900 received at the end of four years is:

Managerial economics:

Consumer-producer rivalry occurs because of:

As the interest rate increases, the opportunity cost of waiting to receive a future amount:

Compute the present value of a perpetual bond that pays a monthly cash flow of $1,000 at an annual interest rate of 12 percent.

Scarce resources are ultimately allocated toward the production of goods most wanted by society because:

If the annual interest rate is 0 percent, the present value of receiving $210 in the next year is:

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) = 100Y - 8Y² and C(Y) = 10Y². Then marginal benefits are:

Suppose total benefits and total costs are given by B(Y) = 100Y - 8Y² and C(Y) = 10Y². What is the maximum level of net benefits (rounded to the nearest whole number)?