. Scarcity is a condition that exists when (Points: 10)
There is a fixed supply of resources.
There is a large demand for a product.
Resources are not able to meet the entire demand for a product.
All of the above
2. Managerial economics is best defined as (Points: 10)
The study of economics by managers.
The study of how managers make decisions about the use of scarce resources.
The study of the aggregate economic activity.
All of the above are equally good definitions.
3. Which of the following is the best example of the "command" process? (Points: 10)
AOL buys Time Warner
Striking auto workers force General Motors to shut down its factories.
Banks raise their fees on late payments by credit card holders.
The FCC requires local telephone companies to provide access to their local networks before being able to offer long distance services.
4. Accounting costs (Points: 10)
Are historical costs.
Are replacement costs.
Usually include implicit costs.
Usually include normal profits.
5. When a firm earns a normal profit, its revenue is just enough to cover both its _______ cost and its _________ cost. (Points: 10)
Historical; replacement
Explicit; accounting
Accounting; replacement
Accounting; opportunity
6. The calculation of stockholder wealth involves (Points: 10)
The time-value of money concept.
The cash flow stream.
Business and financial risk.
All of the above.
7. Which of the following would cause a decrease in the demand for fish? (Points: 10)
The price of red meat increases.
The price of fish increases.
The price of chicken decreases.
The number of fishing boats decreases.
8. In the short run, a change in the equilibrium price will (Points: 10)
Always lead to inflation.
Cause a shift in the demand curve.
Cause a shift in the supply curve.
Cause a change in the quantity demanded or supplied.
9. Which of the following would indicate that price is temporarily below its market equilibrium? (Points: 10)
There are a number of producers who are left with unwanted inventories.
There are a number of customers who must be placed on waiting lists for the product.
Firms decide to leave the market.
The government must step in and subsidize the product.
10. When total revenue increases from $18,000 to $26,000 when quantity increases from eight to ten, marginal revenue is equal to (Points: 10)
$3,000
$4,000
$8,000
$2,600
11. The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1, the quantity sold per hour fell from 18 to 8. The arc elasticity of demand for lettuce is
-0.56
-1.15
-0.8
-1.57
12. In general, if there are many good substitutes for a given product, the demand elasticity will be (Points: 10)
High
Low
Indeterminate
Zero
13. A product consumed in conjunction with another is called a(n) (Points: 10)
Inferior good
Complementary good
Normal good
Substitute good
14. If a regression coefficient passes the t-test, it means that
The regression coefficient is significantly different from zero
The regression equation is valid
The regression coefficient can be used for forecasting.
The regression coefficient should be included in the regression equation.
15. Which of the following is a test of the statistical significance of the entire regression equation?
t-test
R2
F-test
Durbin-Watson test
16. Which of the following refers to a relatively high correlation among the independent variables of a regression equation? (Points: 10)
Autocorrelation
The identity problem
Statistically insignificant regression coefficients
Multicollinearity
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