question
Which theory of profit holds that profit will be higher in industries where firms in the industry are able to prevent other firms from entering the industry?
answer
monopoly theory
question
Which of the following refers to the study of the application of statistical tools (particularly regression analysis) to real world data to estimate the models postulated by economic theory?
answer
econometrics
question
If average cost is at a minimum, then...
answer
it is equal to marginal cost
question
A good is normal if a rise in consumers income causes...
answer
an increase in demand
question
Which of the following is the best definition of economic profit?
answer
Equals the revenue of the firm minus its explicit costs and implicit costs
question
When rent control are imposed below the current market price they can do all except...
answer
create excess supply of rental housing
question
If a firm's average cost is equal to its average revenue, then...
answer
profit equals zero
question
The marginal cost when output = 10 is equal to...
answer
the slope of a line drawn tangent to the total cost curve where output = 10
question
A firm's total revenue function is TR =20Q -0.5Q2 and its total cost function is defined as TC = 100 + 2Q + 0.25Q2. Use these two yields the profit maximum. At what level is profit maximized?
answer
Q = $12
question
The marginal principle asserts that, in general, when net benefit is maximized...
answer
marginal benefit will be equal to marginal cost
question
The level of output where a straight line drawn from the origin is tangent to the total cost curve is where...
answer
average cost is equal to marginal cost
question
Suppose that a firm's total revenue function is defined as TR = 200Q - 20Q2. What is average revenue equal to when 1 unit of output is produced?
answer
$180
question
The law of demand states that...
answer
the inverse relationship between the price and the quantity demanded of a commodity per time period
question
Relationships between economic variables can be expressed in the form of...
answer
table, graph, or equation.
question
What is the present value of $1.21 received at the end of two years if the interest rate is 10 percent and compounding is annual?
answer
$1
question
Assume that corn and wheat are substitutes in production; that is, the same inputs can be used to produce either one of these two commodities. Also assume that the laws of supply and demand apply in both markets. If the demand for one of these commodities increases, what will likely happen in the other market?
answer
the supply will decrease
question
By tying a manager's compensation to the performance of the firm relative to that of its competitors, corporate stockholders and directors create incentives that tend to resolve the...
answer
principal-agent problem
question
Excess demand causes the price to...
answer
increase
question
Which of the following areas of study refers to the application of economic theory and the tools of analysis of decision science to examine how an organization can achieve its aims or objectives most efficiently?
answer
managerial economics
question
If both supply and demand increase at the same time, then...
answer
the equilibrium price will increase if the change in equilibrium quantity is relatively large
question
Management decision problems are composed of three elements. Which of the following is not one of them?
answer
profitibility
question
If a firm's marginal revenue is greater than its marginal cost, then the firm should...
answer
increase output to increase profit.
question
The modern theory of the firm postulates that the primary objective of managers is to maximize...
answer
the wealth or value of the firm.
question
The economic concept that corresponds most closely to a "derivative" in calculus is the concept of...
answer
marginal value
question
Which theory of profit views profit as a reward for introducing a new product or technique?
answer
innovation theory of profit
question
The optimal amount of pollution to society is where...
answer
the marginal benefit of pollution equals the marginal cost of pollution.
question
Businesses have responded to the incentive for ethical behavior by...
answer
lobbying for the abolition of laws that require ethical behavior.
question
At the equilibrium price...
answer
Quantity demanded equals quantity supplied.
question
The optimal solution to a problem is best defined as the solution that...
answer
is superior to any other possible solution
question
The last stage in the five-step decision process described in the text is to...
answer
implement the decision
question
If marginal revenue is equal to zero, then...
answer
total revenue is at a maximum or a minimum
question
Average cost is defined as....
answer
Total cost divided by total output
question
What is the effect of an increase in the price of fuel on the transportation service in a market where fuel is an input?
answer
The supply will decrease.
question
Business ethics refers to...
answer
any behavior by business that may violate social or moral standards.
The code or guidelines that prescribe acceptable behavior in business behavior and business transactions.
The code or guidelines that prescribe acceptable behavior in business behavior and business transactions.
question
When rent control is imposed above the current market price it will...
answer
Rent control results in a shortage of apartments for rent.
Rent controlled apartments usually cut maintenance and repairs to reduce costs, so the quality of housing deteriorates.
It reduces the return on investment in rental housing, and so fewer rental apartments will be constructed.
It encourages conversion into cooperatives (since their price is not controlled), which further reduces the supply of rent controlled apartments.
There is must be a substitute for market price allocation.
Rent controlled apartments usually cut maintenance and repairs to reduce costs, so the quality of housing deteriorates.
It reduces the return on investment in rental housing, and so fewer rental apartments will be constructed.
It encourages conversion into cooperatives (since their price is not controlled), which further reduces the supply of rent controlled apartments.
There is must be a substitute for market price allocation.
question
Monica quit her $50,000 per year job, purchased a building that was previously rented by the operator of a candy store for $1,500 per month, and used the space to breed and sell tropical fish. In her first year she made a business profit of $60,000. What was her economic profit?
answer
Economic loss of $8,000
question
The contemporary theory of the firm is based on the assumption that firms make decisions that are intended to...
answer
maximize profit
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
