Managerial Econ Exam 1 - Assignment Essays

question

Economics

answer

Exists because of scarcity

question

Basic principles that comprise good management include

answer

-understanding incentives
-identifying goals and constraints.
-recognizing the nature and importance of profits.

question

Which of the following is the main goal of a continuing company?

answer

Maximize value of the firm

question

Which of the following is incorrect?

answer

Managers should only be interested in accounting profits.

question

Accounting profits are

answer

Total revenue minus total cost

question

Economic profits are

answer

Total revenue minus total opportunity cost

question

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

answer

Foregone wages

question

The additional benefits that arise by using an additional unit of the managerial control variable is defined as the

answer

Marginal Benefit

question

Negotiations between the buyer and seller of a new house are an example of

answer

Consumer−producer rivalry

question

The behavior of bidders in an auction is an example of

answer

Consumer−consumer rivalry

question

The higher the interest rate

answer

The smaller the present value of a future amount

question

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

answer

$2,562

question

A firm will have constant profits of $100,000 per year for the next four years, and the interest rate is 6 percent. Assuming these profits are realized at the end of each year, what is the present value of these future profits?

answer

$346,510.56

question

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

answer

$7,392.29

question

The law of demand states that, holding all else constant

answer

As price falls, quantity demanded rises

question

A change in income will not lead to

answer

A movement along the demand curve

question

If good A is an inferior good, an increase in income leads to

answer

A decrease in the demand for good A

question

Which of the following pairs of goods are probably complements

answer

Hamburgers and Ketchup

question

Other things held constant, the greater the price of a good

answer

The lower the consumer surplus

question

The law of supply states that, holding all else constant, as the price of a good falls

answer

Quantity supplied falls

question

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

answer

It will rise

question

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. From the law of demand we know that ax will be:

answer

Less than 0

question

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. If ay is positive, then:

answer

Goods y and x are substitutes

question

Suppose the demand for good X is given by Qdx = 10 - 2Px + Py + M. The price of good X is $1, the price of good Y is $10, and income is $100. Given these prices and income, how much of good X will be purchased?

1000
115
515

answer

None of the statements associated with this question are correct. `

question

Suppose the supply of good X is given by QSx = 10 + 2Px. How many units of good X are produced if the price of good X is 20?

20
10
30

answer

None of the statements associated with this question are correct. `

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

answer

$19

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price ceiling of $15 is imposed,

answer

There will be a shortage of 20 units

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus?

answer

question

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W. If PX = 100, PY = 150, PW = 50, then the supply curve is

answer

Qxs = 150 + Px.

question

Assume that the price elasticity of demand is −2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:

answer

Decrease

question

A price elasticity of zero corresponds to a demand curve that is:

answer

Vertical

question

As we move down along a linear demand curve, the price elasticity of demand becomes more:

answer

Inelastic

question

The demand for good X has been estimated by Qxd = 12 − 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

answer

-0.6

question

The own price elasticity of demand for apples is −1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?

answer

It will increase by 6%

question

If quantity demanded for sneakers falls by 10 percent when price increases 25 percent, we know that the absolute value of the own price elasticity of sneakers is:

answer

0.4

question

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

answer

Inelastic

question

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

answer

infinite

question

Suppose Qxd = 10,000 − 2 Px + 3 Py − 4.5M, where Px = $100, Py = $50, and M = $2,000. What is the own price elasticity of demand?

answer

-0.21

question

Which of the following factors would NOT affect the own price elasticity of a good?

answer

Price of an Input

question

Lemonade, a good with many close substitutes, should have an own price elasticity that is:

answer

Relatively elastic

question

If the cross-price elasticity between ketchup and hamburgers is −1.2, a 4 percent increase in the price of ketchup will lead to a 4.8 percent:

answer

Drop in quantity demanded of hamburgers

question

If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the (arc) cross price-elasticity of apple sauce and pork chops?

answer

-1.17

question

An income elasticity less than zero tells us that the good is:

answer

An inferior good

question

where PX is the price of X, PY is the price of good Y, M is income, and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the income elasticity of good X is:

answer

0.82

1 of 44

question

Economics

answer

Exists because of scarcity

question

Basic principles that comprise good management include

answer

-understanding incentives
-identifying goals and constraints.
-recognizing the nature and importance of profits.

question

Which of the following is the main goal of a continuing company?

answer

Maximize value of the firm

question

Which of the following is incorrect?

answer

Managers should only be interested in accounting profits.

question

Accounting profits are

answer

Total revenue minus total cost

question

Economic profits are

answer

Total revenue minus total opportunity cost

question

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

answer

Foregone wages

question

The additional benefits that arise by using an additional unit of the managerial control variable is defined as the

answer

Marginal Benefit

question

Negotiations between the buyer and seller of a new house are an example of

answer

Consumer−producer rivalry

question

The behavior of bidders in an auction is an example of

answer

Consumer−consumer rivalry

question

The higher the interest rate

answer

The smaller the present value of a future amount

question

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

answer

$2,562

question

answer

$346,510.56

question

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

answer

$7,392.29

question

The law of demand states that, holding all else constant

answer

As price falls, quantity demanded rises

question

A change in income will not lead to

answer

A movement along the demand curve

question

If good A is an inferior good, an increase in income leads to

answer

A decrease in the demand for good A

question

Which of the following pairs of goods are probably complements

answer

Hamburgers and Ketchup

question

Other things held constant, the greater the price of a good

answer

The lower the consumer surplus

question

The law of supply states that, holding all else constant, as the price of a good falls

answer

Quantity supplied falls

question

Suppose there is a simultaneous increase in demand and decrease in supply, what effect will this have on the equilibrium price?

answer

It will rise

question

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. From the law of demand we know that ax will be:

answer

Less than 0

question

Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. If ay is positive, then:

answer

Goods y and x are substitutes

question

answer

None of the statements associated with this question are correct. `

question

Suppose the supply of good X is given by QSx = 10 + 2Px. How many units of good X are produced if the price of good X is 20?

20
10
30

answer

None of the statements associated with this question are correct. `

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium price is:

answer

$19

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price ceiling of $15 is imposed,

answer

There will be a shortage of 20 units

question

Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. If a price floor of $30 is set, what will be size of the resulting surplus?

answer

question

answer

Qxs = 150 + Px.

question

Assume that the price elasticity of demand is −2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to:

answer

Decrease

question

A price elasticity of zero corresponds to a demand curve that is:

answer

Vertical

question

As we move down along a linear demand curve, the price elasticity of demand becomes more:

answer

Inelastic

question

The demand for good X has been estimated by Qxd = 12 − 3Px + 4Py. Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity.

answer

-0.6

question

The own price elasticity of demand for apples is −1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?

answer

It will increase by 6%

question

If quantity demanded for sneakers falls by 10 percent when price increases 25 percent, we know that the absolute value of the own price elasticity of sneakers is:

answer

0.4

question

The quantity consumed of a good is relatively unresponsive to changes in price whenever demand is:

answer

Inelastic

question

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

answer

infinite

question

Suppose Qxd = 10,000 − 2 Px + 3 Py − 4.5M, where Px = $100, Py = $50, and M = $2,000. What is the own price elasticity of demand?

answer

-0.21

question

Which of the following factors would NOT affect the own price elasticity of a good?

answer

Price of an Input

question

Lemonade, a good with many close substitutes, should have an own price elasticity that is:

answer

Relatively elastic

question

If the cross-price elasticity between ketchup and hamburgers is −1.2, a 4 percent increase in the price of ketchup will lead to a 4.8 percent:

answer

Drop in quantity demanded of hamburgers

question

If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the (arc) cross price-elasticity of apple sauce and pork chops?

answer

-1.17

question

An income elasticity less than zero tells us that the good is:

answer

An inferior good

question

answer

0.82

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