question

Economics

answer

Exists because of scarcity

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Basic principles that comprise good management include

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-understanding incentives

-identifying goals and constraints.

-recognizing the nature and importance of profits.

-identifying goals and constraints.

-recognizing the nature and importance of profits.

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

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Maximize value of the firm

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Which of the following is incorrect?

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Managers should only be interested in accounting profits.

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Accounting profits are

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Total revenue minus total cost

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Economic profits are

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Total revenue minus total opportunity cost

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

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Foregone wages

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

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Marginal Benefit

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

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Consumer−producer rivalry

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The behavior of bidders in an auction is an example of

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Consumer−consumer rivalry

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The higher the interest rate

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The smaller the present value of a future amount

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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

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$2,562

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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?

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$346,510.56

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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

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$7,392.29

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The law of demand states that, holding all else constant

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As price falls, quantity demanded rises

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A change in income will not lead to

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A movement along the demand curve

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

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A decrease in the demand for good A

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Which of the following pairs of goods are probably complements

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Hamburgers and Ketchup

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

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The lower the consumer surplus

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

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Quantity supplied falls

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

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It will rise

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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:

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Less than 0

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

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Goods y and x are substitutes

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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

1000

115

515

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

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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

20

10

30

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

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

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$19

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

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There will be a shortage of 20 units

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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?

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55

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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

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Qxs = 150 + Px.

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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:

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Decrease

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

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Vertical

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

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Inelastic

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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.

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-0.6

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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?

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It will increase by 6%

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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:

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0.4

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

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Inelastic

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

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infinite

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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?

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-0.21

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

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Price of an Input

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

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Relatively elastic

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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:

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Drop in quantity demanded of hamburgers

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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?

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-1.17

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

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An inferior good

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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