Eco 550 Midterm Exam Part 1 & 2 (50 Questions)
Midterm Exam Part 1
Question 1
Income tax payments are an example of ____.
Answer
implicit costs
explicit costs
normal return on investment
shareholder wealth
Question 2
The primary objective of a for-profit firm is to ___________.
Answer
maximize agency costs
minimize average cost
maximize total revenue
set output where total revenue equals total cost
maximize shareholder value
Question 3
To reduce Agency Problems, executive compensation should be designed to:
Answer
create incentives so that managers act like owners of the firm.
avoid making the executives own shares in the company.
be an increasing function of the firm’s expenses.
be an increasing function of the sales revenue received by the firm.
Question 4
Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:
Answer
maximize total costs
maximize output, subject to a breakeven constraint
maximize the happiness of the administrators of the NFP enterprise
maximize the utility of the contributors
Question 5
Economic profit is defined as the difference between revenue and ____.
Answer
explicit cost
total economic cost
implicit cost
shareholder wealth
Question 6
The moral hazard in team production arises from
Answer
poorly designed team membership
lack of proper assignment of individual tasks
disorganization in groups
a conflict between tactically best interest and one’s duty
insufficient experience
Question 7
The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:
Answer
the coefficient of variation is easier to compute
the standard deviation is a measure of relative risk whereas the coefficient of variation is a measure of absolute risk
the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk
the standard deviation is rarely used in practice whereas the coefficient of variation is widely used
Question 8
The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)
Answer
68.26%
2.28%
34%
15.87%
Question 9
The ____ is the ratio of ____ to the ____.
Answer
standard deviation; covariance; expected value
coefficient of variation; expected value; standard deviation
correlation coefficient; standard deviation; expected value
coefficient of variation; standard deviation; expected value
Question 10
A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.
Answer
marginal returns
total costs
marginal costs
average costs
average benefits
Question 11
Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds?
Answer
U.S. Government bonds
municipal bonds
common stock
commercial paper
Question 12
An closest example of a risk-free security is
Answer
General Motors bonds
AT&T commercial paper
U.S. Government Treasury bills
San Francisco municipal bonds
an I.O.U. that your cousin promises to pay you $100 in 3 months
Question 13
Marginal revenue (MR) is ____ when total revenue is maximized.
Answer
greater than one
equal to one
less than zero
equal to zero
equal to minus one
Question 14
A price elasticity (ED) of ?1.50 indicates that for a ____ increase in price, quantity demanded will ____ by ____.
Answer
one percent; increase; 1.50 units
one unit; increase; 1.50 units
one percent; decrease; 1.50 percent
one unit; decrease; 1.50 percent
ten percent; increase; fifteen percent
Question 15
If demand were inelastic, then we should immediately:
Answer
cut the price.
keep the price where it is.
go to the Nobel Prize Committee to show we were the first to find an upward sloping demand curve.
stop selling it since it is inelastic.
raise the price.
No comments:
Post a Comment