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MULTIPLE CHOICE
6.
In a study of banking by asset size over time, we can find which asset siz
es are tending to become more prominent. The size that is becoming mo
re predominant is presumed to be least cost. This is called:
7.
George Webb Restaurant collects on the average $5 per customer at its
breakfast & lunch diner. Its variable cost per customer averages $3, and
its annual fixed cost is $40,000. If George Webb wants to make a profit
of $20,000 per year at the diner, it will have to serve__________ custo
mers per year.
10.
The primary disadvantage of engineering methods for measuring cost fu
nctions is that they deal with the managerial and entrepreneurial aspect
s of the production process or plant.
12.
A ____ total cost function implies that marginal costs ____ as output is i
ncreased.
13.
A ____ total cost function implies that marginal costs ____ as output is i
ncreased.
15.
In the linear breakeven model, the difference between selling price per u
nit and variable cost per unit is referred to as:
16.
Which of the following is not an assumption of the linear breakeven mod
el:
17.
In the linear breakeven model, the breakeven sales volume (in dollars) is
equal to fixed costs divided by:
18.
The degree of operating leverage is equal to the ____ change in ____ di
vided by the ____ change in ____.
19. The linear breakeven model excludes ____ from the analysis.
20.
In the linear breakeven model, the relevant range of output is that range
where the linearity assumptions of the model are assumed to hold.
21.
In the linear breakeven model, the breakeven sales volume (in dollars) c
an be found by multiplying the breakeven sales volume (in units) by:
22.
In the linear breakeven model, a firm incurs operating losses whenever
output is less than the breakeven level.
PROBLEMS
2.
Offshore Petroleum's fixed costs are $2,500,000 and its debt repayment
requirements are $1,000,000. Selling price per barrel of oil is $18 and v
ariable costs per barrel are $10.
Chapter 10
Prices, Output, and Strategy: Pure and Monopolistic Competition
MULTIPLE CHOICE
1.
The main difference between perfect competition and monopolistic comp
etition is:
2.
Long distance telephone service has become a competitive market. The a
verage cost per call is $0.05 a minute, and its declining. The likely reas
on for the declining price for long distance service is:
3.
What is the profit maximization point for a firm in a purely competitive e
nvironment?
4.
All of the following are true for both competition and monopolistic comp
etition in the long run, except one of them. Which is it?
5.
Which of the following statements is (are) true concerning a pure compe
tition situation?
6. In pure competition:
7. In the short-
run for a purely competitive market, a manufacturer will stop production
when:
9. In long-
run equilibrium, all firms in a pure competition market situation operati
ng under a condition of certainty will have identical costs even though th
ey may use different production and operation techniques.
10.
If price exceeds average costs under pure competition, ____ firms will e
nter the industry, supply will ____, and price will be driven ____.
15.
Buyers anticipate that the temporary warehouse seller of unbranded co
mputer equipment will
16.
All of the following are mechanisms which reduce the adverse selection
problem except ____.
19.
To escape adverse selection and elicit high quality experience goods buy
ers can
20.
The problems of asymmetric information exchange arise ultimately beca
use
25.
The price for used cars is well below the price of new cars of the same g
eneral quality. This is an example of:
PROBLEMS
1.
Sunrise Juice Company sells its output in a perfectly competitive market.
The firm's total cost function is given in the following schedule:
2.
Superior Metals Company has seen its sales volume decline over the last
few years as the result of rising foreign imports. In order to increase sal
es (and hopefully, profits), the firm is considering a price reduction on l
uranium--
a metal that it produces and sells. The firm currently sells 60,000 pound
s of luranium a year at an average price of $10 per pound. Fixed costs o
f producing luranium are $250,000. Current variable costs per pound ar
e $5. The firm has determined that the variable cost per pound could be
reduced by $.50 if production volume could be increased by 10 percent (
fixed costs would remain constant). The firm's marketing department has
estimated the arc elasticity of demand for luranium to be 1.5.
Chapter 11
Price and Output Determination: Monopoly and Dominant Firms
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ECO 550 Midterm Part 1 and 2 (All Possible Questions)
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Chapter 1Introduction and Goals of the Firm
MULTIPLE CHOICE
2.
If one defines incremental cost as the change in total cost resulting from
a decision, and incremental revenue as the change in total revenue resul
ting from a decision, any business decision is profitable if:
3.
In the shareholder wealth maximization model, the value of a firm's stoc
k is equal to the present value of all expected future ____ discounted at t
he stockholders' required rate of return.
4.
Which of the following statements concerning the shareholder wealth ma
ximization model is (are) true?
8.
Which of the following (if any) is not a factor affecting the profit perform
ance of firms:
9.
Agency problems and costs are incurred whenever the owners of a firm
delegate decision-making authority to management.
10.
Economic profit is defined as the difference between revenue and ____.
12.
Various executive compensation plans have been employed to motivate
managers to make decisions that maximize shareholder wealth. These in
clude:
14.
The Saturn Corporation (once a division of GM) was permanently close
d in 2009. What went wrong with Saturn?
20.
To reduce Agency Problems, executive compensation should be designe
d to:
21.
Recently, the American Medical Association changed its recommendatio
ns on the frequency of pap-
smear exams for women. The new frequency recommendation was desig
ned to address the family histories of the patients. The optimal frequenc
y should be where the marginal benefit of an additional pap-test:
Chapter 2
1.
A change in the level of an economic activity is desirable and should be
undertaken as long as the marginal benefits exceed the ____.
2.
The level of an economic activity should be increased to the point where
the ____ is zero.
4.
Generally, investors expect that projects with high expected net present
values also will be projects with
6.
The standard deviation is appropriate to compare the risk between two i
nvestments only if
7.
The approximate probability of a value occurring that is greater than on
e standard deviation from the mean is approximately (assuming a norma
l distribution)
8. Based on risk-
return tradeoffs observable in the financial marketplace, which of the fol
lowing securities would you expect to offer higher expected returns than
corporate bonds?
9.
The primary difference(s) between the standard deviation and the coeffic
ient of variation as measures of risk are:
12.
Receiving $100 at the end of the next three years is worth more to me th
an receiving $260 right now, when my required interest rate is 10%.
13.
The number of standard deviations z that a particular value of r is from t
he mean can be computed as z = (r - )/ s.
Suppose that you work as a commission-
only insurance agent earning $1,000 per week on average. Suppose that
your standard deviation of weekly earnings is $500. What is the probab
ility that you zero in a week? Use the following brief z-
table to help with this problem.
PROBLEMS
1.
Suppose that the firm's cost function is given in the following schedule (
where Q is the level of output):
MULTIPLE CHOICE
1.
Suppose we estimate that the demand elasticity for fine leather jackets is
.7 at their current prices. Then we know that:
Question 2
Question 3
Question 4
The primary objective of a for-profit firm is to ___________.
Question 5
Question 6
Which of the following will increase (V0), the shareholder wealth maxim
ization model of the firm:
Question 7
Question 9
Based on risk-
return tradeoffs observable in the financial marketplace, which of the fo
llowing
securities would you expect to offer higher expected returns than corpor
ate bonds?
Question 10
Question 11
The approximate probability of a value occurring that is greater than on
e standard deviation from
Question 12
The primary difference(s) between the standard deviation and the coeffi
cient of variation as
Question 13
Suppose we estimate that the demand elasticity for fine leather jackets i
s .7 at their current
Question 14
Question 15
When demand is ____ a percentage change in ____ is exactly offset by t
he same percentage change
in ____ demanded, the net result being a constant total consumer expe
nditure.
Question 16
Question 17
A price elasticity (ED) of 1.50 indicates that for a ____ increase in price,
quantity demanded will
____ by ____.
Question 18
The factor(s) which cause(s) a movement along the demand curve inclu
de(s):
Question 20
Question 21
Question 22
The estimated slope coefficient (b) of the regression equation (Ln Y = a +
b Ln X) measures the ____
Question 23
from 2.0?
Question 24
relationship, estimates of the parameters (a, and the b's) using linear re
gression analysis can be
Question 25
One commonly used test in checking for the presence of autocorrelation
when working with time
Question 2
Question 3
Question 4
Question 5
Question 6
Question 7
Question 8
Question 9
Question 11
Question 12
Question 13
Question 14
The isoquants for inputs that are perfect substitutes for one another cons
ist of a series of:
Question 15
Question 17
If the marginal product of labor is 100 and the price of labor is 10, whil
e the marginal product of
capital is 200 and the price of capital is $30, then what should the firm?
Question 18
Question 19
Question 20
Question 21
Question 22
Question 24
Question 25
From the scenario for Katrinas Candies, examine the procedure Herb
will use to estimate the demand model developed in the scenario for Wee
k 1.
Determine the meaning, relevance, and importance for a manager interp
reting the regression results.
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ECO 550 Week 2 DQ 2 Estimating Elasticity of Demand
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From the e-
Activity, analyze the elasticity of demand for products within the selected
industry relevant to Katrinas Candies.
Determine the factors involved in making decisions about pricing these
products that you believe to be the most influential.
Provide a rationale for your response.
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ECO 550 Week 3 Assignment 1 Demand Estimation (2 Sets)
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This Tutorial contains 2 Sets
o Now, assume you have acquired some time series data that would ena
ble you to make short, medium, and long term forecasts. Ascertain the q
uantitative technique that will provide you with the most accurate foreca
st. Provide a rationale for your responses
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ECO 550 Week 3 DQ 2 Outsourcing Offshore
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"Outsourcing Offshore" Please respond to the following:
o Aside from maximizing profits, list the key factors that managers sho
uld consider when deciding whether or not to outsource offshore. Deter
mine the key factors that you believe to be the most influential. Provide a
rationale for your response.
From the e-
Activity, recommend whether the company in question should or should
not continue to produce the good or service. Provide a rationale for you
r response
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ECO 550 Week 5 DQ 1 Applications of Cost Theory
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o Recommend two (2) kinds of pricing and output strategies that Katrin
as Candies should use to reach the goal of profit maximization. Suggest
key modifications that Katrinas Candies should make in order to mainta
in a competitive advantage when new entrants enter the market. Provide
a rationale for your suggestions.
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Using the regression results and the other computations from Assignmen
t 1, determine the market structure in which the low-
calorie food company operates.
Use the Internet to research two (2) of the leading competitors in the low
-
calorie microwavable food industry, and take note of their pricing strate
gies, profitability, and their relationships within the industry (worldwide
).
1.Outline a plan that will assess the effectiveness of the market structure
for the companys operations.
2.Suppose the business operations have now changed from the market st
ructure specified in the scenario. Determine two (2) likely factors that m
ight have caused the change. Predict the primary manner in which this c
hange would likely impact business operations in the new market enviro
nment.
3.Analyze the major short-run and long-
run production and cost functions for the low-
calorie microwaveable food company. Suggest substantive ways in whic
h the low-
calorie food company may use this information in order to make decisio
ns in both the short-run and the long-run.
4.Determine the possible circumstances under which the company shoul
d discontinue operations. Suggest key actions that management should t
ake in order to confront these circumstances. Provide a rationale for yo
ur response.
5.Suggest one (1) pricing policy that will enable your low-
calorie microwavable food company to maximize profits. Provide a ratio
nale for your suggestion.
6.Outline a plan, based on the information provided in the scenario, that
the company could use in order to evaluate its financial performance. C
onsider all the key drivers of performance, such as company profit or los
s for both the short term and long term, and the fundamental manner in
which each factor influences managerial decisions.
7.Recommend two (2) actions that the company could take in order to im
prove its profitability and deliver more value to its stakeholders. Outline
, in brief, a plan to implement your recommendations.
8.Use at least five (5) quality academic resources in this assignment. Not
e: Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with o
ne-
inch margins on all sides; citations and references must follow APA or s
chool-
specific format. Check with your professor for any additional instruction
s.
Include a cover page containing the title of the assignment, the student
s name, the professors name, the course title, and the date. The cover p
age and the reference page are not included in the required assignment
page length.
The specific course learning outcomes associated with this assignment a
re:
Explain the criteria the U.S. Department of Justice and the Federal Trade
Commission would follow when deciding on whether or not to approve
a proposed merger
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of the firm and its ability to maximize profits. Provide a rationale for
your response.
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Support your position with two (2) examples of the impact of regulation.
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* From the scenario for Katrinas Candies, suggest one (1) method
in which Herb could use a cost-
benefit analysis to argue for or against an expansion.
Create three (3) optimal decision rules for Katrinas Candies (e.g., whet
her to hire more staff or hire temporary workers to meet production sche
dules).
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ECO 550 Week 10 DQ 2 Cost-Benefit Analysis
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ECO 550 Week 10 Discussion 2
Create a list of three (3) best practices to follow in the field of man
agerial economics and globalization. Provide a rationale for your respo
nse.