EEQuiz1 - VERSION 1 FAMILY NAME / INITIAL FAMILY INI SOLUTI...

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VERSION 1 1 FAMILY NAME / IN FAMILY NAME / INITIAL TIAL S O L U T I O N S STUDENT ID # STUDENT ID # MIME 310 ENGINEERING ECONOMY ENGINEERING ECONOMY – QUIZ #1 QUIZ #1 May 7, 2007 – 8:30 to 9:15 MULTIPLE-CHOICE QUESTIONS Circle the correct answer on this test paper and record it on the computer answer sheet. PART 1. Multiple-choice Statements and Short Problems – Circle the correct an- swer on this paper and record it on the computer answer sheet. Questions 1 to 4 are worth 1 point each, and questions 5 to 9, 2 points each, for a total of 14. Note : There are no penalties for incorrect answers. 1. A firm with a total asset turnover ratio lower than the industry standard may have: A) insufficient fixed assets. B) insufficient sales. C) excessive cost of goods sold. D) excessive debt. E) insuffucient current assets. 2. A firm has a times interest earned ratio of 2.7. This means that: A) The firm generated enough cash to cover its interest expense 2.7 times. B) The firm has sufficient EBIT (earnings before interest and taxes) to cover its interest expense 2.7 times. C) The interest expense of this firm exceeded earnings before taxes by 2.7 times. D) The net income of this firm is sufficient to cover its interest expense 2.7 times. E) The firm earned $1 in EBIT for every $2.70 it paid out in interest. 3. On the balance sheet, net fixed assets represent: A) fixed assets currently in service at cost minus depreciation expenses for the year. B) fixed assets currently in service at cost minus accumulated depreciation. C) fixed assets currently in service at current market value minus depreciation expenses for the year. D) fixed assets currently in service at current market value minus accumulated deprecation. E) None of the choices given above
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VERSION 1 2 4. Consider the following two statements: I. Whenever a firm’s average variable cost decreases as output increases, its marginal cost is decreasing as well. II. Whenever a firm’s average total cost increases as output increases, its average vari- able cost is increasing as well. A) I is true and II is false B) I is false and II is true. C) I and II are both true. D) I and II are both false. E) None of the choices given above are correct. Use the following information to answer questions 5 and 6 GJ Inc. makes 80 fibreglass truck hoods per day for large truck manufacturers. Each hood sells for $500 and GJ Inc. sells all of its product to the large truck manufacturers. The supply function for hoods is [ Q s = -40 + 0.24 P ]. The demand function for hoods is linear and at the sales price of $500, the price elasticity of demand is 0.4. 5. The demand function for hoods is: A) Q D = -40 + 0.24 P B) Q D = 112 - 0.064 P C) Q D = -40 - 0.064 P D) Q D = 112 + 0.24 P E) None of the choices given above are correct 6. If the local government imposes a tax of $25 per hood manufactured, what would be the new equilibrium price given a demand function of [ Q D = 112 - 0.064 P ]. A)
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This note was uploaded on 10/06/2009 for the course MIME 310 taught by Professor Bilido during the Summer '08 term at McGill.

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EEQuiz1 - VERSION 1 FAMILY NAME / INITIAL FAMILY INI SOLUTI...

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