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BUSINESS 702 FIRST EXAM KEY FALL 1995 MANAGERIAL ECONOMICS MULTIPLE CHOICE QUESTIONS (30 pts, 1pt each) 1. The value of the firm will fall following a rise in: > A. interest rates. B. profits. C. the time horizon. D. revenues. 2. Managers who seek satisfactory rather than optimal results: > A. take actions that benefit parties other than stockholders. B. are insensitive to social constraints. C. are insensitive to self-imposed constraints. D. increase allocative efficiency. 3. Nonvalue-maximizing behavior is most common: A. in vigorously competitive markets. > B. when shareholders are poorly informed. C. when managers own a significant ownership interest. D. in the production of goods rather than services. 4. Accounting net income divided by the book value of the firm is the: A. return on assets. B. profit margin. > C. return on stockholders' equity. D. total asset turnover ratio. 5. Freely competitive markets: A. reduce consumer choice. B. ignore social costs. C. ignore social benefits. > D. allocate goods via supply and demand. 6. The choice alternative that produces a result most consistent with managerial objectives is the: > A. optimal decision. B. economic decision. C. least-cost alternative. D. uneconomic decision. 7. Total revenue is maximized at the point where: > A. marginal revenue equals zero. B. marginal cost equals zero. C. marginal revenue equals marginal cost. D. marginal profit equals zero. 8. If P = $500 - $2Q, A. MR = $500 - $2Q. > B. MR = $500 - $4Q. C. MR = $500Q - $2Q 2 . D. MR = $500 - $4Q 2 . 9. Total cost minimization occurs at the point where: A. MC = 0. B. MC = AC. C. AC = 0. > D. Q = 0. 10. The slope of a straight line from the origin to the total profit curve indicates: A. marginal profit at that point.
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2 B. an inflection point. > C. average profit at that point. D. total profit at that point. 11. Generally speaking, population parameters are not known and must be estimated by the sample: A. mean. B. mode. C. median. > D. statistics. 12. A measure of inflation that washes out price extremes employs: A. mean price changes. B. weighted average price changes. C. the standard deviation of price changes. > D. median price changes. 13. A multiple regression model involves two or more: A. Y-variables. > B. X-variables. C. intercept terms. D. data points. 14. When no scatter about the regression line exists: > A. S.E.E. = 0. B. R 2 = 0. C. t = 0. D. F = 0. 15. High correlation among X-variables leads to: > A. multicollinearity. B. high R 2 . C. low R 2 . D. high t-statistics. 16. Holding all else equal, an unnecessary increase in federally-mandated auto safety requirements leads to a decrease in: A. auto demand. B. the quantity of autos supplied. > C.
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This note was uploaded on 07/31/2011 for the course ECON 1201 taught by Professor Smith during the Spring '11 term at Waseda University.

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