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BUSINESS 702
FIRST EXAM KEY
SPRING 1997
MANAGERIAL ECONOMICS
MULTIPLE CHOICE QUESTIONS (30 pts, 1pt each)
1.
A typical annual rate of return on invested capital is:
A.
5%.
>
B.
10%.
C.
15%.
D.
20%.
2.
Warren Buffett looks for "wonderful businesses" that feature:
A.
ongoing innovation.
B.
large capital investment.
>
C.
consistent earnings growth.
D.
complicated business strategies.
3.
Business profit is:
>
A.
the residual of sales revenue minus the explicit accounting costs of doing business.
B.
a normal rate of return.
C.
economic profit.
D.
the return on stockholders' equity.
4.
According to frictional profit theory, abovenormal profits:
A.
are sometimes caused by barriers to entry that limit competition.
B.
arise as a result of successful invention or modernization.
C.
can sometimes be seen as a reward to efficient operations.
>
D.
are observed following unanticipated changes in product demand or cost conditions.
.
5.
The primary virtue of managerial economics lies in its:
A.
logic.
>
B.
usefulness.
C.
consistency.
D.
mathematical rigor.
6.
The optimal decision produces:
A.
maximum revenue.
B.
maximum profits.
C.
minimum average costs.
>
D.
a result consistent with managerial objectives.
7.
An equation is:
>
A.
an analytical expressions of functional relationships.
B.
a visual representation of data.
C.
a table of electronically stored data.
D.
a list of economic data.
8.
A dependent variable is:
A.
an Xvariable determined separately from the Yvariable.
>
B.
a Yvariable determined by X values.
C.
a Yvariable determined prior to X values.
D.
a Yvariable determined with X values.
9.
Inflection is:
A.
a line that touches but does not intersect a given curve.
>
B.
a point of maximum slope.
C.
a measure of the steepness of a line.
D.
an activity level that generates highest profit.
10.
The comprehensive impact resulting from a decision is the:
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A.
gain or loss associated with a given managerial decision.
B.
change in total cost.
C.
change in total profit.
>
D.
incremental change.
11.
Statistics are:
>
A.
descriptive measures for a sample.
B.
summary measures for the population.
C.
predetermined variables.
D.
endogenous variables.
12.
The "middle" observation is the:
>
A.
median.
B.
average.
C.
mean.
D.
mode.
13.
A normally distributed test statistic with zero mean and standard deviation of one is the:
>
A.
zstatistic.
B.
tstatistic.
C.
Fstatistic.
D.
S.E.E.
14.
A relation known with certainty is called a:
A.
statistical relation.
B.
multiple regression.
>
C.
deterministic relation.
D.
simple regression.
15.
The standard deviation of the dependent Yvariable after controlling for all Xvariables is the:
A.
correlation coefficient.
B.
coefficient of determination.
C.
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 Spring '11
 smith
 Economics

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