332sample packet exam I

332sample packet exam I - CHAPTER 1INTRODUCTION MULTIPLE...

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CHAPTER 1—INTRODUCTION MULTIPLE CHOICE 1. 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. ANS: A 2. Value maximization is broader than profit maximization because it considers: a. total revenues. b. total costs. c. real-world constraints. d. interest rates. ANS: D 3. The return to owner-provided inputs such as financial capital is an: a. implicit cost. b. economic rent. c. entrepreneurial profit. d. explicit cost. ANS: A 4. The value of a firm is equal to: a. the present value of tangible assets. b. the present value of all future revenues. c. the present value of all future cash flows. d. current revenues less current costs. ANS: C CHAPTER 2—BASIC ECONOMIC RELATIONS MULTIPLE CHOICE 5. Which of the following short run strategies should a manager select to obtain the highest degree of sales? a. maximize revenues. b. minimize average costs. c. minimize total costs. d. maximize profits. ANS: A
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6.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. ANS: A 7. If P = $1,000 - $4Q: a. MR = $1,000 - $4Q b. MR = $1,000 - $8Q c. MR = $1,000Q - $4 d. MR = $250 - $0.25P ANS: B 8. Average cost minimization occurs at the point where: a. MC = 0 b. MC = AC c. AC = 0 d. Q = 0 ANS: B 9. Marginal profit equals: a. the change in total profit following a one-unit change in output. b. the change in total profit following a managerial decision. c. average revenue minus average cost. d. total revenue minus total cost. ANS: A 10. If average profit increases with output marginal profit must be: a. decreasing. b. greater than average profit. c. less than average profit. d. increasing. ANS: B 11. At the profit-maximizing level of output: a. marginal profit equals zero. b. marginal profit is less than average profit. c. marginal profit exceeds average profit. d. marginal cost equals average cost. ANS: A
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PROBLEMS 12. Marginal Analysis . Consider the price (P) and output (Q) data in the following table. Q P TR MR AR 0 $35 1 30 2 25 3 20 4 15 5 10 6 5 7 0 A. Calculate the related total revenue (TR), marginal revenue (MR), and average revenue (AR) figures. B. At what output level is revenue maximized? ANS: A. Q P TR=P × Q MR= TR/ Q AR=TR/Q=P 0 $35 $ 0 -- -- 1 30 30 $30 $30 2 25 50 20 25 3 20 60 10 20 4 15 60 0 15 5 10 50 -10 10 6 5 30 -20 5 7 0 0 -30 0 B. Revenue is maximized at an output level 4, where MR = 0.
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13. Profit Maximization . Fill in the missing data for price (P), total revenue (TR), marginal revenue (MR), total cost (TC), marginal cost (MC), profit ( π ), and marginal profit (M π ) in the following table. Q
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332sample packet exam I - CHAPTER 1INTRODUCTION MULTIPLE...

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