First Exam Practice Questions

First Exam Practice Questions - Practice Test Questions...

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Practice Test Questions First Exam 11:373:422 Chapter 1 ____ 1. Managerial economics uses ____________ to help managers solve problems. a. formal models b. prescribed behavior c. quantitative methods d. microeconomic theory e. all of the above ____ 2. If the annual interest rate is i , the present value of $ X to be received at the end of each of the next n years is: a. $ X/i b. $ X/ (1 + i ) n c. d. $ X [(1 + i ) n ] / [ i (1 + i ) n – 1] e. $ X / [ i (1 + i ) n – 1] ____ 3. You’ve just won the $25 million lottery. You are going to receive a check for $1 million today and at the end of every year for the next 24 years. If the interest rate is 10 percent, the present value of your prize is: a. $8,984,744 b. $9,984,744 c. $12,984,744 d. $20,000,000 e. $25,000,000 ____ 4. In managerial economics, managers are assumed to maximize: a. current profits b. their take-home pay c. their employees’ welfare d. the value of their firm e. social welfare ____ 5. Economic profits may result from: a. innovation b. risk taking c. exploiting market inefficiencies d. all the above e. a and b 1
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____ 6. Managers may make decisions that are not consistent with the goals of stockholders. This is referred to as the _____ problem. a. principal–agent b. economic disincentive c. incentive–compromise d. efficiency–inefficiency e. equilibrium ____ 7. California imposes strict new regulations on the blending of gasoline that increase production costs. As a result, the: a. demand for gasoline will increase b. demand for gasoline will decrease c. supply of gasoline will increase d. supply of gasoline will decrease e. demand for and supply of gasoline will not change Figure 1 ____ 8. In Figure 1, the equilibrium price and quantity are: a. P a and Q a b. P b and Q b c. P c and Q c d. P a and Q c e. P c and Q a 2
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____ 9. In Figure 1, there will be an excess supply at any price: a. above P b b. below P b c. other than P b d. below P a e. above P c Ch1 Answer Section 1. ANS: E PTS: 1 2. ANS: C PTS: 1 3. ANS: B PTS: 1 4. ANS: D PTS: 1 5. ANS: D PTS: 1 6. ANS: A PTS: 1 7. ANS: D PTS: 1 8. ANS: B PTS: 1 9. ANS: A PTS: 1 3
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Chapter 2 ____ 1. The demand curve’s usual slope implies that consumers: a. buy more as the price of a good is increased b. buy more as a good is advertised more c. buy more at higher average incomes d. buy less as the price of a good is increased e. have tastes that sometimes change ____ 2. A market demand curve is likely to shift to the right when: a. average income falls b. prices fall c. prices rise d. population increases e. new firms enter the market ____ 3. If the elasticity of per capita demand with respect to population is zero, then a 10 percent increase in the population will cause the quantity demanded to: a. increase by 25 percent b. decrease by 10 percent c. remain constant d. increase by 10 percent e. decrease by 25 percent ____ 4. As we move down a linear demand curve, demand becomes: a. more elastic b. less elastic at first and then more elastic
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First Exam Practice Questions - Practice Test Questions...

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