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Quiz 1A

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Question 1 (1 point)
Business profit is:
  1. the residual of sales revenue minus the explicit accounting costs of doing business.
  2. a normal rate of return.
  3. economic profit.
  4. the return on stockholders' equity.
Question 2 (1 point)
According to frictional profit theory, above-normal profits:
  1. are sometimes caused by barriers to entry that limit competition.
  2. arise as a result of successful invention or modernization.
  3. can sometimes be seen as a reward to efficient operations.
  4. are observed following unanticipated changes in product demand or cost conditions.
Question 3 (1 point)
In a free market economy, the optimal quality of goods and services is determined by:
  1. workers.
  2. firms.
  3. government.
  4. customers.
Question 4 (1 point)
Government regulation is important because government:
  1. regulation reduces public-sector employment.
  2. produces most of society's services output.
  3. produces most of society's material output.
  4. uses scarce resources.
Question 5 (1 point)
The share of revenues paid to suppliers does not depend upon:
  1. resource scarcity.
  2. input market competition.
  3. output market competition.
  4. relative productivity.
Question 6 (1 point)
Industry profits can be reduced by constraints on:
  1. the number of firms in the industry.
  2. pollution emissions.
  3. unions.
  4. price competition.
Question 7 (1 point)
Managers display satisficing behavior if they seek:
  1. leisure.
  2. to maximize community well-being.
  3. to maximize employee welfare.
  4. an industry-average profit rate.
Question 8 (1 point)
Unfriendly takeovers have the greatest potential to enhance the market price of companies whose managers:
  1. maximize short-run profits.
  2. maximize the value of the firm.
  3. satisfice.
  4. maximize long-run profits.
Question 9 (1 point)
Constrained optimization techniques are not designed to deal with the problem of:
  1. self-serving management.
  2. contractual requirements.
  3. scarce investment funds.
  4. limited availability of essential inputs.
Question 10 (1 point)
The value of the firm decreases with a decrease in:
  1. total revenue.
  2. the discount rate.
  3. the cost of capital.
  4. total cost.
Question 11 (1 point)
Inflection is:
  1. a line that touches but does not intersect a given curve.
  2. a point of maximum slope.
  3. a measure of the steepness of a line.
  4. an activity level that generates highest profit.
Question 12 (1 point)
The breakeven level of output occurs where:
  1. marginal cost equals average cost.
  2. marginal profit equals zero.
  3. total profit equals zero.
  4. marginal cost equals marginal revenue.
Question 13 (1 point)
Which of the following short run strategies should a manager select to obtain the highest degree of sales penetration?
  1. maximize revenues.
  2. minimize average costs.
  3. minimize total costs.
  4. maximize profits.
Question 14 (1 point)
If total revenue increases at a constant rate as output increases, marginal revenue:
  1. is greater than average revenue.
  2. is less than average revenue.
  3. is greater than average revenue at low levels of output and less than average revenue at high levels of output.
  4. equals average revenue.
Question 15 (1 point)
If P = $500 - $2Q,
  1. MR = $500 - $2Q.
  2. MR = $500 - $4Q.
  3. MR = $500Q - $2
  4. MR = $500 - $4
Question 16 (1 point)
Total cost minimization occurs at the point where:
  1. a. MC = 0.
  2. MC = AC.
  3. AC = 0.
  4. Q = 0.
Question 17 (1 point)
The optimal output decision:
  1. minimizes the marginal cost of production.
  2. minimizes production costs.
  3. is most consistent with managerial objectives.
  4. minimizes the average cost of production.
Question 18 (1 point)
An increase in output reduces total profits if:
  1. marginal profit is less than average profit.
  2. marginal profit is greater than average profit.
  3. average profit is decreasing.
  4. marginal profit is negative.
Question 19 (1 point)
An optimal decision:
  1. minimizes output cost.
  2. maximizes profits.
  3. produces the result most consistent with decision maker objectives.
  4. maximizes product quality.
Question 20 (1 point)
To be descriptive of managerial behavior, the process of optimization must:
  1. consider all decision alternatives.
  2. ignore real-world constraints.
  3. predict observed performance.
  4. be mathematically formulated.
Copyright 2008, by the Contributing Authors. Cite/attribute Resource. admin. (2009, January 27). Quiz 1A. Retrieved November 24, 2009, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/managerial-economics/quiz1a.htm. This work is licensed under a Creative Commons License. Creative Commons License