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Quiz 1B

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Question 1 (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 2 (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 3 (1 point)
Value maximization is broader than profit maximization because it considers:
  1. total revenues.
  2. total costs.
  3. real-world constraints.
  4. interest rates.
Question 4 (1 point)
Industry profits can be increased by constraints on:
  1. natural resources.
  2. imports.
  3. skilled labor.
  4. worker health and safety.
Question 5 (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 6 (1 point)
Value maximization theory fails to address the problem of:
  1. risk.
  2. uncertainty.
  3. sluggish growth.
  4. self-serving management.
Question 7 (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 8 (1 point)
Direct regulation of business has the potential to yield economic benefits to society when:
  1. barriers to entry are absent.
  2. there are no good substitutes for a product.
  3. many firms serve a given market.
  4. smaller firms are most efficient.
Question 9 (1 point)
Monopoly exploitation is reduced by regulation that:
  1. enhances product-market competition.
  2. increases the bargaining power of workers.
  3. increases the bargaining power of employers.
  4. restricts output.
Question 10 (1 point)
The incremental profit earned from the production and sale of a new product will be higher if:
  1. the costs of materials needed to produce the new product increase.
  2. excess capacity can be used to produce the new product.
  3. existing facilities used to produce the new product must be modified.
  4. the revenues earned from existing products decrease.
Question 11 (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 12 (1 point)
Total revenue is maximized at the point where:
  1. marginal revenue equals zero.
  2. marginal cost equals zero.
  3. marginal revenue equals marginal cost.
  4. marginal profit equals zero.
Question 13 (1 point)
If P = $1,000 - $4Q:
  1. MR = $1,000 - $4Q
  2. MR = $1,000 - $8Q
  3. MR = $1,000Q - $4
  4. MR = $250 - $0.25P
Question 14 (1 point)
Marginal profit equals:
  1. the change in total profit following a one-unit change in output.
  2. the change in total profit following a managerial decision.
  3. average revenue minus average cost.
  4. total revenue minus total cost.
Question 15 (1 point)
Profit per unit is rising when marginal profit is:
  1. greater than average profit per unit.
  2. less than average profit per unit.
  3. equal to average profit per unit.
  4. positive.
Question 16 (1 point)
Marginal cost is rising when marginal cost is:
  1. positive.
  2. less than average cost.
  3. greater than average cost.
  4. none of these.
Question 17 (1 point)
Marginal profit equals average profit when:
  1. marginal profit is maximized.
  2. average profit is maximized.
  3. marginal profit equals marginal cost.
  4. the profit minimizing output is produced.
Question 18 (1 point)
Total revenue increases at a constant rate as output increases when average revenue:
  1. increases as output increases.
  2. increases and then decreases as output increases.
  3. exceeds price.
  4. is constant.
Question 19 (1 point)
If average profit increases with output marginal profit must be:
  1. decreasing.
  2. greater than average profit.
  3. less than average profit.
  4. increasing.
Question 20 (1 point)
When marginal profit equals zero:
  1. the firm can increase profits by increasing output.
  2. the firm can increase profits by decreasing output.
  3. marginal revenue equals average revenue.
  4. profit is maximized.
Copyright 2008, by the Contributing Authors. Cite/attribute Resource. admin. (2009, January 27). Quiz 1B. Retrieved November 23, 2009, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/managerial-economics/quiz1b.htm. This work is licensed under a Creative Commons License. Creative Commons License