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Quiz 9

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Question 1 (1 point)
The competitive market pricing rule-of-thumb for profit maximization is to set:
  1. MR = MC
  2. MR = MC/[1 + (1/eP)]
  3. P = MC/[1 + (1/eP)]
  4. MC = MR/[1 + (1/eP)]
Question 2 (1 point)
A 50% markup on cost is equivalent to a markup on price of:
  1. 25%
  2. 33%
  3. 50%
  4. 100%
Question 3 (1 point)
A 50% markup on price is equivalent to a markup on cost of:
  1. 25%
  2. 33%
  3. 50%
  4. 100%
Question 4 (1 point)
When eP = -2, the optimal markup on cost is:
  1. 100%
  2. 67%
  3. 50%
  4. 33%
Question 5 (1 point)
When eP = -1, the optimal markup on price is:
  1. 100%
  2. 67%
  3. 50%
  4. 33%
Question 6 (1 point)
During peak periods:
  1. incremental costs are relevant for pricing purposes
  2. fully allocated costs are relevant for pricing purposes
  3. facilities are underutilized
  4. expansion is not required to further increase production
Question 7 (1 point)
A by-product:
  1. has MR = 0.
  2. results from an increase in the production of some other output.
  3. has MC = MCQ.
  4. is identified in terms of its excess production.
Question 8 (1 point)
When transferred products can be sold in perfectly competitive external markets, the optimal transfer price is the:
  1. external market price.
  2. marginal revenue of the transferred-to (buying) division.
  3. marginal revenue in the output market.
  4. marginal cost of the transferring (selling) division.
Question 9 (1 point)
Consumers' surplus represents:
  1. total revenues.
  2. total revenues less total costs.
  3. the excess of revenues above and beyond the cost of output to producers.
  4. the value of output to consumers above and beyond the amount paid to producers.
Question 10 (1 point)
If a firm charges a price of $6 for a product with a cost of $4, the markup on cost equals:
  1. 67%
  2. 33%
  3. 150%
  4. 50%
Question 11 (1 point)
If a firm charges a price of $5 for a product with a cost of $2, the markup on price equals:
  1. 60%
  2. 150%
  3. 250%
  4. 40%
Question 12 (1 point)
Profit margin equals:
  1. marginal cost minus marginal revenue.
  2. average cost minus average revenue.
  3. average cost minus average variable cost.
  4. price minus cost.
Question 13 (1 point)
The optimal markup on price will fall following an increase in:
  1. cost.
  2. revenue.
  3. the price elasticity of demand.
  4. price.
Question 14 (1 point)
When engaging in short-run incremental analysis, managers should ignore:
  1. fixed costs.
  2. implicit costs.
  3. explicit costs.
  4. effects on the costs of already existing products.
Question 15 (1 point)
With price discrimination, higher prices are charged when:
  1. the price elasticity of demand is high.
  2. the price elasticity of demand is low.
  3. the cross-price elasticity of demand is high.
  4. the cross-price elasticity of demand is low.
Question 16 (1 point)
Price discrimination exists when:
  1. costs vary among customers.
  2. markups vary among customers.
  3. markups are constant among customers.
  4. prices vary among customers.
Question 17 (1 point)
Successful price discrimination requires:
  1. the ability to prevent transfers among customers in different submarkets.
  2. inelastic demand in each submarket.
  3. constant marginal costs.
  4. identical price elasticities among submarkets.
Question 18 (1 point)
A firm supplying a single product to two distinct submarkets will maximizes profits by equating:
  1. average revenue in each market to average cost.
  2. average revenue in each market to marginal cost.
  3. marginal revenue in each market to marginal cost.
  4. price in each market to marginal cost.
Question 19 (1 point)
When products A and B are produced in fixed proportions, profits will be maximized when marginal cost:
  1. equals marginal revenue of B.
  2. of B equals zero.
  3. equals marginal revenue of A plus B
  4. equals marginal revenue of A
Question 20 (1 point)
If the optimal markup on price is 50%, the optimal markup on cost is:
  1. 100%
  2. 75%
  3. 50%
  4. 25%
Copyright 2008, by the Contributing Authors. Cite/attribute Resource. admin. (2009, January 27). Quiz 9. Retrieved November 23, 2009, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/managerial-economics/quiz9.htm. This work is licensed under a Creative Commons License. Creative Commons License