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Strayer eco550 midterm exam (both parts taken on febuary 09, 2014)

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Question;eco 550 mid term exam..................................Take Test: Midterm Exam Part 1;Question;1;Income tax payments are an example of ____.;Answer;implicit costs;explicit costs;normal return;on investment;shareholder;wealth;Question 2;The primary objective of a for-profit firm is to ___________.;Answer;maximize;agency costs;minimize;average cost;maximize total;revenue;set output;where total revenue equals total cost;maximize shareholder value;Question 3;To reduce Agency Problems, executive compensation should be;designed to;Answer;create incentives so that managers act like;owners of the firm.;avoid making;the executives own shares in the company.;be an;increasing function of the firm's expenses.;be an;increasing function of the sales revenue received by the firm.;Question 4;Possible goals of Not-For-Profit (NFP) enterprises include all;of the following EXCEPT;Answer;maximize total costs;maximize;output, subject to a breakeven constraint;maximize the;happiness of the administrators of the NFP enterprise;maximize the;utility of the contributors;Question 5;Economic profit is defined as the difference between revenue and;Answer;explicit cost;total economic cost;implicit cost;shareholder;wealth;Question 6;The moral hazard in team production arises from;Answer;poorly;designed team membership;lack of proper;assignment of individual tasks;disorganization;in groups;a conflict;between tactically best interest and one?s duty;insufficient;experience;Question 7;The primary difference(s) between the standard deviation and the;coefficient of variation as measures of risk are;Answer;the;coefficient of variation is easier to compute;the standard;deviation is a measure of relative risk whereas the coefficient of variation;is a measure of absolute risk;the;coefficient of variation is a measure of relative risk whereas the standard;deviation is a measure of absolute risk;the standard;deviation is rarely used in practice whereas the coefficient of variation is;widely used;Question 8;The approximate probability of a value occurring that is greater;than one standard deviation from the mean is approximately (assuming a normal;distribution);Answer;68.26%;2.28%;34%;15.87%;Question 9;The ____ is the ratio of ____ to the ____.;Answer;standard;deviation, covariance, expected value;coefficient of;variation, expected value, standard deviation;correlation;coefficient, standard deviation, expected value;coefficient of;variation, standard deviation, expected value;Question 10;A change in the level of an economic activity is desirable and;should be undertaken as long as the marginal benefits exceed the ____.;Answer;marginal;returns;total costs;marginal costs;average costs;average;benefits;Question 11;Based on risk-return tradeoffs observable in the financial;marketplace, which of the following securities would you expect to offer higher;expected returns than corporate bonds?;Answer;U.S.;Government bonds;municipal;bonds;common stock;commercial;paper;Question 12;An closest example of a risk-free security is;Answer;General Motors;bonds;AT&T;commercial paper;U.S.;Government Treasury bills;San Francisco;municipal bonds;an I.O.U. that;your cousin promises to pay you $100 in 3 months;Question 13;Marginal revenue (MR) is ____ when total revenue is maximized.;Answer;greater than;one;equal to one;less than zero;equal to zero;equal to minus;one;Question;14;A price elasticity (ED) of?1.50 indicates;that for a ____ increase in price, quantity demanded will ____ by ____.;Answer;one percent;increase, 1.50 units;one unit;increase, 1.50 units;one percent;decrease, 1.50 percent;one unit;decrease, 1.50 percent;ten percent;increase, fifteen percent;Question 15;If demand were inelastic, then we should immediately;Answer;cut the price.;keep the price;where it is.;go to the;Nobel Prize Committee to show we were the first to find an upward sloping;demand curve.;stop selling;it since it is inelastic.;raise the;price.;Question 16;Those goods having a calculated income elasticity that is;negative are called;Answer;producers;goods;durable goods;inferior goods;nondurable;goods;Question 17;An income elasticity (Ey) of 2.0 indicates that for a;increase in income, ____ will increase by ____.;Answer;one percent;quantity supplied, two units;one unit;quantity supplied, two units;one percent;quantity demanded, two percent;one unit;quantity demanded, two units;ten percent;quantity supplied, two percent;Question 18;The factor(s) which cause(s) a movement along the demand curve;include(s);Answer;increase in;level of advertising;decrease in;price of complementary goods;increase in;consumer disposable income;decrease in;price of the good demanded;uestion;19;Which of the following would tend to make demand INELASTIC?;Answer;the amount of;time analyzed is quite long;there are lots;of substitutes available;the product is;highly durable;the proportion;of the budget spent on the item is very small;no one really;wants the product at all;Question 20;The standard deviation of the error terms in an estimated;regression equation is known as;Answer;coefficient of;determination;correlation;coefficient;Durbin-Watson;statistic;standard error;of the estimate;uestion;21;In which of the following econometric problems do we find;Durbin-Watson statistic being far away from 2.0?;Answer;the;identification problem;autocorrelation;multicollinearity;heteroscedasticity;agency;problems;Question;22;When using a multiplicative power function (Y = a X1b1 X2b2;X3b3) to represent an economic relationship, estimates of the parameters (a;and the b's) using linear regression analysis can be obtained by first applying;a ____ transformation to convert the function to a linear relationship.;Answer;semilogarithmic;double-logarithmic;reciprocal;polynomial;cubic;Question;23;The method which can give some information in estimating demand;of a product that hasn?t yet come to market is;Answer;the consumer;survey;market;experimentation;a statistical;demand analysis;plotting the;data;the barometric;method;Question 24;Demand functions in the multiplicative form are most common for all of the;following reasons except;Answer;elasticities are constant over a range of data;ease of estimation of elasticities;exponents of parameters are the elasticities of those variables;marginal impact of a unit change in an individual variable is constant;Question 25;The Identification Problem in the development of a demand function is a result;of;Answer;the variance of the demand elasticity;the consistency of quantity demanded at any given point;the negative slope of the demand function;the simultaneous relationship between the demand and supply functions;Take Test: Midterm Exam Part 2Question;1;The use of quarterly data to develop the forecasting model Yt= a +bYt?1 is an example;of which forecasting technique?;Answer;Barometric;forecasting;Time-series;forecasting;Survey and;opinion;Econometric;methods based on an understanding of the underlying economic variables;involved;Input-output;analysis;Question;2;Time-series forecasting models;Answer;are useful;whenever changes occur rapidly and wildly;are more;effective in making long-run forecasts than short-run forecasts;are based;solely on historical observations of the values of the variable being;forecasted;attempt to;explain the underlying causal relationships which produce the observed;outcome;Question;3;Consumer expenditure plans is an example of a forecasting;method. Which of the general categories best described this example?;Answer;time-series;forecasting techniques;barometric;techniques;survey;techniques and opinion polling;econometric;techniques;input-output;analysis;Question 4;Which of the following barometric indicators would be the most;helpful for forecasting future sales for an industry?;Answer;lagging;economic indicators.;leading;economic indicators.;coincident economic;indicators.;wishful;thinking;Question 5;Smoothing techniques are a form of ____ techniques which assume;that there is an underlying pattern to be found in the historical values of a;variable that is being forecast.;Answer;opinion;polling;barometric;forecasting;econometric;forecasting;time-series;forecasting;Question 6;The variation in an economic time-series which is caused by;major expansions or contractions usually of greater than a year in duration is;known as;Answer;secular trend;cyclical;variation;seasonal;effect;unpredictable;random factor;Question 7;In an open economy with few capital restrictions and substantial;import-export trade, a rise in interest rates and a decline in the producer;price index of inflation will;Answer;raise the;value of the currency;lower the;nominal interest rate;increase the;volume of trading in the foreign exchange market;lower the;trade-weighted exchange rate;increase;consumer inflation.;Question 8;In a recession, the;trade balance often improves because;Answer;service;exports exceed manufactured good exports;banks sell;depressed assets;fewer;households can afford luxury imports;direct;investment abroad declines;the capital;account exceeds the current account;Question 9;An appreciation of the U.S. dollar has what impact on;Harley-Davidson (HD), a U.S. manufacturer of motorcycles?;Answer;domestic sales;of HD motorcycles increase and foreign sales of HD motorcycles increase;domestic sales;of HD motorcycles decrease and foreign sales of HD motorcycles increase;domestic sales;of HD motorcycles increase and foreign sales of HD motorcycles decrease;domestic sales;of HD motorcycles decrease and foreign sales of HD motorcycles decrease;Question 10;If the British pound (?) appreciates by 10% against the dollar;Answer;both the US;importers from Britain and US exporters to Britain will be helped by the;appreciating pound.;the US;exporters will find it harder to sell to foreign customers in Britain.;the US;importer of British goods will tend to find that their cost of goods rises;hurting its bottom line.;both US;importers of British goods and exporters to Britain will be unaffected by;changes in foreign exchange rates.;Question;11;European Union labor costs exceed U.S. and British labor costs;primarily because;Answer;worker;productivity is lower in the EU;union wages;are higher in the EU;layoffs and;plant closings are more restrictive in the U.S. and Britain;the amount of;paid time off is higher in the EU;labor-management;relations are better in the EU;Question 12;Purchasing power parity or PPP says the ratios composed of;Answer;interest rates explain the direction of exchange rates.;growth rates explain the direction of exchange rates.;inflation rates explain the direction of exchange rates.;services explain the direction exchange rates.;public opinion polls explain the direction of exchange rates.;Question 13;Trading partners should specialize in producing goods in accordance with;comparative advantage, then trade and diversify in consumption because;Answer;out-of-pocket costs of production decline;free trade areas protect infant industries;economies of scale are present;manufacturers face diminishing returns;more goods are available for consumption;Question 14;Given a Cobb-Douglas production function estimate of Q = 1.19L.72K.18for a given industry, this industry would have;Answer;increasing returns to scale;constant returns to scale;decreasing returns to scale;negative returns to scale;Question 15;Marginal factor cost is defined as the amount that an additional unit of the;variable input adds to ____.;Answer;marginal cost;variable cost;marginal rate of technical substitution;total cost;Question 16;The marginal rate of technical substitution may be defined as all of the;following except;Answer;the rate at which one input may be substituted for another input in the;production process, while total output remains constant;equal to the negative slope of the isoquant at any point on the isoquant;the rate at which all combinations of inputs have equal total costs;equal to the ratio of the marginal products of X and Y;Question 17;The primary purpose of the Cobb-Douglas power function is to;Answer;allow one to make estimates of cost-output relationships;allow one to make predictions about a resulting increase in output for a;given increase in the inputs;aid one in gaining accurate empirical values for economic variables;calculate a short-run linear total cost function;Question 18;The marginal product is defined as;Answer;The ratio of total output to the amount of the variable input used in;producing the output;The incremental change in total output that can be produced by the use of;one more unit of the variable input in the production process;The percentage change in output resulting from a given percentage change in;the amount;The amount of fixed cost involved.;4 points;Question 19;Which of the following is never negative?;Answer;marginal product;average product;production elasticity;marginal rate of technical substitution;slope of the isocost lines;Question 20;are defined as costs which are incurred regardless of the alternative;action chosen in a decision-making problem.;Answer;Opportunity costs;Marginal costs;Relevant costs;Sunk costs;Question 21;Answer;Unaffected when two or more products are produced;Reduced when two or more products are produced;Increased when two or more products are produced;Demonstrating constant returns to scale;Demonstrating decreasing returns to scale;Question;22;For a short-run cost function which of the following statements;is (are) not true?;Answer;The average;fixed cost function is monotonically decreasing.;The marginal;cost function intersects the average fixed cost function where the average;variable cost function is a minimum.;The marginal;cost function intersects the average variable cost function where the average;variable cost function is a minimum.;The marginal;cost function intersects the average total cost function where the average;total cost function is a minimum.;Question 23;If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is;Answer;10.2;102;37.1;371;321;Question;24;The existence of diseconomies of scale (size) for the firm is;hypothesized to result from;Answer;transportation;costs;imperfections;in the labor market;imperfections;in the capital markets;problems of;coordination and control encountered by management;Question 25;The cost function is;Answer;a means for expressing output as a function of cost;a schedule or mathematical relationship showing the total cost of producing;various quantities of output;similar to a profit and loss statement;incapable in being developed from statistical regression analysis

 

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