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| 1 | |
If you put $2,200 in a savings account at an interest rate of 6.5%, how much money will you have in one year? |
| | A) | $143. |
| | B) | $2,066. |
| | C) | $2,209. |
| | D) | $2343. |
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| 2 | |
Which of the following increases the potential for sustainable long-run industry profits? |
| | A) | Entry. |
| | B) | The availability of multiple substitutes. |
| | C) | Absence of complements. |
| | D) | None of the responses are correct. |
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| 3 | |
Opportunity cost differs from accounting costs because of |
| | A) | Implicit costs. |
| | B) | Accounting profits. |
| | C) | Incremental revenue. |
| | D) | Explicit costs. |
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| 4 | |
Which of the following statements most likely is true regarding economic and accounting profits? |
| | A) | Economic profits minus accounting profits generally equal zero. |
| | B) | Economic profits plus accounting profits generally equal zero. |
| | C) | Economic profits are generally less than accounting profits. |
| | D) | Economic profits are generally greater than accounting profits. |
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| 5 | |
If marginal benefit equals marginal cost of any activity, the economic agent earns |
| | A) | zero total benefits. |
| | B) | minimum net benefits. |
| | C) | maximum net benefits. |
| | D) | all of the responses are correct. |
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| 6 | |
If the interest rate is 7% and cash flows are $4,000 at the end of year one and $6,000 at the end of year two, then the present value of these cash flows is |
| | A) | $9,246. |
| | B) | $8,979. |
| | C) | $9,615. |
| | D) | $10,691. |
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| 7 | |
If firms in the pizza industry are earning negative economic profits, which of the following will most likely occur in the future? |
| | A) | Some firms will exit the market. |
| | B) | The economic profits of the firms in the industry will rise. |
| | C) | The market price for pizza will rise. |
| | D) | All of the responses are correct. |
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| 8 | |
If the interest rate is 6.5%, what is the present value of $500 received in one year? |
| | A) | $303. |
| | B) | $469. |
| | C) | $532. |
| | D) | $577. |
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| 9 | |
If the interest rate is 4%, the present value of $1000 received at the end of 3 years is |
| | A) | $970. |
| | B) | $1,040. |
| | C) | $889. |
| | D) | $961. |
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| 10 | |
A good example of producer-producer rivalry is |
| | A) | the process of buyer bidding for a second-hand, antique clock in an auction. |
| | B) | negotiations between buyer and seller of a new house. |
| | C) | the competition between pizza restaurants. |
| | D) | None of the responses are correct. |
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| 11 | |
Which of the following is NOT one of Porter's five forces? |
| | A) | Power of pressure groups. |
| | B) | Power of Buyers. |
| | C) | Power of Sellers. |
| | D) | Rivalry. |
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| 12 | |
If the interest rate is 2.5%, $870 received at the end of 8 years is worth how much today? |
| | A) | 870/(0.025)8. |
| | B) | 870/(1 - 0.025)8. |
| | C) | 870/(1 + 0.025)8. |
| | D) | None of the responses are correct. |
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| 13 | |
Suppose the growth rate of the firm's profit is 3%, the interest rate is 7%, and the current profits of the firm are 150 million dollars: What is the value of the firm? |
| | A) | $296 million. |
| | B) | $3,863 million. |
| | C) | $4,013 million. |
| | D) | $5,607 million. |
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| 14 | |
Scarce resources are allocated towards the production of goods most valued by society because |
| | A) | firms have incentive to maximize profits. |
| | B) | consumers are unwilling to buy expensive good and services. |
| | C) | of the benevolence of firm owners. |
| | D) | government mandates resources to be used in certain production combinations. |
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| 15 | |
Maximizing the firm's current profits is the same as maximizing the lifetime value of the firm when the |
| | A) | the growth rate in profits is smaller than the interest rate. |
| | B) | the period-to-period growth rate in profits is constant. |
| | C) | the period-to-period interest rate is constant. |
| | D) | all of the responses must be true. |
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