Managerial Econ Units 1-4 quizzes & hw

During a year of operation, Knight's Electric, LLC collects $5,000,000 in revenue and spends $3,500,000 on labor expense, raw materials, rent, and utilities. Knight's owner has provided $1,000,000 of her own money to her business instead of investing the money and earning a 12 percent annual rate of return. Knight's Electric earns accounting profit of $_____ and its economic profit is $_____. Top of Form Multiple Choice $1,500,000; $1,000,000 $3,500,000; $120,000 $4,500,000; $1,000,000 $1,500,000; $1,380,000 None of the choices is correct.

1,500,000; 1,800,000

Until recently you worked as an accountant earning $60,000 annually. Then you inherited a piece of commercial real estate bringing in $40,000 rent annually. You decided to leave your job and open a tattoo parlor in the office space you inherited. At the end of the first year, your books showed total revenues of $180,000 and total explicit costs of $90,000 for labor, ink, utilities, taxes, and miscellaneous supplies. Your total cost of doing business during the first year is _____ and you earned economic profit of _____. Top of Form Multiple Choice $190,000; −$10,000 $90,000; $90,000 $130,000; $50,000 $150,000; $30,000 Bottom of Form Bottom of Form

190,000-10,000

Which of the following is a common mistake that managers make?Top of Form Multiple Choice using marginal analysis to make output decisions maximizing the value of the firm instead of maximizing the firm's profits treating implicit opportunity costs as part of the total costs of using resources increasing the rate of production in order to reduce unit costs of production All of the choices are correct

All of the choices are correct

When a firm is a price-taking firm, Top of Form Multiple Choice the price of the product it sells is determined by the intersection of the market demand and supply curves for the product. raising the price of the product above the market-determined price will cause sales to fall nearly to zero. many other firms produce a product that is identical to the output produced by the rest of the firms in the industry. All of the choices are correct.

All of the choices are correct.

What is given up to use a resource in a business is called ________. Multiple choice question. resource cost opportunity cost economic cost wages

opportunity cost

What is given up to use a resource in a business is called ________. Multiple choice question. resource cost wages opportunity cost economic cost

opportunity cost

A _______ is a coefficient in an equation that determines the exact mathematical relation among the variables in the equation. Multiple choice question. estimate parameter dependent variable independent variable

parameter

A _______ is a coefficient in an equation that determines the exact mathematical relation among the variables in the equation. Multiple choice question. parameter independent variable dependent variable estimate

parameter

The _______ is the true regression line. The _______ is the line that best fits the data collected. Multiple choice question. full; population population; true population; sample sample; population

population; sample

The _______ is the true regression line. The _______ is the line that best fits the data collected. Multiple choice question. sample; population full; population population; sample population; true

population; sample

A _______ firm has many competitors, while a _______ firm has a product that is different from other products. Multiple choice question. price-setting; price-taking unprofitable; profitable profitable; unprofitable price-taking; price-setting

price- taking; price setting

Because businesses seek to maximize _______, understanding ________ is helpful. Multiple choice question. market share; microeconomics stock prices; macroeconomics profits; microeconomics salaries; microeconomics

profits; microeconomics

The ________ captures the effects of all the minor unpredictable factors that cannot reasonably be included in the model as explanatory variables. Multiple choice question. random error term intercept parameter slope parameter dependent variable

random error term

Which of the following is a common mistake that managers make? Top of Form Multiple Choice using marginal analysis to make output decisions maximizing the value of the firm instead of maximizing the firm's profits reducing price to increase the firm's share of total market sales treating implicit opportunity costs as part of the total costs of using resources All of the choices are correct.

reducing the price to increase the firms share of total market shares.

The values of parameters are often obtained by using _________. Multiple choice question. regression analysis independent variables slope estimation parameter analysis

regression analysis

_________ uses data on economic variables to determine a mathematical equation that describes the relationship between the economic variables. Multiple choice question. Slope parameter Regression analysis Regression estimation Slope analysis

regression analysis

The _______ is the distribution of the values an estimate can take because the observations of the variables X and Y come from a random sample. Multiple choice question. estimation distribution cumulative distribution function relative frequency distribution probability distribution function

relative frequency distribution

The _______ is the distribution of the values an estimate can take because the observations of the variables X and Y come from a random sample. Multiple choice question. relative frequency distribution cumulative distribution function estimation distribution probability distribution function

relative frequency distribution

When plotted on a graph, all data results in a ________. Multiple choice question. curve linear diagram line scatter diagram

scatter diagram

The estimate of b is more likely to be closer to the true value when the variance of the estimate is Blank______, Multiple choice question. greater than the estimate. larger smaller

smaller

The value of a firm is Top of Form Multiple Choice smaller the higher is the risk premium used to compute the firm's value. larger the higher is the risk premium used to compute the firm's value. the price for which the firm can be sold minus the present value of the expected future profits. both "larger the higher is the risk premium used to compute the firm's value" and "the price for which the firm can be sold minus the present value of the expected future profits".

smaller the higher is the risk premium used to compute the firms value.

Businesses utilize: Multiple choice question. resources provided voluntarily. only resources they possess. both market-supplied resources and owner-supplied resources. only resources they must purchase.

Both market supplied resources and owner supplied resources

True or false: Maximizing profit in each period will always result in the maximum value of the firm. True false question. True False

False

Which of the following statements is false? Top of Form Multiple Choice Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of obtaining the resources in the market. When economic profit is zero, the firm's owners could not have done better putting their resources in some other industry of comparable risk. If economic profit is positive, accounting profit must also be positive. If economic profit is negative, accounting profit must also be negative. None of the statements is false. Bottom of Form

If economic profit is negative, accounting profit must also be negative

Which of the following statements is false? Top of Form Multiple Choice Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of obtaining the resources in the market. When economic profit is zero, the firm's owners could not have done better putting their resources in some other industry of comparable risk. If economic profit is positive, accounting profit must also be positive. If economic profit is negative, accounting profit must also be negative. None of the statements are false.

If economic profit is negative, accounting profit must also be negative.

______ focuses on the behavior and structure of firms and industries. Multiple choice question. Market theory Macroeconomics Microeconomics Industrial organization

Industrial organization

Suppose Marv, the owner-manager of Marv's Hot Dogs, earned $82,000 in revenue last year. Marv's explicit costs of operation totaled $36,000. Marv has a Bachelor of Science degree in mechanical engineering and could be earning $40,000 annually as mechanical engineer. Top of Form Multiple Choice Marv's implicit cost of using owner-supplied resources is $36,000. Marv's economic profit is $36,000. Marv's implicit cost of using owner-supplied resources is $30,000. Marv's economic profit is $6,000.

Marv's economic profit is $6,000.

_______ do not accept the existing business conditions as fixed, but seek to alter the circumstances of competition. Multiple choice question. Profit maximizations Business tactics Strategic decisions

Strategic decisions

True or false: The least-squares estimator of a and b is an unbiased estimator. True false question. True False

T

Monopolistic competition

a large number of relatively small firms sell a differentiated product.

Perfect competition

a large number of small firms produces and sells identical products.

In markets characterized by monopolistic competition, Top of Form Multiple Choice a small number of relatively small firms sell a differentiated product. a small number of relatively large firms sell a standardized product. entry into the market is relatively easy so that profit in the long run is zero. entry into the market is restricted so that profit may be positive in the long run.

a small number of relatively small firms sell a differentiated product.

Using economic theory requires that one _______ nonessential items and ________ what is relevant. Multiple choice question. study; decide abstract from; concentrate on focus on; respect

abstract from; concentrate on

Business owners should maximize economic profits because Multiple choice question. accounting profit ignores implicit cost. economic profit includes all revenues. economic profit ignores implicit cost.

accounting profit ignores implicit cost

In a perfectly competitive market, Top of Form Multiple Choice · all firms produce and sell a standardized or undifferentiated product. · the output sold by a particular firm may be quite different from the output sold by the other firms in the market. · firms are price-setters. · it is difficult for new firms to enter the market due to barriers to entry.

all firms produce and sell a standardized or undifferentiated product.

Over the past 25 years, which of the following developments encouraged globalization of markets? Top of Form Multiple Choice · Eleven European countries began using the "euro" as a common currency. · The ability to buy and sell goods on the Internet was increased. · Numerous bilateral and multilateral trade agreements were reached. · Both "Eleven European countries began using the "euro" as a common currency" and "numerous bilateral and multilateral trade agreements were reached". · All of the choices are correct.

all of the choices are correct

If the t-statistic is greater than the critical value of t, we say Multiple choice question. b = 0. b is statistically significant. b is not statistically significant. b > 0.

b is statistically significant.

Which of the following economic forces promotes profitability in the long run? Top of Form Multiple Choice existence of strong barriers to entry a large number of complementary products a large number of close substitute products both "Existence of strong barriers to entry" and "A large number of complementary products" All of the choices are correct.

both

Businesses utilize Multiple choice question. resources provided voluntarily. only resources they possess. both market-supplied resources and owner-supplied resources. only resources they must purchase.

both market supplied resources and owner supplied resources

Owners of a firm want the managers to make business decisions which will Top of Form Multiple Choice maximize the value of the firm. maximize expected profit in each period of operation. maximize the market share of the firm. both "maximize the value of the firm" and "maximize expected profit in each period of operation" are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods.

both maximize the value of the firm and maximize expected profit in each period of operation are correct when revenue and cost conditions in one time period are independent of revenues and costs in future time periods.

The principal-agent problem arises when Top of Form Multiple Choice the principal and the agent have different objectives. the principal cannot enforce the contract with the agent or finds it too costly to monitor the agent. the principal cannot decide whether the firm should seek to maximize the expected future profits of the firm or maximize the price for which the firm can be sold. both "the principal and the agent have different objectives" and "the principal cannot enforce the contract with the agent or finds it too costly to monitor the agent".

both the principal agent and the agent have different objectives and the principal cannot enforce the contract with the agent or finds too costly to monitor the agent.

Which of the following is an example of an implicit cost for a firm? Top of Form Multiple Choice the value of time worked by the owner any wages and salaries paid to employed forgone rent on property owned by firm both "the value of time worked by the owner" and "forgone rent on property owned by firm"

both the value of time worked by the owner and forgone rent on property owned by firm

If an estimated coefficient is far enough away from 0, it is considered to be Multiple choice question. statistically significant. significant estimates. hypothetically tested. positive.

statistically significant

Which of the following are markets? Multiple select question. free carwash stock exchange grocery store auction flea market garage sale school supply giveaway

stock exchange, grocery store, auction, flea market, garage sale

______ do not accept the existing business conditions as fixed, but seek to alter the circumstances of competition. Multiple choice question. Profit maximizations Business tactics Strategic decisions

strategic decisions

Globalization of markets implies Multiple choice question. firms will have less competition. firms will sell fewer products. firms will have higher costs. the integration of markets around the world.

the integration of markets around the world.

Which of the following is NOT one of features characterizing market structures? Top of Form Multiple Choice the number and size of firms the likelihood of new firm's entering a market the level of capital investment in research and development the degree of product differentiation Bottom of Form

the level of capital investment in research and development

Which of the following is NOT one of features characterizing market structures? Top of Form Multiple Choice · the number and size of firms · the likelihood of new firm's entering a market · the level of capital investment in research and development the degree of product differentiation

the level of capital investment in research and development.

Which of the following is NOT one of the features characterizing market structures? Multiple choice question. The likelihood of new firms entering a market. The degree of product differentiation. The level of capital investment in research and development. The number and size of firms.

the level of capital investment in research and development.

Which of the following are the features characterizing market structures? Multiple select question. The level of capital investment in research and development. The corporate structure. The number and size of firms. The degree of product differentiation. The likelihood of new firms entering a market.

the number and size of firms; the degree of product differentiation; the likelihood of new firms entering a market.

A(n) _______ is a data set in which the data on the dependent and explanatory variables are collected from many different firms or industries at a given point in time. Multiple choice question. time series scatter data set cross-sectional data set panel data set

cross sectional data set

A(n) _______ is a data set in which the data on the dependent and explanatory variables are collected from many different firms or industries at a given point in time. Multiple choice question. time series panel data set cross-sectional data set scatter data set

cross-sectional data set

Business owners should seek to maximize Multiple choice question. total revenue. output. accounting profit. economic profit.

economic profit

In markets characterized by monopolistic competition, Top of Form Multiple Choice · a small number of relatively small firms sell a differentiated product. · a small number of relatively large firms sell a standardized product. · entry into the market is relatively easy so that profit in the long run is zero. · entry into the market is restricted so that profit may be positive in the long run.

entry into the market is relatively easy so that profit in the long run is zero.

In markets characterized by oligopoly, Top of Form Multiple Choice a large number of relatively large firms sell a differentiated product. a small number of relatively small firms sell a standardized product. mutual interdependence of firms means that actions of any one firm in the market will have no effect on the sales of all other firms in the market. entry into the market is restricted so that profit may be positive in the long run.

entry into the market is restricted so that profit may be positive in the long run.

Which of the following statements is true? Top of Form Multiple Choice · Shareholders as a group have little or no ability to force managers to pursue maximization of the firm's value. · The effectiveness of a board of directors in monitoring managers is enhanced by appointing members from the firm who are well-informed about the management problems facing the firm. · Reducing the amount of debt financing can reduce divergence between the shareholders' interests and the manager's interests. · Equity ownership by managers is thought to be one of the most effective corporate control mechanisms. · All of the statements are true.

equity ownership by managers is through to be one of the most effective corporate control mechanisms.

The objective of regression analysis is to find Multiple select question. a perfect fit for the scatter diagram. estimates of the true slope and intercept parameters. the straight line that best fits a scatter of data points. estimates of the dependent and explanatory variables.

estimates of the true slope and intercept parameters. the straight line that best fits a scatter of data points.

A regression equation shows the _______ level of a dependent variable given levels of explanatory variables. Multiple choice question. true expected actual complete

expected

A(n) _______ variable affects the value of the _______ variable. Multiple choice question. explanatory; dependent dependent; explanatory explanatory; slope intercept; slope

explanatory; dependent

________ costs are the monetary payments made for market-supplied inputs while ________ costs are non-monetary opportunity costs. Multiple choice question. Implicit; explicit Economic; wage Explicit; implicit Capital; implicit

explicit, implicit

Which of the following is NOT one of the economic forces that promotes long-run profitability of business firms? Top of Form Multiple Choice · low market power of input suppliers · low market power of consumers · strong barriers to entry of rival firms · fierce rivalry among the firms competing in the industry · abundance of complementary products

fierce rivalry among the firms competing in the industry

Microeconomics studies: Multiple select question. firms industries workers government spending inflation unemployment consumers

firms, industries, workers, consumers

Economic theory is a valuable tool for business decision making because it Top of Form Multiple Choice identifies for managers the essential information for making a decision. assumes away the problem. creates a realistic, complex model of the business firm. provides an easy solution to complex business problems.

identifies for managers the essential information for making a decision.

Economic theory is a valuable tool for business decision making because it Top of Form Multiple Choice · identifies for managers the essential information for making a decision. · assumes away the problem. · creates a realistic, complex model of the business firm. provides an easy solution to complex business problems

identifies for managers the essential information for making a decision.

Which of the following statements is false? Top of Form Multiple Choice Explicit costs of using market-supplied resources entail an opportunity cost equal to the dollar cost of obtaining the resources in the market. When economic profit is zero, the firm's owners could not have done better putting their resources in some other industry of comparable risk. If economic profit is positive, accounting profit must also be positive. If economic profit is negative, accounting profit must also be negative. None of the statements are false.

if economic profit is negative, accounting profit must also be negative.

Which of the following is a common mistake that managers make? Top of Form Multiple Choice using marginal analysis to make output decisions maximizing the value of the firm instead of maximizing the firm's profits treating implicit opportunity costs as part of the total costs of using resources increasing the rate of production in order to reduce unit costs of production All of the choices are correct.

increasing rate of production in order to reduce unit costs of production

_____ focuses on the behavior and structure of firms and industries. Multiple choice question. Market theory Industrial organization Microeconomics Macroeconomics

industrial organization

______ focuses on the behavior and structure of firms and industries. Multiple choice question. Macroeconomics Industrial organization Market theory Microeconomics

industrial organization

What is the most important characteristic of oligopoly?Top of Form Multiple Choice firms have market power product differentiation barriers to entry interdependence of profits Bottom of Form

interdependence of profits

Economic profit is a better measure of a firm's performance than accounting profit because Top of Form Multiple Choice accounting profit is unreliable because generally accepted accounting practices (GAAP) overstates the firm's true costs of using resources. economic profit fully accounts for all sources of revenue. as a general rule, only explicit costs can be subtracted from revenue for the purposes of computing taxable profit. the opportunity cost of using ALL resources is subtracted from total revenue. both "as a general rule, only explicit costs can be subtracted from revenue for the purposes of computing taxable profit" and "the opportunity cost of using ALL resources is subtracted from total revenue".

the opportunity cost of ALL resources is subtracted from total revenue.

The value of the firm is calculated as Multiple choice question. the value of all assets. the present value of future accounting profits. the present value of future economic profits. the sum of all expected future profits.

the present value of future economic profits

The value of the firm is calculated as Multiple choice question. the value of all assets. the present value of future economic profits. the present value of future accounting profits. the sum of all expected future profits.

the present value of future economic profits

Which of the following leads to the principal-agent problem? Multiple select question. The principal and the agent have different objectives. The principal cannot enforce the contract agent or finds it too costly to monitor the agent. The principal decides to maximize the price for which the firm can be sold

the principal agent and the agent have different objectives; the principal cannot enforce the contract agent or finds it too costly to monitor the agent.

Total economic costs is _________ owner-supplied resources and market-supplied resources. Multiple choice question. the sum of the opportunity costs of both the difference between the costs of the sum of the wages paid to both

the sum of opportunity costs of both

Total economic costs is _________ owner-supplied resources and market-supplied resources. Multiple choice question. the difference between the costs of the sum of the opportunity costs of both the sum of the wages paid to both

the sum of the opportunity costs of both

Data collected over time is called a Multiple choice question. cross-sectional data set. time series. time-based data set. panel data set.

time series

Markets exist Multiple choice question. to benefit sellers. to reduce efficiency. to reduce transaction costs. to benefit buyers.

to reduce transaction costs

Economic profit is the difference between Top of Form Multiple Choice total revenue and the opportunity cost of all of the resources used in production. total revenue and the implicit costs of using owner-supplied resources. accounting profit and the opportunity cost of the market-supplied resources used by the firm. accounting profit and explicit costs.

total revenue and the opportunity cost of all the resources used in production.

When economic profit is positive, Top of Form Multiple Choice · total revenue exceeds total economic cost. · the firm's owners have successfully solved the principle-agent problem. · the firm's owners experience a decrease in their wealth. · foreign companies experience loss of market share

total revenue exceeds total economic cost

Accounting profit is Multiple choice question. total revenue minus implicit cost total revenue minus opportunity cost total revenue minus explicit cost total revenue minus total economic cost

total revenue minus explicit cost

Examples of ways principals can control agent behavior include Multiple select question. tying managers' compensation to fulfilling the goals of shareholders requiring equity financing linking directors' compensation to the value of the firm

tying managers compensation to fulfilling the goals of shareholders; linking directors compensation to the value of the firm.

A linear regression analysis estimates the parameters of the equation Multiple choice question. Y = a + bx. Y = a * bx. Y = a/bx. Y = a + bx2.

y = a+bx

A(n) ______ is any arrangement through which buyers and sellers exchange final goods or services, resources used for production or anything of value. Multiple choice question. auction market store

market

Owners of a firm want the managers to make business decisions that will Multiple choice question. maximize the market share of the firm. minimize net costs in each period of operation. maximize total revenues. maximize the value of the firm.

maximize the value of the firm

The method of least squares finds the sample regression line that Multiple choice question. a. maximizes the sum of the squared distances from each sample data point to the sample regression line. b. minimizes the sum of the squared distances from each sample data point to the true regression line. c. minimizes the sum of the squared distances from each sample data point to the sample regression line. d. minimizes the difference of the squared distances from each sample data point to the sample regression line.

minimizes the sum of the squared distances from each sample data point to the sample regression line.

Monoply

A single firm produces all the product in the market.

An annual income statement for Bonus Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 100,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 63,000,000 Interest expense (corporate bonds & loans) $ 500,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 100,000 Income taxes $ 740,000 Net income $ 61,660,000 During this year of operation, Bonus Realty owned and occupied an office building in downtown Cleveland.For this year, the building could have been leased to other businesses for $3,000,000 in lease income.Bonus Realty also owned undeveloped land valued at $10,000,000. Owners of Bonus Realty can earn a 4% rate of return annually on funds invested elsewhere. Total implicit costs of using owner-supplied resources for Bonus Realty for this year are Top of Form Multiple Choice $3,400,000. $13,000,000. $14,000,000. $37,000,000. None of the choices is correct

3,400,000

An annual income statement for Bonus Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 100,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 63,000,000 Interest expense (corporate bonds & loans) $ 500,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 100,000 Income taxes $ 740,000 Net income $ 61,660,000 During this year of operation, Bonus Realty owned and occupied an office building in downtown Cleveland.For this year, the building could have been leased to other businesses for $3,000,000 in lease income.Bonus Realty also owned undeveloped land valued at $10,000,000. Owners of Bonus Realty can earn a 4% rate of return annually on funds invested elsewhere. Total implicit costs of using owner-supplied resources for Bonus Realty for this year are Top of Form Multiple Choice $3,400,000. $13,000,000. $14,000,000. $37,000,000. None of the choices is correct.

3,400,000

An annual income statement for Quest Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 80,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 43,000,000 Interest expense (corporate bonds & loans) $ 300,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 200,000 Income taxes $ 700,000 Net income $ 41,800,000 During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere. Total explicit costs of using market-supplied resources for Quest Realty for this year are Top of Form Multiple Choice $23,000,000 $37,000,000 $38,200,000 $41,100,000

38,200,000

An annual income statement for Bonus Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 100,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 63,000,000 Interest expense (corporate bonds & loans) $ 500,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 100,000 Income taxes $ 740,000 Net income $ 61,660,000 During this year of operation, Bonus Realty owned and occupied an office building in downtown Cleveland.For this year, the building could have been leased to other businesses for $3,000,000 in lease income.Bonus Realty also owned undeveloped land valued at $10,000,000. Owners of Bonus Realty can earn a 4% rate of return annually on funds invested elsewhere. Total explicit costs of using market-supplied resources for Bonus Realty for this year are Top of Form Multiple Choice $23,000,000. $37,000,000. $36,200,000. $38,340,000. $41,000,000.

38,340,000

An annual income statement for Quest Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 80,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 43,000,000 Interest expense (corporate bonds & loans) $ 300,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 200,000 Income taxes $ 700,000 Net income $ 41,800,000 During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere. Total implicit costs of using owner-supplied resources for Quest Realty for this year are Top of Form Multiple Choice · $4,100,000 · $19,000,000 · $38,200,000 · $41,000,000 · None of the choices is correct.

4,100,000

An annual income statement for Quest Realty, Inc. is shown below: Revenues Revenue from sales of goods and services $ 80,000,000 Operating costs and expenses: Cost of products and services sold $ 30,000,000 Selling expenses $ 3,000,000 Administrative expense $ 4,000,000 Total operating costs and expenses $ 37,000,000 Income from operations $ 43,000,000 Interest expense (corporate bonds & loans) $ 300,000 Non-recurring expense (Legal expenses/fines in settling a federal antitrust suit) $ 200,000 Income taxes $ 700,000 Net income $ 41,800,000 During this year of operation, Quest Realty owned and occupied an office building in downtown Indianapolis. For this year, the building could have been leased to other businesses for $2,000,000 in lease income. Quest Realty also owned undeveloped land valued at $15,000,000. Owners of Quest Realty can earn a 14% rate of return annually on funds invested elsewhere. Quest's total economic cost is Top of Form Multiple Choice $17,000,000 $38,200,000 $41,000,000 $42,300,000

42,300,000

The level of confidence when the level of significance is 0.05 is Multiple choice question. 50% confidence. 95% confidence. 5% confidence. 0.95% confidence.

95%

Oligopoly

A few firms produce and sell all the product in a market.

Firms with market power may try to limit entry of rival firms in the long run by setting the price of their product below the level that maximizes profit. This kind of pricing behavior Top of Form Multiple Choice · is OK in theory but would not be commonly practiced in the real world because no manager will ever price either above or below the profit-maximizing level. · is a business practice or tactic because pricing decisions are routine decisions made by managers everyday. · should always be implemented in order maximize the firm's market share in both the short run and long run periods. · is a strategic pricing decision because the manager is making the pricing decision with the goal of altering the behavior of rival firms to protect its profit in the long run.

is a strategic pricing decision because the manager is making the pricing decision with the goal of altering the behavior of rival firms to protect its profit in the long run.

Multiple Choice is OK in theory but would not be commonly practiced in the real world because no manager will ever price either above or below the profit-maximizing level. is a business practice or tactic because pricing decisions are routine decisions made by managers everyday. should always be implemented in order maximize the firm's market share in both the short run and long run periods. is a strategic pricing decision because the manager is making the pricing decision with the goal of altering the behavior of rival firms to protect its profit in the long run.

is a strategic pricing decision because the manager is making the pricing decision with the goal of altering the behavior of rival firms to protect its profit in the long run.

A market Top of Form Multiple Choice raises the transaction costs of doing business. is any arrangement that brings buyers and sellers together to exchange goods or services. is an institution used rarely by capitalist nations. is characterized by rigid prices

is any arrangement that brings buyers and sellers together to exchange goods or services

Moral hazard Top of Form Multiple Choice occurs when managers pursue profit maximization without regard to the interests of society in general. exists when either party to a contract has an incentive to cancel the contract. occurs only rarely in modern corporations. is the cause of principal-agent problems.

is the cause of principal agent problems.

The method of ________ is a method of estimating a linear regression equation by finding the line that minimizes the sum of the squared distances from each sample data point to the sample regression line. Multiple choice question. predicted values least residual least squares error minimization

least squares

Hypothesis testing is a tool that Multiple select question. 1. makes a probabilistic statement about the true value of a parameter. 2. determines the estimates of the values of parameters. 3. determines whether the coefficients are statistically different from 0. 4. helps to determine if estimates are statistically significant. 5. results in the true value of the parameter.

makes a probabilistic statement about the true value of a parameter. determines whether the coefficients are statistically different from 0. helps to determine if estimates are statistically significant.