Managerial Economics: FINAL EXAM

The lower the interest rates a. less investments will take place. b. does not affect the investment strategy. c. the less value individuals place on future dollars. d. the more value individuals place on future dollars.

b. does not affect the investment strategy.

In a perfectly competitive market industry, firm's prices are equal to a. marginal revenue but not average revenue. b. average revenue but not marginal revenue. c. total revenue. d. average revenue and marginal revenue

d. average revenue and marginal revenue

An example of a price floor is a. a clearance sale price. b. an insurance maximum out-of-pocket expense. c. rent controls in New York. d. minimum wages.

d. minimum wages.

suppose Voltronics, a battery manufacturer, pays $51,527 per month to service the debt on its factory. In any given month, Voltronics has labor and ingredient costs equal to $173,333 to produce 100,000 nine-volt batteries and $210,527 to produce 200,000 nine-volt batteries. What is the total cost of producing 200,000 nine-volt batteries each month? a. $262,054 b. $159,348 c. $359,045 d. $435,384

a. $262,054

A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate: a. $6,000 worth of buyer surplus and $4,000 of seller surplus. b. No surplus. c. $4,000 worth of seller surplus and unknown amount of buyer surplus. d. $6,000 worth of buyer surplus and unknown amount of seller surplus

a. $6,000 worth of buyer surplus and $4,000 of seller surplus.

CirrusBox, an online cloud storage provider, is cheaper than all other cloud storage providers. In order to attract customers, CirrusBox decides to launch an advertisement campaign and undertake some price adjustment. CirrusBox executives think that they should continue to be the lowest-cost provider in the market. Which of the following would be a strategy consistent with CirrusBox's position in the market? a. Advertisements should focus customers' attention to the fact that CirrusBox is the least expensive and CirrusBox should cut prices. b. Advertisements should focus customers' attention to the fact that CirrusBox is the least expensive and CirrusBox should increase prices. c. Advertisement should focus customers' attention to the fact that CirrusBox is better in quality than its competitors and CirrusBox should cut prices. d. Advertisements should focus customers' attention to the fact that CirrusBox is bett

a. Advertisements should focus customers' attention to the fact that CirrusBox is the least expensive and CirrusBox should cut prices.

Money-making opportunities result from: a. Assets in lower-valued uses b. Assets in higher-valued uses c. A failure to consider the longer-term d. A lack of efficiency

a. Assets in lower-valued uses

Strategy is all of the following except: a. Learning how to avoid producing value for consumers in goods or services b. The art of matching the resources and capabilities of a firm to the opportunities and risks in its environment c. Making sure that the resource developed is non-fungible to create a sustainable advantage d. Developing a resource for the company that is both rare and valuable to create competitive advantage

a. Learning how to avoid producing value for consumers in goods or services

A local restaurant increases the prices on its burgers as soon as it begins a promotional campaign. Which of the following is most likely to be true? a. The promotional campaign featured the quality of their burgers. b. The promotional campaign focused on how their burgers have long been the cheapest in town. c. The promotional campaign made demand more elastic. d. The promotional campaign focused on the value per dollar

a. The promotional campaign featured the quality of their burgers.

Suppose you're trying to compare the year-to-year performance of one of your regional salespeople over a period during which income grew by 3%. If demand for your products has an income elasticity of 2, how would you measure the salesperson's performance? a. You would expect quantity to increase by 6% b. You would expect quantity to increase by 8% c. You would expect quantity to increase by 4% d. You would expect quantity to increase by 2%

a. You would expect quantity to increase by 6%

In 2020, a severe acute respiratory syndrome coronavirus began to infect large numbers of people and spread around the world. Almost universally, consumers' quantity demanded increased at every price for alcohol-based hand sanitizer. Graphically, the change in quantity demanded for alcohol-based hand sanitizer at every price would be represented by a. a rightward shift of the entire demand curve. b. an increase in the slope of the demand curve. c. no shift in the demand curve. d. a leftward shift of the entire demand curve.

a. a rightward shift of the entire demand curve.

Once marginal costs rise above the average cost, a. average cost increases. b. average costs will stay the same. c. average cost decreases. d. average costs will approach zero.

a. average cost increases.

Intense market competition is _______ for producers, since it _______. a. bad; erodes producer profits b. good; increases the price level in the market c. good; decreases the price level in the market d. bad; erodes consumer surplus

a. bad; erodes producer profits

A weaker peso, relative to the US dollar, causes the demand for US exports to Mexico to _______ and the demand for US imports from Mexico to _______. a. decrease; increase b. decrease; decrease c. increase; increase d. increase; decrease

a. decrease; increase

If long run average costs rise with output, you have a. decreasing returns to scale. b. increasing returns to scale. c. zero returns to scale. d. constant returns to scale

a. decreasing returns to scale.

Eddy's Electronics found that instead of producing a streaming device and a gaming system separately, it is cheaper to incorporate streaming capabilities in their new version of the gaming system. Eddy's Electronics is taking advantage of a. economies of scope. b. decreasing marginal costs. c. learning curve. d. economies of scale.

a. economies of scope.

A Swiss watch company advertises its history of superior craftsmanship. The company thinks that this would do all of the following except a. focus the consumer more on price. b. make the demand for the product less elastic. c. assist them with differentiating their product. d. make the customers less sensitive to the price.

a. focus the consumer more on price.

The demand for dollars is downward sloping because when the dollar appreciates, a. foreigners demand fewer US goods and services. b. foreigners demand more US goods and services. c. foreigners do not change their demand for US goods and services. d. foreigners demand more dollars.

a. foreigners demand fewer US goods and services.

You operate a small poultry farm in East Texas. You sell most of your output through a regional distributor of poultry products in the area. In this case, you are subject to a. high buyer power. b. no buyer power. c. indeterminant buyer power. d. low buyer power

a. high buyer power.

Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy may cause the demand for the US dollar to _______ and the supply to _______. a. increase; decrease b. decrease; decrease c. decrease; increase d. increase, increase

a. increase; decrease

The wages for Nike workers increases. At the same time, we see the price for Adidas shoes increase. This would cause the price for Nike shoes _______ and the quantity demanded for Nike shoes is _______. a. increases; uncertain b. decreases; uncertain c. decreases; increases d. uncertain; decreases

a. increases; uncertain

After the housing bubble burst, consumer confidence plummeted and housing sales dropped to all-time lows. This caused the demand curve for normal goods to shift a. inwards. b. up and to the right. c. neither left nor right. d. outwards.

a. inwards.

Apple has continued to be innovative to ensure that the demand for its products stays or becomes a. more inelastic. b. unitary elastic. c. more elastic. d. perfectly elastic.

a. more inelastic.

Low cost strategies are usually found in industries where a. products are not particularly differentiated and price competition tends to be fierce. b. brand loyalty is the dominant factor in a consumer's decision. c. products are particularly differentiated. d. price competition is less intense.

a. products are not particularly differentiated and price competition tends to be fierce.

Firms maintain their competitive edge by all of the following except a. reducing the value their product provides consumers. b. being innovative. c. providing a good at lower costs than their rivals. d. providing a superior product at the same cost as their rival.

a. reducing the value their product provides consumers.

If a firm in a perfectly competitive industry is experiencing higher than normal returns, in the long run, a. some firms will enter the industry and price will fall. b. some firms will leave the industry and price will fall. c. some firms will leave the industry and price will rise. d. some firms will enter the industry and price will rise.

a. some firms will enter the industry and price will fall.

The price elasticity of demand informs the economist about a. the sensitivity of quantity to price b. the sensitivity of price to quantity c. the sensitivity of income to price d. the sensitivity of income to quantity

a. the sensitivity of quantity to price

The general rule to increase profits when two close complementary brands are jointly owned is a. to decrease prices for both brands. b. to increase prices on one brand, decreasing it for the other. c. to increase prices on one brand, keeping the prices of the second brand constant. d. to increase prices for both brands.

a. to decrease prices for both brands.

A buyer willingly buys a good if their _______ of the good is _______ the price of the good. a. valuation; greater than b. valuation; unrelated to c. valuation; less than d. valuation; only slightly less than

a. valuation; greater than

Transactions that are __________ create wealth by letting people follow __________. a. voluntary; their self-interest b. regulated; their self-interest c. mandated; the societal good d. socialized; the societal good

a. voluntary; their self-interest

Supplier power tends to be high when a. your firm purchases critical inputs from the supplier and the firm's input choices are highly differentiated. b. your firm has roughly identical cost-savings technology to that of competitive firms. c. your firm purchases widely attainable inputs from the supplier. d. your input choices are homogeneous goods.

a. your firm purchases critical inputs from the supplier and the firm's input choices are highly differentiated.

If a firm produces 8 units of output with average fixed cost=$40 and average variable cost=$25, what is its average cost?​ a. ​$65 b. ​$20 c. ​$32 d. ​$100

a. ​$65

A firm produces 1000 units per week. It hires 10 full-time workers (40 hours/week each) at an hourly wage of $20. Raw materials costs $5 per unit. Rent for the factory is $1,500 per week. What are the overall costs for the week? a. ​total variable cost is $13,000; total fixed cost is $1,500; total cost is $14,500 b. ​total variable cost is $13,000; total fixed cost is $9,500; total cost is $22,500 c. ​total variable cost is $5,000; total fixed cost is $9,500; total cost is $14,500 d. ​total variable cost is $5,000; total fixed cost is $1,500; total cost is $6,500

a. ​total variable cost is $13,000; total fixed cost is $1,500; total cost is $14,500

Suppose that Etsy charges sellers a 6.5% fee on the sales price of all goods sold. Mariana decides to start a small business where she paints Mexican folk art on TOMS shoes and sells them on Etsy. Her cost of producing a pair of Taxco-stylized shoes is $75. A consumer values the same Taxco-stylized shoes at $175. What is the minimum price for which Mariana would be willing to sell the shoes on Etsy? a. $163.63 b. $79.88 c. $81.50 d. $106.50

b. $79.88

Suppose that the exchange rate between United States dollars (USD) and Swiss francs (CHF) is such that USD/CHF is 0.965. Which of the following is most likely to be the exchange rate (USD/CHF) if there is a decrease in the demand for Swiss francs among all countries (not just the US) but the demand for US dollar stays the same? a. 0.750 b. 1.000 c. 0.867 d. 0.965

b. 1.000

Economic reasoning is based on the premise that: a. Only non-economic decisions or actions have a cost associated with them. b. All decisions and actions have a cost associated with them. c. Only economic decisions or actions have a cost associated with them. d. All decisions or actions are costless.

b. All decisions and actions have a cost associated with them.

The figure below shows a long-run average cost curve. What part of the long-run average cost curve exhibits economies of scale? a. Between 20 and 40 units per hour b. Between 10 and 20 units per hour c. Along the entire curve d. Between 40 and 50 units per hour

b. Between 10 and 20 units per hour

If company X is successfully outsourcing its production of T-shirts to China, it: a. Should be stopped on economic grounds since it is destroying wealth b. Creates wealth by moving labor in China from lower-value use to higher-value use c. Destroys wealth by acquiring cheaper labor from China d. Destroys wealth by depriving labor in other countries of jobs

b. Creates wealth by moving labor in China from lower-value use to higher-value use

The general rule to increase profits when two close substitute brands are jointly owned is to a. decrease prices for both brands. b. increase prices for both brands. c. increase prices on one brand, keeping the prices of the second brand constant. d. increase prices on one brand, decreasing it for the other.

b. Increase prices for both brands

The difficult part of analyzing exchange rates is: a. Applying supply and demand to interpret movements. b. Keeping track of your frame of reference. c. Whether it is an appreciation or depreciation. d. Staying current with the exchange market.

b. Keeping track of your frame of reference.

There are three levers one can push to correct bad decision-making. Which of the following is NOT such a lever? a. Change the current decision makers' incentives. b. Let someone else who has no relationship to the problem make the decision. c. Let someone else who has better information or incentives make the decision. d. Give more information to the current decision-maker.

b. Let someone else who has no relationship to the problem make the decision.

What is a synergy or cost complementarity? a. The cost of producing different products offered by separate companies is random when produced by one company b. The cost of producing different products offered by separate companies is higher than when produced by one company c. The cost of producing different products offered by separate companies would be more expensive when produced by one company d. The cost of producing different products offered by separate companies is equal to when the products are produced by one company

b. The cost of producing different products offered by separate companies is higher than when produced by one company

If movie theatres decided to increase the price for the movie tickets, holding other factors constant, what would happen to the demand for popcorn in the theatres? a. The demand for popcorn would shift to the left because popcorn and movies are substitute goods. b. The demand for popcorn would shift to the left because popcorn and movies are complementary goods. c. The demand for popcorn would shift to the right because popcorn and movies are substitute goods. d. The demand for popcorn would shift to the right because popcorn and movies are complementary goods

b. The demand for popcorn would shift to the left because popcorn and movies are complementary goods.

The zero sum fallacy is: a. The idea that profits always go to zero over time. b. The idea that profit by one economic agent must come at the expense of some other economic agent. c. The idea that everyone's profits increase uniformly given sufficient time. d. The idea that when total revenue equals total cost, no profit is made.

b. The idea that profit by one economic agent must come at the expense of some other economic agent.

Changes in the price of same product, Good X, can cause a. a shift of the supply curve for Good X. b. a movement along the demand curve for Good X. c. both a shift of the demand and supply curves for Good X. d. a shift of the demand curve for Good X.

b. a movement along the demand curve for Good X.

If advertising makes demand of a product more elastic, it makes sense for a firm to a. increase the price of the product. b. decrease the price of the product. c. leave the price unchanged. d. decrease the quality of the product to increase its profit.

b. decrease the price of the product.

What are economies of scale? a. increasing average costs as production increases b. decreasing average costs as production increases c. increasing fixed costs as production increases d. decreasing average costs as production decreases

b. decreasing average costs as production increases

In the IO perspective, it is important to enter an industry with a. high buyer power. b. high barriers to entry. c. high supplier power. d. high threats from substitutes.

b. high barriers to entry.

Even if there are significant barriers to entry, firms may not be highly profitable a. if consumers incur a high cost switching between different firms' goods. b. if there are substitute product offerings among rivals and consumers are able to easily switch between substitute goods. c. if the two firms collude. d. if they are able to substantially differentiate their products.

b. if there are substitute product offerings among rivals and consumers are able to easily switch between substitute goods.

hen economics speak of "marginal," they mean a. scarcity b. incremental c. opportunity d. unimportant

b. incremental

The RBV perspective locates the source of competitive advantage for a firm at the a. national level. b. individual firm level. c. industry level. d. customer level.

b. individual firm level.

Musicians sometimes sell the right to the future proceeds of their performances to investors for lump-sums of cash (often at a discount). These are called royalties. When artists sell their royalties to investors, wealth is created by a. providing untalented investors the possibility of earning a living from music. b. shifting money forward in time for musicians to satisfy their present needs and providing a steady income to investors with potential upside of securing the rights to performances of a would-be star. c. providing untalented artists the possibility of earning a living from investments. d. shifting money from those who have a lot (investors) to those who have little (artists).

b. shifting money forward in time for musicians to satisfy their present needs and providing a steady income to investors with potential upside of securing the rights to performances of a would-be star.

The purchasing power parity predicts that if the price level in the US falls relative to Mexico, a. the dollar will depreciate relative to the peso. b. the dollar will appreciate relative to the peso. c. PPP predicts price level will normalize in the long run. d. there is no effect on either currency.

b. the dollar will appreciate relative to the peso.

The level of output that minimizes average costs is known as a. the socially-optimal quantity. b. the minimum efficient scale. c. the shut-down point. d. the profit-maximizing quantity.

b. the minimum efficient scale.

A discount shoe manufacturer's advertisement suggests that they are almost as good as the name brands but provide better value. The shoe manufacturer believes that the advertisement will make a. the demand for their product less elastic. b. their customers more price sensitive. c. their customers less price sensitive. d. them able to raise prices.

b. their customers more price sensitive.

A firm produces 2300 units per month. The firm hires 15 full-time workers (160 hours per month each) at an hourly wage of $17.50. Raw materials cost $7 per unit. Rent for the factory is $4,000 per month. What are the costs for the month? a. total fixed cost is $4,000; total variable cost is $24.50; total cost is $4,024.50 b. total fixed cost is $4,000; total variable cost is $58,100; total cost is $62,100.00 c. total fixed cost is $50,000; total variable cost is $17.50; total cost is $44,250 d. total fixed cost is $58,100; total variable cost is $4,000; total cost is $62,100.00

b. total fixed cost is $4,000; total variable cost is $58,100; total cost is $62,100.00

Which of the following is true according to the IO perspective? a. ​Industry performance determines firm conduct which in turn determines firms' structure b. ​Industry structure determines firm conduct which in turn determines firms' performance c. ​Industry conduct determines firm structure which in turn determines firms' performance d. ​Industry structure determines firm performance which in turn determines firms' conduct

b. ​Industry structure determines firm conduct which in turn determines firms' performance

What is the present value of the following stream of payments: $250 in the current year, $275 one year from now, $315 two years from now, and $500 three years from now? Assume an interest rate of 5%. Round to the nearest cent. a. $930.81 b. $1,229.54 c. $1,170.99 d. $1,340.00

c. $1,170.99

Scenario 10-1 Suppose consumers who shop at Alpine Bakery enjoy their Swiss eclairs, a dough filled with cream and topped with chocolate (or other icing). Consumers value each eclair at $7.50. Meanwhile, Alpine Bakery incurs a cost of $1.00 per eclair and sells them at a price of $2.00. Use Scenario 10-1 What is the consumer surplus of eclair produced and sold by Alpine Bakery? a. $4.50 b. $7.50 c. $5.50 d. $6.50

c. $5.50

What company would a rational actor rather work for? a. A company who gives equal raises to everyone annually b. A company who gives raises based on title, not effort c. A company who gives raises/bonuses based on a clear effort scale d. A company who gives bonuses on objects not directly tied to work

c. A company who gives raises/bonuses based on a clear effort scale

Scenario 10-1 Suppose consumers who shop at Alpine Bakery enjoy their Swiss eclairs, a dough filled with cream and topped with chocolate (or other icing). Consumers value each eclair at $7.50. Meanwhile, Alpine Bakery incurs a cost of $1.00 per eclair and sells them at a price of $2.00. Use Scenario 10-1 Which of the following categories of value capture is the greatest? What is that category's value? a. Profit; $1.00 b. Cost; $1.00 c. Consumer surplus; $5.50 d. Indeterminant; Indeterminant

c. Consumer surplus; $5.50

Bucco, an Italian shoe company, manufactures luxurious, high-quality loafers. Hathaway Brothers, an American garment company, makes quality polo shirts. Many young, well-to-do professionals enjoy pairing Bucco loafers with the less expensive and accessible Hathaway polos. If Hathaway Brothers acquires Bucco, what would Hathaway likely do to increase profits? a. Hathaway should raise the price on the loafers but lower the price on the polo shirts. b. Hathaway should raise the price on both the loafers and the polo shirts. c. Hathaway should lower the price of both the loafers and the polo shirts. d. Hathaway should lower the price on the loafers but raise the price of the polo shirts.

c. Hathaway should lower the price of both the loafers and the polo shirts.

Which of the following statements is correct? a. Sunk costs can be avoided with planning b. Post-investment hold-up is unavoidable c. If cost includes all your costs, including your opportunity cost of capital, you are earning zero profit when P=AC d. Before investing, look back and reason ahead

c. If cost includes all your costs, including your opportunity cost of capital, you are earning zero profit when P=AC

Suppose there are two gym suppliers, Rascal Fitness and Colossus Fitness. Both companies produce log presses, atlas stones, and other equipment. Rascal Fitness often has a reputation of higher quality. Their products command a premium. Meanwhile, Colossus — while respected — is considered to be the bargain brand of the two. ​ Consider what would happen if Rascal acquired Colossus. What should Rascal do? a. Raise the price of both goods by the same percentage. b. Raise the price of the Rascal goods and the Colossus goods, but raise the price of the Rascal goods by a greater percentage. c. Raise the price of the Rascal goods and the Colossus goods, but raise the price of the Colossus goods by a greater percentage. d. Raise the price of the Colossus goods and lower the price of the Rascal goods

c. Raise the price of the Rascal goods and the Colossus goods, but raise the price of the Colossus goods by a greater percentage.

In the long-run, a perfectly competitive firm will achieve a. economic profits. b. losses. c. an average rate of return. d. above average profits.

c. an average rate of return.

If the price of a Canadian dollar went from 0.95 US dollars to 0.98 US dollars, we would say that the US dollar has a. not changed in value. b. appreciated. c. depreciated. d. increased in value against the Canadian dollar.

c. depreciated.

Average cost curves initially fall a. due to rising fixed costs. b. due to rising marginal costs. c. due to declining average fixed costs. d. due to rising average fixed costs

c. due to declining average fixed costs.

In the long run, in a competitive industry a. firms produce a quantity above the break-even quantity. b. prices are less than average cost. c. economic profits are zero, firms break even, and price equals average costs. d. economic profits are greater than zero.

c. economic profits are zero, firms break even, and price equals average costs.

Attractive industries have all the following attributes, except a. low buyer power. b. high entry barriers. c. high supplier power. d. low rivalry.

c. high supplier power.

Two cities face identical prices for their housing. If City A decided to be a pollution free city "Clean town" and all the factories would locate in City B "Smogville," we expect the prices of housing in City A "Clean town" to a. stay the same. b. converge back to original prices. c. increase. d. decrease.

c. increase.

The IO Economics perspective locates the source of competitive advantage for a firm at the a. individual firm level. b. national level. c. industry level. d. customer level.

c. industry level.

In a competitive industry buffeted by demand and supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting a. positive earnings. b. below-average return. c. mean reversion. d. above-average return.

c. mean reversion.

The concept that explains the firm's ability to produce output with differing bundles of resources is called a. imitability. b. resource immobility. c. resource heterogeneity. d. barriers to entry.

c. resource heterogeneity.

A recent medical study shows that peanuts are one of the leading causes of high cholesterol. This would cause the demand for peanuts to a. not change. b. shift to the right. c. shift to the left. d. go down the demand curve.

c. shift to the left.

Supplier power tends to be higher when a. suppliers are not heavily concentrated. b. there are low costs to switching between suppliers. c. suppliers are concentrated and there are high costs to switching between suppliers. d. suppliers have highly different cost-saving technology

c. suppliers are concentrated and there are high costs to switching between suppliers.

A model of how humans behave, particularly "the rational actor" paradigm, is a necessary assumption for a. computerization of data within a business organization. b. not assuming people are inherently good. c. the problem-solving algorithm. d. assuming that humans are inherently altruistic.

c. the problem-solving algorithm.

The enforcement of property rights contributes to: a. poverty b. unconsummated mutual beneficial transactions c. wealth-creating transactions d. minimization of total surplus

c. wealth-creating transactions

How does an increase in income affect the market for bus rides (inferior good)? a. ​The supply curve for bus rides to shift to the left. b. ​The supply curve for bus rides to shift to the right. c. ​The demand curve for bus rides to shift to the left. d. ​The demand curve for bus rides to shift to the right.

c. ​The demand curve for bus rides to shift to the left.

A firm in a _______ faces a _______ demand curve. a. ​perfectly competitive market; perfectly inelastic b. ​monopoly market; horizontal c. ​perfectly competitive market; perfectly elastic d. ​monopoly market; perfectly elastic

c. ​perfectly competitive market; perfectly elastic

An individual in the US wants to buy a car from England which costs 12,000 pounds. If the exchange rate is 1 pound = $1.75, how much would the car cost that individual in dollars? a. $12,000 b. Need more information c. $6,800 d. $21,000

d. $21,000

An auction on eBay results in a final price of $24 for an original VHS copy of the well-received film Predator. The seller of the video tape of the 1987 classic values the copy at $5. Meanwhile, the buyer, an avid collector of 80's action films, has a top dollar of $33. In this case, the consumer surplus is _______, the producer surplus is _______, and the total surplus is _______. (Assume in this example that eBay does not collect a fee for providing an auction marketplace.) a. $9; $0; $38 b. $19; $9; $28 c. $0; $19; $38 d. $9; $19; $28

d. $9; $19; $28

Consider a football game. You buy a ticket for $20, but at game time, an unauthorized ticket reseller is selling tickets for $50 because your team is playing its cross-state rivals who have legions of fans willing to pay over $50 to go to the game. Even though you do not value the tickets at $50 (indeed - you value them for much less!), you go anyway because, you say, "These tickets cost me only $20." In this case, you should: a. Go to the game because the tickets cost only $20. b. Go to the game if the benefit of going to the game is more than $20. c. Stay home because it's only $20. d. Go to the game if the benefit of going to the game is bigger than $50.

d. Go to the game if the benefit of going to the game is bigger than $50.

A firm that produces toothpaste acquires another firm that produces toothbrushes. In order to increase profits, the firm should a. increase prices on toothbrushes but keep the price on toothpaste constant. b. increase prices on toothbrushes and increase the price on toothpaste. c. increase prices for both toothbrushes and toothpaste. d. decrease prices for both toothbrushes and toothpaste.

d. decrease prices for both toothbrushes and toothpaste.

The five forces model is a framework a. for increasing buyer power in the market. b. for improving competition in the industry. c. for increasing supplier power in the market. d. for analyzing the attractiveness of an industry.

d. for analyzing the attractiveness of an industry.

Currency devaluation _______ export producers because _______. a. hurts; exports are more expensive b. hurts; exports are less expensive c. helps; exports are more expensive d. helps; exports are less expensive

d. helps; exports are less expensive

While you were an intern, you bought 5 packages of hot dogs a month. After acquiring a full-time job with a considerably higher salary, you stopped purchasing hot dogs. For you, hot dogs are a(n) a. complementary good. b. normal good. c. substitute good. d. inferior good

d. inferior good

Determining which costs and revenues are relevant to a particular decision a. is not a common step in analyzing economic decision making. b. is not necessary if one is to apply marginal analysis. c. is only performed in decisions of manufacturing but no other area of economics. d. is the main difficulty in applying marginal analysis.

d. is the main difficulty in applying marginal analysis.

If a customer values good A at $15 and it costs the firm $10 to produce, the firm can increase its profits if a. it redesigns the production process so that the costs increase over $10. b. it redesigns the production process such that the costs increase to $15. c. it redesigns the product such that it delivers less than $15 in customer value. d. it either redesigns the product such that it delivers over $15 in value for the customer or such that the production costs fall below $10.

d. it either redesigns the product such that it delivers over $15 in value for the customer or such that the production costs fall below $10.

Acquiring a firm that sells a substitute good would make the aggregate demand curve for your products a. more elastic. b. unchanged. c. unit elastic. d. more inelastic.

d. more inelastic.

A good policy _______ and a bad policy _______. a. concentrates on government intervention; refrains from government intervention b. refrains from any government intervention; concentrates on government intervention c. moves an asset to lower value use; moves an asset to higher value use d. moves an asset to higher value use; moves an asset to lower value use

d. moves an asset to higher value use; moves an asset to lower value use

One lesson of business: a. promoting a policy change to eradicate inefficiencies. b. is tracing the consequences of a policy. c. is to maximize total revenue. d. moving assets from lower to higher value uses, thereby creating wealth.

d. moving assets from lower to higher value uses, thereby creating wealth.

An increase in the price of a substitute shifts the demand curve to the _______. a. left b. it does not change the demand curve c. bowed outward d. right

d. right

Feeb's Fabulous Salads is a small food supplier in Florida that sells prepackaged chopped salads to convenience stores. Her main competitor is Strongman Alex's Muscle Meals, another small food supplier in California that sells prepackaged protein bowls to the same convenience stores. Feeb eventually secures financing to acquire Strongman and the protein bowl products. If Feeb wishes to maximize profit, then a. she should raise the price on the salads and lower the price of the protein bowls. b. she should lower the price on the salads and raise the price on the protein bowls. c. she should lower the price of both the salads and the protein bowls. d. she should raise the price on the salads and the protein bowls.

d. she should raise the price on the salads and the protein bowls.

The equilibrium price in the market for foreign currencies is called a. the going rate. b. the price. c. the market price. d. the exchange rate.

d. the exchange rate.

The break-even quantity is a. the fixed costs divided by the marginal cost. b. the contribution marginal divided by fixed costs. c. the fixed costs divided by the price. d. the fixed costs dived by the contribution margin

d. the fixed costs dived by the contribution margin

A price ceiling can often be viewed as a. the government setting price above market equilibrium price. b. the government setting price below market equilibrium price. c. an implicit tax on producers and an implicit subsidy to consumers. d. the government imposing an implicit tax on producers, an implicit subsidy to consumers, and setting prices below the market equilibrium price.

d. the government imposing an implicit tax on producers, an implicit subsidy to consumers, and setting prices below the market equilibrium price.

A consumer values a car at $30,000 and a producer values the same car at $20,000. What amount of tax will result in unconsummated transaction? a. ​$9,000 b. ​$4,000 c. ​$2,000 d. ​$15,000

d. ​$15,000

Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the following is true?​ a. ​MC = $30 b. ​FC = $100 c. ​FC = $400 d. ​MC = $300

d. ​MC = $300

You own two different energy drink brands: "Blue Cow" and "600 minute energy." If you reduce the price on "Blue Cow,"​ a. ​Neither "Blue Cow" nor "600 minute energy" would see an increase in sales. b. ​Sales of "Blue Cow" would increase, without any changes in sales for "600 minute energy." c. ​Sales of both "Blue Cow" and "600 minute energy" would increase. d. ​Sales of "Blue Cow" would increase, but the sales of "600 minute energy" would be cannibalized.

d. ​Sales of "Blue Cow" would increase, but the sales of "600 minute energy" would be cannibalized.

Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the following is true? a. ​VC rise by $1,800 b. ​VC rise by $0 c. ​VC rise by $1,500 d. ​VC rise by $300

d. ​VC rise by $300