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ECO 550 Complete Quiz Bank Week 1-11 Strayer University

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  • 1. ECO 550Managerial EconomicsStrayer UniversityTo Purchase Complete Quiz Bank for ECO 550 Strayer University Follow this Linkhttp://www.researcherclub.com/product.php?id_product=192Chapter 1 Quiz: 1. The form of economics most relevant to managerial decision-making within the firm is:a.macroeconomicsb. welfare economicsc.free-enterprise economicsd. microeconomicse.none of the above 2. If one defines incremental cost as the change in total cost resulting from a decision, andincremental revenue as the change in total revenue resulting from a decision, any businessdecision is profitable if:a.it increases revenue more than costs or reduces costs more than revenueb. it decreases some costs more than it increases others (assuming revenues remain constant)c.it increases some revenues more than it decreases others (assuming costs remain constant)d. all of the above

2. e. b and c only3. In the shareholder wealth maximization model, the value of a firms stock is equal to thepresent value of all expected future ____ discounted at the stockholders required rate of return.a. profits (cash flows)b. revenuesc. outlaysd. costse. investments 4. Which of the following statements concerning the shareholder wealth maximizationmodel is (are) true?a. The timing of future profits is explicitly considered.b. The model provides a conceptual basis for evaluating differential levels of risk.c. The model is only valid for dividend-paying firms.d. a and be. a, b, and c5. According to the profit-maximization goal, the firm should attempt to maximize short-runprofits since there is too much uncertainty associated with long-run profits.a. trueb. false 3. 6. According to the innovation theory of profit, above-normal profits are necessary tocompensate the owners of the firm for the risk they assume when making their investments.a.trueb. false7. According to the managerial efficiency theory of profit, above-normal profits can arisebecause of high-quality managerial skills.a.trueb. false 8. Which of the following (if any) is not a factor affecting the profit performance of firms:a.differential riskb. innovationc.managerial skillsd. existence of monopoly powere.all of the above are factors9. Agency problems and costs are incurred whenever the owners of a firm delegate decision-making authority to management.a.true 4. b.false 10. Economic profit is defined as the difference between revenue and ____.a.explicit costb.total economic costc.implicit costd.shareholder wealthe.none of the above 11. Income tax payments are an example of ____.a.implicit costsb.explicit costsc.normal return on investmentd.shareholder wealthe.none of the above12. Various executive compensation plans have been employed to motivate managers tomake decisions that maximize shareholder wealth. These include:a.cash bonuses based on length of service with the firmb.bonuses for resisting hostile takeoversc.requiring officers to own stock in the company 5. d.large corporate staffse.a, b, and c only 13.The common factors that give rise to all principal-agent problems include thea.unobservability of some manager-agent actionb.presence of random disturbances in team productionc.the greater number of agents relative to the number of principalsd.a and b onlye.none of the above14. The Saturn Corporation (once a division of GM) was permanently closed in 2009. Whatwent wrong with Saturn?a. Saturns cars sold at prices higher than rivals Honda or Toyota, so they could not sell manycars.b.Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.c.Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.d. Saturn implemented a change management view that helped make first time Saturnpurchasers trade up to Buick or Cadillac.e.all of the above15. A Real Option Value is: a. An option that been deflated by the cost of living index makes it a real option. b. An opportunity cost of capital. 6. c. An opportunity to implement a new cost savings or revenue expansion activity that arisesfrom business plans that the managers adopt. d. An objective function and a decision rule that comes from it. e. Both a and b.16. Which of the following will increase (V0), the shareholder wealth maximization model ofthe firm: V0(shares outstanding) = ??t=1 (? t ) / (1+ke)t + Real Option Value.a.Decrease the required rate of return (ke).b.Decrease the stream of profits (?t).c.Decrease the number of periods from ? to 10 periods.d.Decrease the real option value.e.All of the above.17.The primary objective of a for-profit firm is to ___________.a.maximize agency costsb.minimize average costc.maximize total revenued.set output where total revenue equals total coste maximize shareholder value18.Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:a.maximize total costsb.maximize output, subject to a breakeven constraint 7. c.maximize the happiness of the administrators of the NFP enterprised.maximize the utility of the contributorse.a. and c.19. The flat-screen plasma TVs are selling extremely well. The originators of this technologyare earning higher profits. What theory of profit best reflects the performance of the plasmascreen makers?a.risk-bearing theory of profitb.dynamic equilibrium theory of profitc.innovation theory of profitd.managerial efficiency theory of profite.stochastic optimization theory of profit20. To reduce Agency Problems, executive compensation should be designed to: a. create incentives so that managers act like owners of the firm. b. avoid making the executives own shares in the company. c. be an increasing function of the firms expenses. d. be an increasing function of the sales revenue received by the firm. e. all of the above21. Recently, the American Medical Association changed its recommendations on thefrequency of pap-smear exams for women. The new frequency recommendation was designed toaddress the family histories of the patients. The optimal frequency should be where the marginalbenefit of an additional pap-test:a.equals zero.b.is greater than the marginal cost of the test 8. c.is lower than the marginal cost of an additional testd. equals the marginal cost of the teste.both a and b.To Purchase Complete Quiz Bank for ECO 550 Strayer University Follow this Link http://www.researcherclub.com/product.php?id_product=192Chapter 2 Quiz:1. A change in the level of an economic activity is desirable and should be undertaken aslong as the marginal benefits exceed the ____.a.marginal returnsb. total costsc.marginal costsd. average costse.average benefits 2. The level of an economic activity should be increased to the point where the ____ is zero.a.marginal costb. average costc.net marginal cost 9. d. net marginal benefite.none of the above 3. The net present value of an investment representsa.an index of the desirability of the investmentb. the expected contribution of that investment to the goal of shareholder wealth maximizationc.the rate of return expected from the investmentd. a and b onlye.a and c only4. Generally, investors expect that projects with high expected net present values also will beprojects witha.low riskb. high riskc.certain cash flowsd. short livese.none of the above 5. An closest example of a risk-free security isa.General Motors bondsb. AT&T commercial paper 10. c.U.S. Government Treasury billsd. San Francisco municipal bondse.an I.O.U. that your cousin promises to pay you $100 in 3 months 6. The standard deviation is appropriate to compare the risk between two investments only ifa.the expected returns from the investments are approximately equalb. the investments have similar life spansc.objective estimates of each possible outcome is availabled. the coefficient of variation is equal to 1.0e.none of the above7. The approximate probability of a value occurring that is greater than one standarddeviation from the mean is approximately (assuming a normal distribution)a.68.26%b. 2.28%c.34%d. 15.87%e.none of the above 8. Based on risk-return tradeoffs observable in the financial marketplace, which of thefollowing securities would you expect to offer higher expected returns than corporate bonds? 11. a.U.S. Government bondsb.municipal bondsc.common stockd.commercial papere.none of the above 9. The primary difference(s) between the standard deviation and the coefficient of variationas measures of risk are:a.the coefficient of variation is easier to computeb. the standard deviation is a measure of relative risk whereas the coefficient of variation is ameasure of absolute riskc. the coefficient of variation is a measure of relative risk whereas the standard deviation is ameasure of absolute riskd. the standard deviation is rarely used in practice whereas the coefficient of variation is widelyusede.c and d 10. The ____ is the ratio of ____ to the ____.a.standard deviation; covariance; expected valueb.coefficient of variation; expected value; standard deviationc.correlation coefficient; standard deviation; expected valued.coefficient of variation; standard deviation; expected valuee.none of the above 12. 11. Sources of positive net present value projects includea.buyer preferences for established brand namesb.economies of large-scale production and distributionc.patent control of superior product designs or production techniquesd.a and b onlye.a, b, and c12. Receiving $100 at the end of the next three years is worth more to me than receiving $260right now, when my required interest rate is 10%. a. True b. False13. The number of standard deviations z that a particular value of r is from the mean ? can becomputed as z = (r - ?)/ ????Suppose that you work as a commission-only insurance agentearning $1,000 per week on average. Suppose that your standard deviation of weekly earnings is$500. What is the probability that you zero in a week? Use the following brief z-table to helpwith this problem. Z value Probability-3 .0013-2 .0228-1 .1587 13. 0 .5000a.1.3% ch

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