Managerial Economics: Applications, Strategies and Tactics 13th Edition

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The cost function is: a. a means for expressing output as a function of cost b. a schedule or mathematical relationship showing the total cost of producing various quantities of output c. similar to a profit and loss statement d. incapable in being developed from statistical regression analysis e. none of the above Answer: B

To escape adverse selection and elicit high quality experience goods buyers can a. offer price premiums to new firms in the market b. seek out unbranded goods c. buy from generic storefronts that have leased temporary space d. secure warranties from warehouse retailers e. none of the above Answer: E Answer: E Answer: E The

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2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 223 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 230 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 237 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 244 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 252 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 253 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 260 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 266 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 273 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 276 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 162 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 169 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 178 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 191 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 198 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 203 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole

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When there is multicollinearity in an estimated regression equation, a. the coefficients are likely to be small. b. the t'statistics are likely to be small even though the R2is large. c. the coefficient of determination is likely to be small. d. the problem of omitted variables is likely. e. the error terms will tend to

If the value of the U.S. dollar rises from 1.0 per dollar to 1.3 per dollar, a. imports of automobiles from Germany will decline b. American inflation will increase c. German exports of all traded goods will decline d. American exports to Germany will decrease e. sales by American manufacturers for the export markets will

The ____ method assumes that the cash flows over the life of the project are reinvested at the ____. a. net present value; computed internal rate of return b. internal rate of return; firm's cost of capital c. net present value; firm's cost of capital d. net present value; risk-free rate of return e. none

The production superintendent of the Holloway Company has proposed that the firm purchase a new $40,000 grinding machine for use in the plant. The machine is expected to generate $10,000 per year in pre-tax cash savings (labor and spoilage) for the next 10 years. At the end of 10 years the salvage

The profit-maximizing monopolist, faced with a negative-sloping demand curve, will always produce: a. at an output greater than the output where average costs are minimized b. at an output short of that output where average costs are minimized c. at an output equal to industry output under pure competition d. a and c e. none

Which of the following statements is (are) true concerning a pure competition situation? a. Its demand curve is represented by a vertical line. b. Firms must sell at or below market price. c. Marginal revenue is equal to price. d. both b and c e. both a and b Answer: D Answer: D Answer: D

Emco Company has an assembly line of fixed size A. Total output is a function of the number of workers (crew size) as shown in the following schedule: Determine the following schedules: (a) marginal productivity of labor (b) average productivity of labor (c) elasticity of production with respect to labor Answer: Crew Size Total

Suppose we estimate that the demand elasticity for fine leather jackets is '.7 at their current prices. Then we know that: a. a 1% increase in price reduces quantity sold by .7%. b. no one wants to buy leather jackets. c. demand for leather jackets is elastic. d. a cut in the prices will

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, except: a. price of substitute goods b. level of competitor advertising c. consumer income level d. consumer desires for goods and services e. a and b Answer: B Answer: B Answer: B The Future Flight Corporation manufactures a

The coefficient of determination measures the proportion of the variation in the independent variable that is "explained" by the regression line. a. true b. false Answer: B Answer: B Answer: B In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is: a. highly price elastic b. price inelastic c. unitarily elastic d. an inferior good e. none of the above Answer: B Answer: B Answer: B A change in the level of an economic

Generally, investors expect that projects with high expected net present values also will be projects with a. low risk b. high risk c. certain cash flows d. short lives e. none of the above Answer: B Answer: B Answer: B In regression analysis, the existence of a significant pattern in successive values of the error

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? a. U.S. Government bonds b. municipal bonds c. common stock d. commercial paper e. none of the above Answer: C Answer: C Answer: C Beta in the CAPM is ____. a.

The social discount rate used in cost-benefit analysis is equal to a weighted average of the Treasury Bill rate and the long-term government borrowing rate. a. true b. false Answer: B Answer: B Answer: B In cost-benefit analysis, a low discount rate tends to favor projects with relatively ____ lives. a. short b. long Answer: B Answer: B Answer:

Capital expenditures: a. are easily reversible b. are forms of operating expenditures c. Affect long-run future profitability d. Involve only money, not machinery e. none of the above Answer: C Answer: C Answer: C The ____ is equal to the some of the squares of the market shares of all the firms in an industry. a. market concentration ratio b.

In the purely competitive case, marginal revenue (MR) is equal to: a. cost b. profit c. price d. total revenue e. none of the above Answer: C Answer: C Answer: C The British Automobile Company is introducing a brand new model called the "London Special." Using the latest forecasting techniques, BAC economists have developed the following

An incentive-compatible revelation mechanism is a. self-enforcing b. always multi-period c. too complicated to influence decisions d. prevalent in vertically integrated businesses e. not adopted by franchise businesses Answer: A Answer: A Answer: A The demand curve facing the firm in ____ is the same as the industry demand curve. a. pure competition b. monopolistic competition c. oligopoly d. pure monopoly e. none

The concept of market structure refers to three main characteristics of buyers and sellers in a particular market. These include ____. a. the degree of seller and buyer concentration in the market b. the degree of actual or imagined differentiation between the products or services of competing producers c. the pricing behavior of the

____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem. a. Opportunity costs b. Marginal costs c. Relevant costs d. Sunk costs e. None of the above Answer: D Answer: D Answer: D The form of economics most relevant to managerial decision-making within the firm is: a. macroeconomics b.