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 increase.
Experience goods are products or services
a. that the customer already knows
b. whose performance is highly unusual
c. whose quality is undetectable when purchased
d. not likely to cause repeat purchases
e. all of the above
What method of inventory valuation should be used for economic decision-making
problems?
a. book value
b. original cost
c. current replacement cost
d. cost or market, whichever is lower
e. historical cost
According to the managerial efficiency theory of profit, above-normal profits can arise
because of high-quality managerial skills.
a. true
b. false
Given a Cobb-Douglas production function estimate of Q = 1.19L.72K.18for a given
industry, this industry would have:
a. increasing returns to scale
b. constant returns to scale
c. decreasing returns to scale
d. negative returns to scale
e. none of the above
The cost of internal equity (retained earnings) is ____ the cost of external equity (new
common stock).
a. greater than
b. equal to
c. less than
Phoenix Lumber Company uses the number of construction permits issued to help
estimate demand (sales). The firm collected the following data on annual sales and
number of construction permits issued in its market area:
(a) Which variable is the dependent variable and which is the independent variable?
(b) Determine the estimated regression line.
(c) Test the hypothesis (at the .05 significance level) that there is no relationship
between the variables.
(d) Calculate the coefficient of determination. Give an economic interpretation to the
value obtained.
(e) Perform an analysis of variance on the regression including an F-test (at the .05
significance level) of the overall significance of the results.
(f) Suppose that 8,000 construction permits are expected to be issued in 2010. What
would be the point estimate of Phoenix Lumber Company’s sales for 2010?
The factor(s) which cause(s) a movement along the demand curve include(s):
a. increase in level of advertising
b. decrease in price of complementary goods
c. increase in consumer disposable income
d. decrease in price of the good demanded
e. all of the above
Which of the following statements about cost functions is true?
a. Variable costs will always increase in direct proportion to the quantity of output
produced.
b. The less capital equipment employed in the production process relative to labor and
other inputs, the longer will be the period of time required to increase significantly the
scale of operation.
c. The shape of the firm’s long-run cost function is important in decisions to expand the
scale of operations.
d. none of the above
Even though insignificant explanatory variables can raise the adjusted R2of a demand
function, one should not interpret their effects on the regression when
a. testing marketing hypotheses about the determinants of demand
b. analyzing inventory relative to capacity requirements
c. forecasting unit sales for operations planning
d. sales revenue reaches its peak
e. planning for capital budgets
The lower the barriers to entry and exit, the more nearly a market structure fits the ____
market model.
a. monopolistic competition
b. perfectly contestable
c. oligopoly
d. monopoly
e. none of the above
The marginal rate of technical substitution may be defined as all of the following
except:
a. the rate at which one input may be substituted for another input in the production
process, while total output remains constant
b. equal to the negative slope of the isoquant at any point on the isoquant
c. the rate at which all combinations of inputs have equal total costs
d. equal to the ratio of the marginal products of X and Y
e. b and c
____ as practiced by public utilities is designed to encourage greater usage and
therefore spread the fixed costs of the utility’s plant over a larger number of units of
output.
a. Peak load pricing
b. Inverted block pricing
c. Block pricing
d. First degree price discrimination
e. none of the above
Mr. Geppettouses exponential smoothing to predict revenue in his wood carving
business. He uses a weight of ω = .4 for the naïve forecast and (1-ω) = .6 for the
past forecast. What revenue did he predict for March using the data below? Select
closet answer.MONTH REVENUE FORECAST
Nov 100 100
Dec 90 100
Jan 115 —-
Feb 110 —-
MARCH ? ?
a. 106.2
b. 104.7
c. 103.2
d. 102.1
e. 101.7
If a cartel seeks to maximize profits, the market share (or quota) for each firm should be
set at a level such that the ____ of all firms is identical.
a. average total cost
b. average profit
c. marginal profit
d. marginal cost
e. marginal revenue
Milner Brewing Company experienced the following monthly sales (in thousands of
barrels) during 2010:
(a) Develop 2-month moving average forecasts for March through July.
(b) Develop 4-month moving average forecasts for May through July.
(c) Develop forecasts for February through July using the exponential smoothing
method (with ω = .5). Begin by assuming .
