economy

Answer

F-test

Durbin-Watson test

t-test

z-test

Question 2

When two or more "independent" variables are highly correlated, then we have:

Answer

the identification problem

multicollinearity

autocorrelation

heteroscedasticity

complementary products

Question 3

The Identification Problem in the development of a demand function is a result of:

Answer

the variance of the demand elasticity

the consistency of quantity demanded at any given point

the negative slope of the demand function

the simultaneous relationship between the demand and supply functions

Question 4

The method which can give some information in estimating demand of a product that hasn’t yet come to market is:

Answer

the consumer survey

market experimentation

a statistical demand analysis

plotting the data

the barometric method

Question 5

All of the following are reasons why an association relationship may not imply a causal relationship except:

Answer

the association may be due to pure chance

the association may be the result of the influence of a third common factor

both variables may be the cause and the effect at the same time

the association may be hypothetical

Question 6

Demand functions in the multiplicative form are most common for all of the following reasons except:

Answer

elasticities are constant over a range of data

ease of estimation of elasticities

exponents of parameters are the elasticities of those variables

marginal impact of a unit change in an individual variable is constant

Question 7

Producers' goods are:

Answer

consumers' goods

raw materials combined to produce consumer goods

durable goods used by consumers

always more expensive when used by corporations

Question 8

The factor(s) which cause(s) a movement along the demand curve include(s):

Answer

increase in level of advertising

decrease in price of complementary goods

increase in consumer disposable income

decrease in price of the good demanded

Question 9

If demand were inelastic, then we should immediately:

Answer

cut the price.

keep the price where it is.

go to the Nobel Prize Committee to show we were the first to find an upward sloping demand curve.

stop selling it since it is inelastic.

raise the price.

Question 10

Those goods having a calculated income elasticity that is negative are called:

Answer

producers' goods

durable goods

inferior goods

nondurable goods

Question 11

Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because

Answer

auto customers are less price sensitive than restaurant customers

price elasticity of demand (in absolute values) is higher for auto than restaurant customers

price elasticity of supply is lower in auto than in restaurants

restaurant food spoils quickly and is much more perishable

price elasticity of supply in autos is smaller than the absolute value of price elasticity of demand but the reverse is true for restaurants

Question 12

An increase in each of the following factors would normally provide a subsequent increase in quantity demanded, except:

Answer

price of substitute goods

level of competitor advertising

consumer income level

consumer desires for goods and services

Question 13

Songwriters and composers press music companies to lower the price for music downloads because

Answer

demand for on-line music is inelastic

profits are maximized where price elasticity of demand is -1.0

songwriter royalties are a percentage of sales revenue

profits and total revenue are maximized at different quantities

profits are maximized at the same prices as sales revenue

Question 14

The primary objective of a for-profit firm is to ___________.

Answer

maximize agency costs

minimize average cost

maximize total revenue

set output where total revenue equals total cost

maximize shareholder value

Question 15

In the shareholder wealth maximization model, the value of a firm's stock is equal to the present value of all expected future ____ discounted at the stockholders' required rate of return.

Answer

profits (cash flows)

revenues

outlays

costs

investments

Question 16

Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

Answer

cash bonuses based on length of service with the firm

bonuses for resisting hostile takeovers

requiring officers to own stock in the company

large corporate staffs

Question 17

The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?

Answer

Saturn’s cars sold at prices higher than rivals Honda or Toyota, so they could not sell many cars.

Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.

Saturn found that young buyers of Saturn automobiles were very loyal to Saturn and GM.

Saturn implemented a change management view that helped make first time Saturn purchasers trade up to Buick or Cadillac.

Question 18

The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?

Answer

risk-bearing theory of profit

dynamic equilibrium theory of profit

innovation theory of profit

managerial efficiency theory of profit

stochastic optimization theory of profit

Question 19

The moral hazard in team production arises from

Answer

poorly designed team membership

lack of proper assignment of individual tasks

disorganization in groups

a conflict between tactically best interest and one’s duty

insufficient experience

Question 20

The ____ is the ratio of ____ to the ____.

Answer

standard deviation; covariance; expected value

coefficient of variation; expected value; standard deviation

correlation coefficient; standard deviation; expected value

coefficient of variation; standard deviation; expected value

Question 21

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?

Answer

U.S. Government bonds

municipal bonds

common stock

commercial paper

Question 22

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Answer

68.26%

2.28%

34%

15.87%

Question 23

The level of an economic activity should be increased to the point where the ____ is zero.

Answer

marginal cost

average cost

net marginal cost

net marginal benefit

Question 24

An closest example of a risk-free security is

Answer

General Motors bonds

AT&T commercial paper

U.S. Government Treasury bills

San Francisco municipal bonds

an I.O.U. that your cousin promises to pay you $100 in 3 months

Question 25

The standard deviation is appropriate to compare the risk between two investments only if

Answer

the expected returns from the investments are approximately equal

the investments have similar life spans

objective estimates of each possible outcome is available

the coefficient of variation is equal to 1.0