The primary objective of a for-profit firm is to ___________. Selected Answer: Correct Answer:

5 out of 5 points

maximize shareholder value maximize shareholder value

Question 2

5 out of 5 points

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? Selected Answer: Correct Answer:

innovation theory of profit innovation theory of profit

Question 3

5 out of 5 points

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

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

Question 4

To reduce Agency Problems, executive compensation should be designed to: Selected Answer: Correct Answer:

5 out of 5 points

create incentives so that managers act like owners of the firm. create incentives so that managers act like owners of the firm.

Question 5

The ____ is the ratio of ____ to the ____.

Selected Answer: Correct Answer:

5 out of 5 points

coefficient of variation; standard deviation; expected value coefficient of variation; standard deviation; expected value

Question 6

5 out of 5 points

The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: Selected Answer: Correct Answer:

the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk

Question 7

5 out of 5 points

The net present value of an investment represents

Selected Answer: Correct Answer:

the expected contribution of that investment to the goal of shareholder wealth maximization the expected contribution of that investment to the goal of shareholder wealth maximization

Question 8

5 out of 5 points

Generally, investors expect that projects with high expected net present values also will be projects with Selected Answer: Correct Answer:

high risk high risk

Question 9

Which of the following would tend to make demand INELASTIC?

Selected Answer: Correct Answer:

5 out of 5 points

the proportion of the budget spent on the item is very small the proportion of the budget spent on the item is very small

Question 10

Marginal revenue (MR) is ____ when total revenue is maximized. Selected Answer: Correct Answer:

5 out of 5 points

equal to zero equal to zero

Question 11

5 out of 5 points

Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is: Selected Answer: Correct Answer:

price inelastic price inelastic

Question 12

5 out of 5 points

An income elasticity (Ey ) of 2.0 indicates that for a ____ increase in income, ____ will increase by ____. Selected Answer: Correct Answer:

one percent; quantity demanded; two percent one percent; quantity demanded; two percent

Question 13

0 out of 5 points

When using a multiplicative power function (Y = a X1b1 X2b2 X3b3) to represent an economic relationship, estimates of the parameters (a, and the b's) using linear regression analysis can be obtained by first applying a ____ transformation to convert the function to a linear relationship. Selected Answer:

polynomial

Correct Answer:

double-logarithmic

Question 14

5 out of 5 points

In regression analysis, the existence of a significant pattern in successive values of the error term constitutes: Selected Answer: Correct Answer:

autocorrelation autocorrelation

Question 15

5 out of 5 points

In testing whether each individual independent variables (Xs) in a...