# Marginal Cost and Correct Answer

5 out of 5 points

Economic profit is defined as the difference between revenue and ____. Answer

Selected Answer:

total economic cost

Correct Answer:

total economic cost

Question 2

5 out of 5 points

Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test: Answer

Selected Answer:

equals the marginal cost of the test

Correct Answer:

equals the marginal cost of the test

Question 3

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? Answer

Selected Answer:

innovation theory of profit

Correct Answer:

innovation theory of profit

Question 4

5 out of 5 points

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

Selected Answer:

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

create incentives so that managers act like owners of the firm. Question 5

5 out of 5 points

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

Selected Answer:

common stock

Correct Answer:

common stock

Question 6

5 out of 5 points

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

Selected Answer:

high risk

Correct Answer:

high risk

Question 7

0 out of 5 points

The ____ is the ratio of ____ to the ____.

Answer

Selected Answer:

correlation coefficient; standard deviation; expected value

Correct Answer:

coefficient of variation; standard deviation; expected value Question 8

5 out of 5 points

The net present value of an investment represents

Answer

Selected Answer:

the expected contribution of that investment to the goal of shareholder wealth maximization Correct Answer:

the expected contribution of that investment to the goal of shareholder wealth maximization Question 9

5 out of 5 points

Suppose we estimate that the demand elasticity for fine leather jackets is ‑.7 at their current prices. Then we know that: Answer

Selected Answer:

a 1% increase in price reduces quantity sold by .7%.

Correct Answer:

a 1% increase in price reduces quantity sold by .7%.

Question 10

5 out of 5 points

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

Selected Answer:

equal to zero

Correct Answer:

equal to zero

Question 11

5 out of 5 points

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

Selected Answer:

inferior goods

Correct Answer:

inferior goods

Question 12

5 out of 5 points

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

Selected Answer:

one percent; quantity demanded; two percent

Correct Answer:

one percent; quantity demanded; two percent

Question 13

0 out of 5 points

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

Selected Answer:

the barometric method

Correct Answer:

the consumer survey

Question 14

5 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. Answer

Selected Answer:

double-logarithmic

Correct Answer:

double-logarithmic

Question 15

0 out of 5 points

The standard deviation of the error terms in an estimated regression equation is known...

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